Effects Of Postal Banking

1005 Words 4 Pages
The author’s main thesis of this article is to discuss how the postal banking service was initiated and implemented, how there was a connection between the postal banking service and the effects it had on the savings and loan industry, the financial banking system and the US economy. When discussing the savings and loan industry O’Hara and Easley discuss the inadvertent ramifications the postal banking service had on crippling the saving and loans industry. How the fixed rates were inflexible and how that effected the financial banking system; and when the depression hit, people began to use the postal service as a means of banking instead of using the big financial banking system.
In spite of this postal banking services having an unintentional negative effect of the US economy, I believe that it is important to discuss the pros and cons of this banking system. I will be agreeing on how the banks initially felt threated by the inception of the postal banking services, how the Savings and Loans industry lost profits due to this banking
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There were three main goals of this system, the first one was to not compete with banks, second, it was created to help the small saver, and third it was deigned to make sure that the money did not lose its homegrown background. There was a limit on how much one could invest which was five hundred dollars, but in 1918 that limit went up to two thousand five hundred dollars. To avoid any animosity from the financial banking system there was a two percent rate of interest paid on deposits which was one and a half percent lower than what the big banks were paying out. In my opinion this was a pro and con of the system because the con would be that it initially would not let the postal service bank compete with the big corporations and it was a pro because the system allowed the small depositor to gain interest on their

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