 We've got a point in time and a nice, a nice crowd here. Welcome. Thanks for taking the time to join us this morning. My name is Justin King. I work in the Asset Building Program with the New America Foundation. Our work in the Asset Building Program is focused on significantly broadening access to economic resources through increased states and asset ownership, giving families an enhanced economic security, a direct state in the American Commonwealth, and the needs to pursue their aspirations. I'm very fortunate to be able to work with a group of congressmen and their staffs who also believe in state ownership are critical with the success of individual families, but also for the larger economy. And today's briefing is sponsored by that group with congressional states and ownership caucus. And it's co-chairs of Congressman Jim Cooper, Tom Petri, Joe Pitts, and Congresswoman Amy Songers. I'd like to take the opportunity to thank their staff as well, Zach Marshall, Richard Markowitz, Josh Schall, and Alison Serri from Stockings and Spectrum. Part of the mission of the caucus is to bring people together to explore and discuss ways to promote those critical concepts of saving and ownership. That doesn't constitute an endorsement of the ideas discussed, but without a safe space with a great change of ideas, it's really impossible to move forward with new solutions. So if those are the interests of the caucus, why don't we get here and then call the safety of those office? There's no doubt that those office spaces seem to be challenging. I don't have to work very hard to outline them, decline in the mail-on, increase operating costs, the potential end of Saturday delivery, possible location closures, and a great deal that will certainly be about what will or won't happen here on Capitol Hill. There were current, formal postal workers who were engaged in a hunger strike to protest some of the change that had been contemplated for the agency. The big picture really boils down to this. What's the role of the Postal Service in the 21st century? In increasingly electronic world of communication, how can the Postal Service best serve this data station? Now, this issue of postal reform has commanded a great deal of attention recently. It's by no means the only pressing issue facing the U.S. And the Postal Service isn't the only ones facing troubled balance sheets. Last week, the Federal Reserve released the results of its tri-annual examination of household balance sheets. The survey of consumer finances caused quite a stir with the headline that the average net worth, the net net 40% from 2007 to the end of that news reported by the survey, that drop by 5% as measured by net worth essentially had their wealth of grace entirely. The middle class suffered tremendous decline in that net worth was the decline in value of their homes. Some reports call this loss a loss in paper, but it was actually the only time, always, when I'm saving for my retirement for emergencies. People didn't have... We're unlikely to change our event. Is this on extremely successful efforts in Japan? Saving is happening in many countries, and no savings. I want to get the two things out of the way. Saving these accounts at the Post Office is a pretty wacky process in this country. What seems moving to here is perfectly normal in the rest of the world. And I want to show you that my first slide is just to just refer to you. You can go in common place. Appearance to this in the NS city or town is the local Post Office with dollars to set up especially to deal with financial services. In China today, for example, the Chinese Postal Saving System has over 100 million households as customers, and it's not just accounts, that's households. So these are very large. We're talking about a large Japanese system in a manner. So that's one thing I want to get out of the way. The second, and Justin's already done my job for, but it's looking at practices in the world. As Americans, we don't tend to do that. And nowadays, if anybody said, well, there are things that are worth learning from Japan or Germany or France. And very late, the skeptic would say, well, what about the Euro crisis? What about Japan's 20-year history of economic stagnation? I think the important point here is that we're not talking about taking every aspect of these kinds of things. We're talking about best practices and no country in the world is perfect, including our home. The world said that they would never emulate American best practices because they didn't like this. They call them short sighted and I'm competitive. So I'm making this plea for looking at best practices, looking at both strong points as well as weak points. So it's not going to be a global state assistance around the world. And with that out of the way, I'd like to talk about the origins and the development of the possible savings of the world and then possible lessons that we, as Americans, might learn, particularly, as Justin said, as we address these twin problems that most people would think are unrelated, the problem of inadequate facilities for small savers in this country and the current crisis of the US post office. Well, let's talk about the origins first. Our possible savings emerged a long time ago, actually 150 years ago, and emerged as part of a broader movement to encourage more than other people to save. Elites in Europe and North America and Australia and other places believe that working people regularly saved in a bank, they would become self-reliant citizens who could plan their lives and avoid depending on welfare or turning to crime. Now, proponents, and this is in the 1800s of