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Comment by jjeaff | Hacker News Reader

In my opinion, the main issue with many financial services today is heavy regulation.

This may be good regulation and necessary, but it makes it very difficult for consumers to do simple things like transferring money and setup accounts. Especially for lower income people who tend to have difficulty getting together all the required identification and documentation.

And it seems that any "innovation" in this regard will be companies attempting to skirt these regulations, only to be eventually reined in when they get popular enough to be used for fraud or other nefarious purposes.

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The solution to this is simple: allow the USPS to offer banking services to the unbanked. This is what other first world countries do, but for political reasons, we don't do it in the US [1]. Financial regulation is not going away, and the issues you see with cryptocurrency make it glaringly obvious why regulations exist in the first place.

That's what's so discouraging about a lot of these issues. They're hacks around political apathy, the chances of success are low (to this day I still use the Standard Treasury and BankSimple outcomes as what happens when you go up against the banking industry).

Why YC doesn't stop skirting the issue and align with political representatives and parties that are congruent with the values they're attempting to push through funding is beyond me. They've already chosen a side (looking for solutions for climate change, animal welfare, support of the arts/creators, sustainable use of planetary resources), embrace it fully. If YC wants to create a legacy, they should aim to obsolete themselves by working towards public policy that removes the risk inherant with becoming an entrepreneur (funding, health insurance, derisking opportunity cost, etc).

[1] https://www.google.com/search?q=usps+banking+services

[1a] https://www.theatlantic.com/business/archive/2015/10/bernie-...

Full disclosure: I work for a financial utility in risk management.

If you try and change law in the United States, any group of 41 senators can stop you, and so could half of the House of Representatives. If you try and replace the members of the House of Representatives, the state governments have already stopped you by gerrymandering the seats. If you try and replace the Senators, you have to wait up to six years and deal with literally everything else that can happen within that timespan.

Let's say you manage to make your way through all of that. Or at least you get close enough that you can actually pass legislation. But you can't get the legislation all the way through without making some small compromises, at which point your elected officials are going to be branded as "neoliberal sellouts" and primaried by extremists. Then you have to start all over again.

That's something that you can try and do. That's also something that literally everyone else tries and does all the time, and at least half of those everyone else are working directly against you.

Or you could solve the problem through some other mechanism. That seems hard, but solving the problem through American politics is really hard, probably harder in a lot of cases. What happened first: did political activists literally lobby local governments to drop taxicab medallions, or did startups circumvent that problem by introducing ridesharing?

We must still be willing to try. While cute to attempt to hack around politics by breaking the law, it is not a long term strategy to affect change at scale.

We can appreciate the inroads Uber and Lyft have made in disrupting transportation networks that will last well after they've both exhausted their runways, but a sustainable system will need to exist in the future that does not rely on VCs burning piles of capital in dumpsters.

A lot of that is going to have to be the higher-order work of getting rid of gerrymandering, fixing campaign finance, improving voter access, and so forth. Even setting aside the philosophical question of whether government is a good way to solve problems, it’s not going to be one in practice if it can’t even function.

> The solution to this is simple: allow the USPS to offer banking services to the unbanked.

Walmart is basically the banking service for the unbanked. Between Bluebird, check cashing, and bill paying, you got a lot of bank functions.

https://www.walmart.com/cp/walmart-money-center/5433

Great observation. Huge fan (shockingly enough) of the work they're doing in that regard, but I would argue that minimal banking functions should be served by the USPS or other governmental organization (in a transparent, accountable way), as it's basic infrastructure necessary to operate in today's economy as a citizen.

What Walmart giveth, Walmart can taketh away at any time.

I trust Walmart because its really in their best interest. If you are in a poor area on the 1st of the month, you know exactly why they would not screw this one up. I grew up with Indian Health Services (and the 3 operations to correct a poorly done root canal) have taught me that a group with a profit interest is probably going to do a better job than a disinterested government agency.

I can understand where you're coming from. I would say that we should be building processes and systems that enable those who are interested in delivering results to achieve roles in positions of power in government, while disempowering empire builders and self-interested parties.

To your anecdote, would you not trust the US Health and Human Services to deliver national healthcare if the team behind Watsi was in charge? Because that is quite literally what they're doing; building a transparent [1] and ruthlessly efficient [2] healthcare management system for third world citizens. Cleary, YC believes they can do it [3]. I also believe it can be done.

[1] https://usenotion.com/watsi/transparency/

[2] https://venturebeat.com/2017/02/07/y-combinator-and-watsi-la...

[3] https://blog.ycombinator.com/yc-research-universal-healthcar...

No, I wouldn't trust US Health and Human Services because the government cannot manage to serve a much smaller population through Indian Health Service without racking up years of tragedy and mismanagement. If they cannot succeed with a smaller group then why would I trust them with a bigger group?

Because a government will always be more accountable than a for profit entity. Everyone gets a vote. Anyone can run for office.

This, unfortunately, is wrong in the USA. The IHS is not staffed by elected officials.

The Native Americans who need our help, and do not receive it from the government IHS, do not have any way of democratically bringing about a more efficient team to run their health services.

