DANA CHASIN | Postal Banking's Promise (and Pitfalls)

Postal Savings Certificate from FDR Days (1941). Last month, Sen. Kirsten Gillibrand introduced S. 2755, the Postal Banking Act.   The bill would establish retail banking services at every U.S. post office and authorize the U.S. Postal Service (USPS) to offer checking and savings accounts, small-dollar loans, debit cards, cash withdrawals and money transfer services in each of its roughly 30,000 offices. – Dana Chasin's Update 275, Guest-Posted by Permission. In 1910, President William Howard Taft introduced a postal-savings system for new immigrants and the poor that lasted until 1967. The need for postal banking has been revived by several recent events. The USPS Inspector General (IG) published a report in 2014 in response to the USPS  $2.7 billion deficit, describing how the USPS could implement postal banking policies to address the agency's funding crisis. Postal banking could generate $9 billion profit.  Sen. Elizabeth Warren has been a long time advocate of postal banking since this IG  report and lauded many of the benefits of postal banking. Sen. Bernie Sanders brought postal banking back to the forefront with Sen. Warren during the 2016 primary campaign. The endorsements by these progressive stars in the Senate led to strong popular support of the idea, but neither Senator introduced legislation. S. 2755 is the first legislative step  since 2014. Benefit 1. Serving lower income and rural communities Because of a lack of access to high-quality financial institutions, many Americans take out high interest, high-cost alternative forms of credit, costing them nearly $100 billion a year. The average underserved household pays creditors 10 percent ($2,412) of their gross income in fees and interest. Postal banking would allow more than 80 million lower-income Americans without bank accounts to access essential financial tools and be safeguarded from predatory lenders. The USPS’s 30,000 office locations would house the retail arm of the bank because they are located in every community. These locations exist in banking deserts. 38 percent are in zip codes with zero banks and 21 percent are in zip codes with only one bank branch. Providing access will help Americans generate savings, wealth and credit, while bringing millions of households into the banking system. http://www.apwu.org/issues/postal-banking Benefit 2. Eliminating the USPS funding crisis President Trump recently gave a speech blaming Amazon for the USPS funding crisis. Nevertheless, Congress is the entity most responsible for the funding crisis facing the USPS. This funding crisis has plagued the USPS since the Bush administration passed the Postal Accountability and Enhancement Act of 2006 (PAEA). The USPS has reported losses every year since 2007, losing $2.7 billion in 2017 alone. This can be attributed to the provision in PAEA that requires the Postal Service to prefund its retirees' health benefits up to 2056. Costing $5 billion per year, this is a requirement that no other entity, private or public, has to make. According to the 2014 IG’s report, postal banking would generate $9 billion in profit annually, effectively eliminating the funding crisis the USPS faces. Benefit 3. Reducing the Need for Payday Lending The main focus of S. 2755 is to fight payday lending. S. 2755 would implement smaller short term loans as a public option. 12 million people spend a total of $7 billion a year on short term, smaller loans known as payday loans. These loans average $375 initially with an additional $520 (138%) in fees and interest. Payday lenders have been known to charge interest rates in excess of 300 percent. The USPS has estimated that they could provide the same loan for less than 30 percent in interest rates. S. 2755 would set the interest rates around 10 percent. Payday lending may be a trickier legislative fix than the first two benefits provided by the bill. There would be underwriting issues that would have to be solved and the interest rate would have to be debated. Implementing small dollar loans into postal banking, however, would decrease predatory payday lending and increase the number of low income Americans who have access to loans they can pay back, improving credit scores. Benefit 4. Expanding Access to Financial Institutions  S. 2755 would assist millions outside of the banking system who are vulnerable to predatory lenders and other risks, especially those living in rural areas. Many of these people have been denied access to financial institutions simply because of their location. Although access to financial institutions has not been regarded as a fundamental right in the past, this bill attempts to frame it that way and poses the question: Why haven’t we regarded it that way before? And why isn’t access to financial institutions a fundamental right? Why the Idea Hasn’t Been Taken up It should come as no surprise there are opponents to incorporating financial services into USPS operations. The Citizens Against Government Waste has been vocal, publishing a letter arguing the Postal Service should not be trusted to manage money, pointing to it surpassing its statutory debt limit and $120 billion unfunded liability. Anti-government conservatives in the Republican Party are unlikely to warm up to an idea like S. 2755 anytime soon. The bill is something to watch if the Democrats continue to regain power as the midterm elections proceed..

ECONOMIC IMPACT OF 9/11 | Health Effects and the Zadroga Act

The Destruction of the Twin Towers Resulted in
Injuries that Took Time to Reveal Themselves.

You probably know that in contrast with prior wars, the continuing war in the Middle East is creating relatively many more injured soldiers. The medical and human costs of their injuries have been high.