Thrift and of these various small savers institutions, they often used the word self-help. And we look back on that and we think, well, self-help must mean running individuals if you're on your own. But when proponents of self-help talked about it in the 19th century, they didn't mean that people were totally on their own. They meant that people were going to say, they're going to be diligent, they're going to be thrifty. They would need facilities that would enable them to help themselves. So the story from the start, about 200 years ago, about promoting small saving among working people was not to simply say they're on their own, but to give them institutions that would help them to help themselves. Now, the first institution that was established, I don't know if we're going to talk about that, the first institution that was established to help people help themselves was something called the Savings Bank, which a few of you in the room may be able to remember, we had some here, all of them as many as most. The Savings Bank was founded about 200 years ago. It spread all over Europe, it spread to North America, it spread across oceans. The Savings Bank was set up by civic associations in cities, often by philanthropists. It was set up as an institution, not like a commercial bank, but a bank that would take very small savings of working people and pay interest. So often in most, some sort of subsidy from the city or from the philanthropist, it was designed to enable the working board to become self-reliant citizens. The problem with the Savings Bank, they worked quite well in some places, like Germany, here at the time, who were left. But in many places like England, they weren't sufficient. Where they existed, they did pretty well in terms of making people in the Savings, but they didn't exist much in the countryside, they didn't exist in many urban neighborhoods. Also, the Savings Bank's in the 1800s, this was a two-hour country as well, often by bus, they had insolvencies, they had government, it was insecure. And one of the things that we learned in the history of Savings, is that people are much less likely to save or that they're not even banks, they think that they're going to fail. So security and access were two very important problems. Savings banks started to solve them, but they're fairly insufficient. So as a result, a new institution came into effect in the middle of the 19th century, called the Postal Savings Bank, or the Postal Savings Bank. The idea originated in Britain. It was passed by the Parliament in 1861. The idea of the Postal Savings Bank was actually a brilliant idea in terms of its simplicity. It said rather than depend on spotty coverage by Savings banks, I would why not use the Post Office? The Post Office is at that point, Britain and elsewhere, we're rather the expanded. The Post Office was highly accessible. Use the Post Office as the Savings Bank for most lower income people. So you solve the problem of nation-wide access, our Post Office literally was usually within a few miles of anyone's home. That's all for one problem. The second problem it solved was the problem of security. Because unlike commercial banks or savings banks, the Postal Savings Account was guaranteed by the state, by the central government. So that also was very important in persuading people to actually deposit their savings. And the third aspect of the Postal Savings Bank is because the numbers were so extensive, because the amounts of deposits, although tiny, in the aggregate were quite large, there were certain economies of scale that allowed the Post Office Savings Bank to accept very small deposits. This is very important to the working board that they could make regular but small deposits, they could build up their assets and be able to plan their lives better. And also they paid interest. And the interest was interesting because it was paid directly from the state's profits. So in a sense, at times it was a subsidy, at times it was above the market risk, but that's because the Post Office Savings Bank was set up not to be a market financial institution, but to be a social institution designed to do a social good so often they have a small subsidy to the interest rates. And this Post Office Savings Bank spread throughout Europe in the middle of the 19th century. You can see out there that it spread to Canada, it spread to most European nations by the 1870s and 1880s, and one particular nation stood out and that was the non-Western nation in this equation, that was Japan. Far off Japan was becoming a modernized state at that point. A doctorate of the British Post Office Savings System in 1875, in a sense of the rest of the history, the Japanese Post Office Savings System today is not one of the world's largest cultural savings systems, it's actually the world's largest bank. That may be a problem, but we'll get to that later. Postal savings was very, very important in accomplishing what today we call financial inclusion. In other words, trying to get lots of people on margins, poor people, children, women, people who have been passed by by the commercial banking sector to get them into the banking system. Very successful and particularly with respect to children. Postal savings, and this is something I think we should pay attention to today, postal savings is a very good mechanism for information youth saving. The idea in the 1800s and the idea today should be that if you want people to be responsible financial actors as adults, they need financial education as youth. And so the 1800s financial education is not returned, but they were called school savings banks. And children would