Walmart’s "GoBank" — Private Sector Solution
Bernie Sanders has brought up a lot of absurd things during this election season. Whether its increasing government spending by tens of trillions, or limiting the variety of deodorant Americans can find on store shelves, the Senator from Vermont has managed to come up with policy proposals that even writers at Slate were forced to dismiss as absurd.
Unfortunately one such proposal hasn’t been properly mocked, Bernie’s dream to turn post offices into banks.
Like with several of Senator Sanders’s ideas, it’s understandable why the idea may have some appeal at first. There are millions of Americans who are kept outside the traditional banking sector for a variety of reasons, and many check cashing operations, and pay-day lenders charge high fees and interest. Since many users of these services live paycheck to paycheck, it’s reasonable for people to look for ways to offer financial services to the “underbanked” community.
This explains why the Sanders plan has earned substantive praise from many in the beltway. It was praised as “highly sensible” in The Atlantic, and “revolutionary” in the The Washington Post. Bernie’s proposal has been gaining traction with various unions rallying around the cause and colleagues like Elizabeth Warren becoming vocal supporters.
Of course, there is nothing revolutionary or sensible about adding banking services to failing government post offices. As Paul-Martin Foss noted earlier this year, post office banks have already been attempted in the United States before being ended in the 1960s due to suffering from the problem always inherent in government services: costs and stifling government bureaucracy.
Perhaps more important than highlighting the ways a post office bank is a bad idea is highlighting the fact that the private sector already creates ways to serve the very underbanked community Bernie Sanders thinks needs to be rescued by government.
In 2014, Walmart announced that it would offer customers banking services. Called “GoBank,” Walmart’s service gives customers a reloadable debit card and even waives user fees for those who sign up to have their paychecks directly deposited into their GoBank accounts. Since many Americans lacking access to banks live in low income communities, Walmart’s financial services are a great complement to their long standing business model largely targeting such consumers. This is why Walmart’s GoBank may be a more practical solution than similar apps like Simplify that may be intimidating to less tech-savvy customers.
Similarly, Sam’s Club, Walmart’s warehouse sibling, has branched out into offering small business loans, responding to a massive decline in small business lending from big banks in recent years. Since the massive regulatory burdens from the Dodd-Frank Act, which had the support of both Senator Sanders and Warren in 2010, are a key factor in the tightening of traditional small business loans, here’s a perfect example of an often-vilified private company stepping up to solve a crisis caused by dangerous government policy.
It’s possible that Bernie Sanders may find a way to stumble upon a good idea, but asking the failing US Post Office to take up banking isn’t one of them. Lucky for Americans in need, Walmart is there to provide the services that government will never be able to do well.