The health effects of the attacks on the two World Trade Center Towers seemed more like earlier wars. Three thousand people died, and few people reported to the hospitals with visible injuries. Those who were burned or buried by the Towers, including many NYPD and NYFD rescuers, mostly were killed in seconds or minutes. 

The hospitals were all standing by after the 9/11 attacks, but they had little to do compared with expectations. Few injured people survived to take to the hospitals. 

In fact, the rescuers did suffer illnesses and injuries, but in most cases they took months to show themselves.

I am interested in this subject because in the aftermath of both the 1993 and 2001 attacks on the World Trade Center, as Chief Economist for the New York City Comptroller, I was asked to assess the economic damage caused by the attacks. I maintained then, and still believe, that there would be a long tail to the indirect economic effects of the attacks. This would be consistent with the impact of recent wars in the Middle East on the American military.

The Rousmaniere Study

My friend Peter F. Rousmaniere (pfr@rousmaniere.com), a risk-management professional who writes frequently on occupational risks, studied the problems of the surviving World Trade Center workers and rescuers. He tallied the problems they faced in seeking compensation for illnesses they contracted that they believe are attributable to the conditions under which they worked at the WTC site.

Rousmaniere's study was published in 2007 as four award-winning articles, under the title "Up in Smoke", in Risk & Insurance Magazine, a leading business publication. The articles identified three independent failures in handling compensation:

1. Safety Enforcement at Ground Zero Was Poor. Enforcement of safety was well below recognized standards, even after making allowance for the scale of the challenge. It was long after September 2001 before officials formalized even a basic safety plan.

2. No One Monitored Workers' Health. Even though it was well known that rescue workers were vulnerable to slowly emerging diseases, their health and exposure was not monitored – by employers, insurers or the City of New York. This failure greatly increased the uncertainty today about the health status of tens of thousands of workers. It is axiomatic that workers exposed to high levels of toxic materials should be monitored regularly for their health status. The only workers who were monitored carefully were New York City firefighters. Tens of thousands of workers were allowed into ground zero in September 2001 and the weeks following without any check on their existing health status, which makes it difficult to do a before-and-after analysis. There was an inadequate attempt to check up on them soon afterwards. Confusion today about the actual health status and prognosis of these workers can be directly linked to the absence of medical surveillance from the start.

3. The Workers Compensation System Collapsed. The State system was inadequate as a provider of medical and disability support, which inflamed demands for support from the Federal Government and through judicial awards. The workers compensation system of New York was created in part out of reaction to the 1911 Triangle Shirtwaist fire. Since then, the system has restricted access to persons who acquire diseases at work, such as lung conditions and post-traumatic stress disorders. Substantial numbers of World Trade Center workers have symptoms of these diseases. Workers compensation law is expressly designed to frustrate claims arising from disasters except from those whose full-time work is emergency response. Not until 2006 was the law amended to give these workers fairer access to benefits.

Rousmaniere's Proposals

Rousmaniere drew several lessons from his study of the handling of worker compensation for World Trade Center workers, and made three proposals:

1. Define Who Is in Charge of Disaster Sites. In advance of emergencies, a plan should identify organizations and leaders who have the resources, knowledge and training to carry out the response. New York City in 2001 prided itself on its readiness for emergencies. But its expensive emergency center was in the World Trade Center itself and was destroyed. It missed basic steps. The Federal Government responded slowly and inadequately. If a professional New York City failed, what hope do other cities have of responding on their own?

2. Install a Federal Medical Monitoring System. The system should take in all workers responding to emergencies.

3. Create a Federal Program to Compensate Disaster Workers.  Legal barriers to benefits from the state workers compensation systems exist in most states.

Rousmaniere concluded that in the absence of these actions, the price in death and disability among workers responding to a pandemic in the future may be high. Workers might otherwise not respond in future with the dedication that they showed after 9/11.

The Zadroga Act

Senator Bob Menendez and Congresswoman Carolyn Maloney initially co-sponsored the bill that became the The James Zadroga 9/11 Health and Compensation Act. The bill failed to pass in 2006, but a modified version (after Rousmaniere's articles were published) passed both houses in 2010 and was signed by President Barack Obama at the beginning of 2011.

The Zadroga Act provides both health monitoring and financial aid to first responders, volunteers, and survivors of the September 11 attacks. It is named after James Zadroga, a New York Police Department officer whose death was linked to exposures from the World Trade Center disaster.

The law funds and establishes a health program to provide medical treatment for responders and survivors who experienced or may experience health complications related to the 9/11 terrorist attacks.

A reauthorization bill, sponsored by Senator Kirsten Gillibrand and Congresswoman Carolyn Maloney, passed in 2015, with coverage extended to 2090. In 2016 the first compensation was paid under the Zadroga Act for World Trade Center emergency workers.

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