do with these Australian children on Monday morning all around the developed world at the time. They were small coins in school. They would give it to teachers or often to postal savings bank employees or savings bank employees, and then it would be deposited in their accounts. It was designed to teach them these habits, but post office was a very good mechanism. It would take, again, the very small deposits of children, it would cultivate them as savers and as responsible financial actors. And as I said, postal employees would often go and work with the school system. So you would have comprehensive nationwide assistance for school savings. So post office, the postal savings would be very important in that respect. Let's turn to the United States. What's the history of the United States with postal savings? And believe it or not, it does have history. Again, first of all, the problem of the U.S. having a check of the history of postal savings because when other nations around the world in the 1860s, 1870s, 1880s were adopting postal savings, the United States stood out as an exception. The postal savings bill was actually considered in the U.S. Congress as early as 1873. It was considered in 1874 and it was considered actually for the next 37 years all the way to 1909. All the time it was either rejected or pigeonholed. So there was much more resistance to postal savings in this country and it was a result of also other savings institutions not being particularly widespread or at least responsible. You can see as an international comparison where the United States stood in 1910 in terms of this is a rough measure of financial inclusion. In other words, what's the percentage of savings accounted for population and you can see that most of the countries that had both active savings banks but also a postal savings system had quite high rates of financial inclusion as accounts for population, mainly in the 30 percentile whether it was in European countries or Japan. You can see the United States' lay down in terms of savings banks is before that postal savings bank only about 10 percent of the population most had savings accounts. If you think about all the savings accounts in commercial banks which is really cheap and it's not a good comparison the United States is still an outlier it's still only about 16 percent. So there's these circumstances that a number of performers, as I said in the U.S. Congress but also in the U.S. Postmaster General's office began in the 1870s trying to enact a postal savings system because it was quite obvious that the U.S. needed what the Europeans and the Japanese were doing if they wanted to create institutions for small savings. But, as I said before in the U.S. Congress the postal savings legislation for 37 years faced formal opposition lead opponent as you might guess where the commercial banks which were much better developed in the U.S. at that point than in most countries I am already in the American Bankers Association have informed in the 1870s depending on the very big response they did not want the competition of the postal savings bank even though they themselves were not particularly serving small customers well, regional interests were skeptical about postal savings law because they feared it would mean that the money that was deposited would all go into the conference of the U.S. Treasury and take it away from the state so there were those sorts of opposition in 1907 that was a major financial panic in the United States many banks failed and that was just enough to push Congress into enacting a very weak postal savings bill but one that was heavily compromised that looked really nothing like the postal savings legislation elsewhere so 1910, postal savings is passed this is, you would have to say, one of the great forgettable moments in American history from 1911 to 1966 believe it or not and I often have to tell people who even lived through that period that there was a postal savings bank it seemed to be rather invisible at least for Vienna now it did accomplish a few things it was highly appealing to immigrant communities particularly immigrants from Italy, from the Hungarian Empire and other places where they had come from countries with postal savings banks it was somewhat popular with farmers particularly during the Great Depression the 1930s when banks were calling all over the place postal savings was a guaranteed place but it never really caught on the great past of the American public and there were some reasons for that one, unlike the European and Japanese systems the U.S. postal savings system from the start was crippled because it was not it was prevented from paying interest that was anywhere near what other banks were paying it paid about a 1% effect of interest on accounts at a time when banks were paying between 3 and 4% so it's kind of almost made to fail moreover rural post offices particularly the third and fourth class were not allowed to offer so the whole rationale for postal savings was to serve both sides in inaccessible places and we weren't doing that another reason postal savings fades into the living in 1966 is that in the meantime new mechanisms of small savings surface in the United States that were quite effective in the middle of the 20th century and we need to think about this for a minute postal savings to a certain extent was superseded by new institutions for small savings what were these was one we know very well the U.S. savings fund actually originates in the mid 1930s but it really comes into its own it has four bonds during World War II and in the decade or two after the World War II U.S. savings funds became a very accessible form of savings in some ways it was America's best answer to the postal savings bank elsewhere a U.S. savings fund also was guaranteed by the U.S. government it was really accessible in a way that small savings accounts had not been in the U.S. before you could get it at schools you could get it at workplaces which is a very effective way to save savings you could get it from neighborhood volunteers you could get it at the post office you could get it in banks so that was one thing that competed with postal savings and did a very good job another thing was the introduction of that DIC established in 1934 the sum of weaker insurance systems for savings and loans the weaker system for savings and loans a little more firmed up in the early post-war period so Americans suddenly in contrast to the 100 years before bank annexing that Americans realized that it would save in banks that were now in short and that was very important that is another one of America's answers to postal savings rather than having necessarily everything in the sector you could have a specifically managed system of insurance for deposits and so people after World War II really streamed back to the banks in particular to the savings and loans associations which in a sense became our answer to the savings banks elsewhere and so in the 50s and 60s savings and loans were highly accessible they usually required very low minimum balances that didn't come with many fees savings and loans were all over the place so it was a very accessible system so in a sense the U.S. savings bank the savings and loans managed to displace the postal savings system which in from the start as I said had been very effective however what has happened in recent decades as I think many of you know is that these mid 20th century institutions for small savings have declined or disappeared the savings and loans of course collapsed in the 1980s with few remaining real savings and loans anymore the U.S. savings bonds well how many of you have large numbers of savings U.S. savings bonds used to be the practice they're now actually quite inaccessible if you can get them, if you can only get them online now they in a sense are also designed to fail at the same credit unions could perhaps play the role of savings banks elsewhere they have done a good job they're encouraged but they've never reached a mass market within the small savings industry so we have a situation today in which we really don't have an effective institution for small savings and so that's what brings me to talking about why I think we need postal savings it does not appear I don't know whether people agree with me or not but the commercial banking sector does not appear to be commercial banking sector is particularly interested in small savings certainly for lowering of young people high minimum balances high fees, all sorts of things that have tended to discourage me so into this back in the scenes that the whole stage might actually be an idea that has come back in the scenes on the hinge we simply need to look for a broad broad we see something that's actually quite curious many people in the finance industry in the late 20th century predicted that with growing financial diversity of products that a 19th century institution like postal savings made would more or less disappear if it would be redundant and they said well ok maybe you'll see them in developing countries but you might not see them in the first world but well then we hold in the last 10 years or so as people are taking stock that in many advanced countries as some of the others in South Korea suggest postal savings and postal financial services are actually thriving particularly in Japan Germany, France Switzerland, Belgium you could listen to many other countries the other thing that's very interesting and one that I think we really need to pay attention to is what it means for the post office itself in these other countries their post offices are facing exactly the same problems as ours declining revenues because of delivery services the internet is everywhere private sector delivery services are everywhere so this is a common problem French-based Japanese-based parents-based etc and it is interesting that in many of these other countries that post offices have actually expanded their array of postal financial services beyond postal savings and it's actually been a major revenue producer such that it is in many senses compensated for the defined and delivery services and allowed post offices and post office branches to remain viable as the second quotation from the U.S. study suggests so with that in mind I'd like to look at just very quickly at three of the major postal savings systems what we might be able to learn from them and then we'll go questions the Japanese postal system as we said this is the giant many people would say it's too large we tend to agree with it but let me at least tell you about it it has 24,000 branches or more which is amazing I mean this makes it not really the largest in terms of actual savings but the largest in terms of its net traditionally it offered simple savings accounts but also very popular 10-year time deposit and also offer something that something called postal life insurance basically life insurance policies can actually get after post office so for this reason these are very popular financial products and in terms of what it accomplished in terms of financial inclusion the post office in post office savings bank in 20th century Japan in terms of financial access an official information on saving financial inclusion including lowering of people and she laughed and said we don't really have it anymore we saw that problem 100 years ago and she was right because what postal savings did in Japan and in other places it actually has a knock on effect it actually set policies for the banking sector in general the banking sector in Japan is regulated much like a post office regular banks in Japan legally have to accept tiny deposits and they can't impose savings fees that's the law and it's set up for financial inclusion we're going to see this in other places too now you may have read that the Japanese post office savings bank is being privatized you're going to read that for a long time it's never really going to happen it's been a very long unwieldy process that started with a matter of reform around 2005 it's supposed to have a tender process of privatization and then new leadership came in that wanted to actually save postal savings so it's not happening however ironically the privatization process actually in a sense re-strengthened postal savings by introducing a lot of new sort of private financial products to the postal savings system so introduced mutual funds which you get at the post office you get new credit card small loans all sorts of products and utilities some of which involved partnering with private financial firms so in a sense these private financial firms and this is not only a Japanese story found that there was kind of a win-win situation that the postal savings was going to be there forever they weren't going to be able to dislodge it but they could join it they could join it and they could avail themselves of the vast network offered by these 24,000 postal postal savings branches so it's a lesson that we might think about that the post office could actually be attractive as a place for private financial firms to partner with and to offer new products the one last thing I should say and this is the most controversial virtual element in the Japanese system is that the postal deposits for the most part are invested in government securities it used to be 100% now it's about 75% this strikes many times as a big problem and tends to suck out too much capital into the public sector but we need to be very clear here postal savings has two components one is a service component actually serving customers and then there's a question of where the money is invested it doesn't have to be entirely invested in the government obviously it has to be invested conservatively but we don't have to take the Japanese model 100% you can actually separate bringing in the savings and how the savings are invested in that and it should be something for today now I want to turn to another system the French system I think in many ways the French system offers some very attractive models like the Japanese system it's heavily centralized in fact it's even more centralized and there's been no revitalization of the French postal savings system most of the monies from postal savings are invested in a state-managed fund thrown by Ministry of Finance and interestingly enough most of it is dedicated to what the French call social housing public housing but it's very different because it's not just housing building housing through the very poor social housing in Europe often it's middle class, lower middle class and lower income so it's a vast system of subsidized housing which is partly paid for by the postal deposits but again you don't have to follow that model it's described like Japan extends the system in postal branches and also like Japan part of an explicit policy of government mandated financial inclusion I mean there are laws in France that mandate that post offices and banks serve lower income customers at a low price and banks and post offices are committed so again you have this kind of non-non-effective postal savings actually stimulating more inclusive policies in the commercial banking sector as well as you can see very high levels of financial inclusion in France 99% of the household have banking accounts now the centerpiece of the French system in a device that I think is really interesting for us in France it's called the leveret off that just means like a savings book it's been in existence for almost 200 years it was historically offered at just post offices and the state managed savings companies but because of complaints from the EU that French post office would have really locked things up and monopolizing this product since 2009 the leveret off is small savers account is now offered at all banks in France and it's interesting that it went that way for our country we've probably shut down the effective savings instrument and nobody would have it here it was actually the public instrument that was actually spread to the rest of the country so what is the leveret off why is it attractive well it's a small savers account explicitly, legally it is capped and currently at $15,300 little short $20,000 one per person I know some of you are saying don't the French cheat don't a lot of middle class families to some extent and not as much as you'd expect I think there are about 60 Frenchmen so the cheating is not expensive, most people in fact do what the policies designed or they have one of these and obviously the lower income is often the only one so it's capped, no fee very tiny minimum balance you can bring in the deposit of I believe 10 Euros that is the minimum so it's almost no minimum whatsoever the interest on the leveret is capped and interestingly enough the government, not the market actually sets the interest rate now we might not like that but that is what it's done and it's not usually wildly different from the market rate but sometimes it's a little bit about the market rate and prime ministers will and presidents will defend it by saying there is a social goal associated with promoting small savings among more and more people all sorts of things in this country that's what they choose so that's the French system and then I'm going to close with the German system and that one is quite different it is now actually a privatized post farm it's privatized in part because unlike the other two countries but unlike most other countries Germany for the last 200 years has been very well served by a very accessible network of savings banks at the local level they're called Sparcassen and also a cooperative banks at the local level the savings banks themselves 15 million accounts 15 million customers the cooperative banks 30 million customers so the post farm they just have a capital of 14 million which is still pretty good but the point being small savings already being thoroughly well served nonetheless it does well it does well with young people it does well with low-ranking people it has a lot of branches although not as many as the French and Japanese but it's still very extensive this is a picture I actually took two weeks ago it didn't come up very well from the PowerPoint but it was a different person but I just saw people streaming into this post farm finance center very very popular and very accessible now it's privatized because from about the 1990s the post farm was spun off first the public corporation then the one that would actually be sold to the share finally in the last four years it's been acquired more or less in full by Deutsche Bank Deutsche Bank is a big commercial bank that has really no need for small customers very good stocks for not serving small customers Deutsche Bank thought that by acquiring the post farm that this would give them a contract to the small savers market and in the sense that that is happening now it's not necessarily been that profitable for Deutsche Bank but Deutsche Bank has left it intact not trying to carve it up they're trying to do cost-cutting and units that actually fought back so it actually post-fired in terms of customers remains quite vibrant even though it has been privatized and the privatization hasn't in the case of the summit privatization has brought certain new products that are quite appealing not on the savings accounts debt accounts but down mortgages and DHL the DHL delivery services which are in the company is actually required by the post farm so you can go in and get all sorts of services in the post farm and it remains popular well let me sum up and maybe we'll talk more expensively about this in Q&A and the first thing I would say is looking at the various options credit unions or somehow trying to get commercial banks to do sort of small customers in an accessible way thinking about the various options I can't think of another option that would become anywhere close to the postal savings system in terms of serving the needs of the unbanked and underbanked and doing it on a nationwide basis this would while it may sound complex it's not that complex and it could be done rather quickly and it would I think serve their needs well the second point is one just to repeat what I said that postal financial services elsewhere have shown that that is a way of keeping post offices viable as as the resources decline moreover we can be creative and think about what's happening in the world now in fact on our own post office there is an array of postal financial services that could be offered not on the savings accounts and check-in accounts and debit cards but things that the post office actually does now money orders domestic international money orders now do electronic international money orders so that's not much to believe at all and the post office could partner with private companies and elsewhere for prepaid cards and a whole array of things that would serve to currently underbank lower income and useful customers moreover there is this knock-out effect that when postal savings was first introduced in the United States when it was up in progression of the bank in the early 1900s interesting that is the very point that the commercial banks started to offer their own small savers accounts because they sought competition coming the postal savings system doesn't have to monopolize a small savings it has to actually stimulate the commercial banks to realize that they might too be able to offer small savers products at more attractive rates than they currently are doing so that is not an effect in overall financial inclusion whether a lot of people said how could the post office possibly handle money while they do now this has been an historic factor in 1861 in Britain people in Parliament said how could the post office handle money the same answer came back where the post office was already handling money orders we have money orders we have international transfers the lead to small savers account basic national services is simply not that great it needed to be seen as a total government and not only post offices offer networks that could easily partner with private firms so I'll just close by saying what I said at the beginning Americans don't often like to think about other models and best practices in the world but we've got some big crises and challenges today and this may be a good time to start. Thank you I think the challenge seems to have only angles for quite a few dollars it's interesting that the problem doesn't come up this much now it could mean that everybody else in the world just has better be made the financial inclusion is such an important social goal that they're willing to tolerate small amounts of abuse. I mean in France it's very interesting that it really pushed hard for people receiving social benefits to be fully banked and I think something I think that probably may be coming here although we don't do it as a commitment because it's a bunch more efficient to arrange transfers when people have banked accounts so in France about 92% of the very worst people are banked so French and Japanese would say they overriding all this social inclusion and then use words like that and they're just going to tolerate a little bit of abuse on and on and just feel more important. It's interesting I mean I can almost sort of think of the postal services I don't want to go too far down this road but it's administered in many ways as a civil right you know every community in the U.S essentially has access to the postal service living rural Alaska tremendous land that you can ensure that you have access to the postal service the way that other Americans do and I think you know there's a question in our field about sort of banking access whether the issue is seen as a civil right or not and I think answering that gets a lot more complicated as we move more and more towards electronic payments of government benefits and I think that you're right that there's a case to be made for sort of simplifying payments if people are involved in the same structures at a large scale let's open up the questions are there folks that have been right in the front here and ask will I repeat your question to the benefit of the microphone the rest of the audience you've initiated everything you said but I found one emphasis was coming in already at the end and to learn that is postal checking I'm very familiar with the system which is somewhat similar to the German but the way post finance but its strength is by offering virtually the only right payment you could only really have a checking account with the post office the finance chart too much so you had virtually the whole population then payment at the post office through postal checking and there was a little step that you said you bring us the money that's what we're trying to do why don't you have your own account and that's how it really began much more so than through postal savings that's a very good point I have a question a little bit I was talking about the Swiss system the German system and there is confusion because if you actually talk about checks and people start laughing they think Americans are very kind because we use paper checks because compared to Europeans their idea of checking is called Euro and it's these transfers that Donald was talking about and it's not confined to the post office in Japan I used to always have my bank my bank would arrange all my utility payments and of course we are fine we do that in the US all of this happened 30 or 40 years earlier in much of the rest of the first world so the idea that they did so far in America I think people probably still need checking a council but maybe 10 years from now they may not because things are more and more electronic what the post office could do and I'm remembering now the old hand systems that would be a very good small savers product so again it's comprehensive and I'll always say the postal savings now it's really a postal financial prize so you talked about the ways the post office already handles money most of those tend to be one-off transactions how difficult is it to create the kind of infrastructure needed to do personal savings online access to that savings account to walk in and there's here's my account number that whole personal system how difficult is it to set up that kind of infrastructure well I mean it's all difficult to set up a system I'm in the story now so I don't have any financial products really up close but I can tell you that nobody's had problems creating them from scratch and I don't think it's just because we're in a lifetime that it's particularly hard I mean thanks to set up all the time it's just a nation-wide network to be sure I don't think it's a formidable problem who gets you in right in one of the lines how will it benefit via the banking system structure versus the postal system structure differences historical processes you know banking it just to a full realm there's always been a process of the larger market the framework of how the forces were taxing social networks whereas we have a banking system that's done for a postal service a postal service but yet not financial means on social networks what would be the difference because we're looking at low income or for people being able to utilize this system on this network but yet how will it impact the way the economy will be able to gainfully obtain from this tax revenue system that the banking system usually collects to go back into the system so how would that happen yeah that's a good question so a postal system and of course this is true in any other country where it's still government control is that it resembles the natural institution but it's not quite now I mean interest rates is one thing I mean they can be set by market postal savings system just as they are and then taxes is always interesting and that's where politics gets into this but banks will charge as they do in Japan today banks will charge about the Japanese postal savings system that it's getting a tax subsidy from the US government you know it's not paying for its buildings and certainly not getting taxed I think so let's say it's unfair competition I mean that needs this is true it needs to be taken into consideration but there is a difference between public services and profit making and we certainly have other examples in this country and you know we're going to have to decide as people politically do we, we subsidize all sorts of things here, we subsidize homeownership by the iPhone, we subsidize retirement savings by the iPhone our tax law has all sorts of subsidies some might say reversely this is one where we might agree, we might agree we might agree as a society that this is a need that's not being served well by the market where a public service would want them albeit it's going to have various types of subsidies who does that I mean there are subsidies that are financial in this area as well but we don't have Steve? A very interesting presentation I thank you very much I think this last point is a critical one because right now I think I lost $14 billion this year I lost tens of billions over the last two years so and then there seems to be no appetite to try to subsidize the appetite seems to be how do you downsize it, how do you increase revenues, how do you reduce costs how do you make it a self-sufficient government enterprise as it was designed since 1970 and so now the question becomes is our postal savings an opportunity to generate new revenue, you have these facilities out there, you have mail lines going down, fewer visits to post offices by customers maybe this is a way of leveraging, of making greater use of existing facilities and sort of getting more economies to scale that way or is it in fact going to be the case that the postal services lose money from offering bank services because of the various subsidies for social purposes that you just talked about that seem to be part of the deal in Japan, France and elsewhere so my question is is there any evidence of a postal system could make money operating small accounts an area where commercial banks have got out because they don't think they can make money doing it is there any evidence of local order from past experiences in this country that this can actually be a revenue generator net for the postal service that's what, I mean I have a couple of images back that has been defined by a number of studies of international the one on the bottom of international postal services that a sharp rise in the amount of revenue coming from postal financial services and these various partnerships as you say you've got the infrastructure there already and in these other countries private sector firms often recognize this and see it as a good opportunity to partner so I mean when we say because the buildings are already there being paid for I mean part of that cost is not totally fixed but a lot of it is already there so yesterday there was a lot of evidence I mean a lot of governments in these European cases and especially in Japanese they're really very well and I would add as a piece of evidence the non-traditional financial services sector, the US that caters largely to low income Americans and largely to unbanked and underbanked Americans is a multi-multi-multi-multi-multi-multi-multi-multi-multi-multi something for a better state capital that business in a little bit has seen they have the resources to there they don't have resources to there because they don't have the resources to there thank you for your presentation very interesting and I do think that here in the states we do take a very narrow perspective on what's actually happening in the global landscape so I think it's very interesting information but under PAEA which was enacted in 2006 does currently does the Postal Service have the latitude to provide financial services today or does that require some legislative adjustments well I just the report there on the bottom speaks to that issue and it's working it looks like the Post Office is prevented from engaging in anything other than the Postal Services is that the phrase but some public services like passport and things like that and then there were some rulings or at least one major ruling whether they could continue to offer money orders it's partly grand partly fledged in the ruling because the money orders are things that you can send by mail but of course that's becoming less and less true they're electronic they're obviously not being sent by mail but so the the sense at least in this report that I cited here is that I'm sorry so Post Office may be able to get much more into domestic electronic which you can feel a lot it seems that we are in Congress I mean kind of because it's got to be changed it's got to be modernized I mean there's no other possible system in the first world that has these sort of restrictions and that just can't cover it let's do one more inspection right now Emily are there any examples of this sort of system in North America or South America oh we're close to savings oh yes that's the use of South America yeah I didn't mention the developing world because you know I didn't think anybody would think there was a model system going through the developing world but close to savings is a major form of small savings in a lot of the developing world Brazil is a huge system that's probably the one that people look at most but I think nearly all the South American countries have close to savings and I'm not sure if it's true or not we have reached our reaching out and I want to be respectful of everybody's time I do want to make Shell available for questions afterwards I'm available for questions about efforts and particularly if folks are interested in starting exploring the nitty-gritty of this issue we're available to do that I'd like to thank our sponsors from Congressional savings in ownership caucus and all of you for being here today thank you all so much