The ONLY solution therefore must be a private one.

> The IHS is not staffed by elected officials.

It's accountable to elected officials in Congress and the White House, OTOH, those elected officials are not in any meaningful sense accountable to the population served by IHS.

> The ONLY solution therefore must be a private one.

The structural problems with IHS incentives and accountability don't mean that there is a better private solution, and private services to Native American communities often are poor, too, because private industry isn't really all that interested in solving problems for people that have very little money to pay for the solution.

One of the big problems with US government institutions aimed at the Native American population like IHS is that the population they serve is small and diffuse so that it has basically zero electoral power and can impose no accountability.

The patchworks of demographics, identity, media narrative, alliances, and horse-trading that determine government representation and policy are extremely complex and require immense energy to influence in the smallest of ways.

They are vanishingly unlikely to budge for your pet technocratic issue. Doing surgeries correctly is not, in any meaningful sense, up for a vote, nor is anyone going to win elected office on a doing-surgeries-correctly platform.

Basic societal infrastructure (in this case, universal healthcare) is not a pet technocratic issue. When did we become a first world country in name only?

The irony of such levels of defeatism in a forum that proclaims opportunity is at every turn is astounding. Hope is not a strategy, but chances of success are not zero.

The Indian Health Service exists. The sexy ideological and identitarian battle over whether the federal government should provide health care to Native Americans is already won. But democracy fundamentally lacks an accountability mechanism for pesky little details like the quality of the service provided.

People can bring a class action suit against a private company, but the government is much harder and often impossible to deal with in court. The Department of Interior proved that fairly well with their continued incompetence even in the face of a court system.

> Everyone gets a vote.

Yes, but its a majority game. Heck, look at all the diversity news on HN or the diversity reports by tech giants. See any mention of enrolled members of Native American tribes? See any VC funding to solve the smaller problem (might have been a nice place to test all that basic income stuff)? Heck, Google can block one of the tribal community colleges in Google Voice and no one gives a solitary damn.

No, government is less accountable than any private group. After all, they can get away with doing things like this when questioned: https://www.youtube.com/watch?v=TcgGoAcDXvQ&feature=youtu.be

"People can bring a class action suit against a private company"

Not anymore. I guarantee you that any private company that would try to provide those services would have a "you can't join a class action; you have to go through arbitration" clause.

I pretty sure you can skip arbitration when a company kills people.

That'd be a big ol Citation Needed there, buddy.

Criminal complaints are not subject to arbitration.

Yeah it would be great if the post office was a bank but the check cashing lobby would fight it tooth and nail. Basically any time USPS does anything innovative or makes money, Congress comes along and guts it.

The USPS lost $2.7B last year, even though it has a monopoly on mail. Why anyone would want to give it more responsibility is beyond me.

> The USPS lost $2.7B last year, why anyone would want to give it more responsibility is beyond me.

The loss comes from having to serve literally the entire country by law. A postal service in cities is profitable - a postal service that has to serve even the remotest ditch in the deepest desert of a flyover state with daily mail will always incur loss. And that is what society is for: to bear the cost of providing everyone in the country with affordable mail.

To add banking services to the unbanked (or those who do not trust the megabanks any more, given their historic lack of customer support and historically low image) is something that can very well be used to offset these losses.

Actually, the USPS' primary financial challenge is a 2006 law that instituted unique pension funding requirements. It is otherwise unsubsubsidized.

https://www.21cpw.com/paea-the-most-insane-law-by-congress-e...

So the postal service loses money because it's mandated by law that it has to serve the entire country. But mandating that it has to provide banking services for the entire country is going to save money? Ok.

When you receive a money transfer does your bank send a truck out to your remote mountaintop cabin to drop it in your mailbox?

Providing basic banking services at a post office is not nearly as big a proposition as delivering mail to every address in the country.

Plus banking services are touched less frequently than mail. I get junk mail every day. I don't know the exact logistics of what they're suggesting, but I have a hard time seeing how it could be as expensive as mail delivery.

Why does the USPS need to make money? Why isn't mail (and possibly other services that the USPS could provide) treated like road maintenance or police or whatever else?

(I have a vague idea that this may be a politically loaded question, so I just want to put this disclaimer here to say that I genuinely don't mean for it to be. I don't know much about the past of the USPS and why it is the way it is, so i'm asking)

It's an interesting question. Obviously the money has to come from somewhere. Mail trucks cost money, and no one is going to go out and deliver letters for free. It's easy to say we should just make up the difference with tax reciepts like we are now.

I think it's less a philosophical question -- is mail like roads or police? -- vs a matter of efficiency. It's obviously possible to NOT lose money delivering much more difficult things than paper. FedEx and UPS do it all the time. But they're private businesses who compete with each other (and Amazon and whoever else), so they have to figure it out or they won't be around.

The USPS, meanwhile, doesn't have to compete with anyone (in fact, it's illegal for anyone else to deliver mail) and has no incentive or need to be efficient because they can draw on the US Treasury whenever they need to. It's not that they're bad people, it's just the nature of the incentives and system involved (and also it's run by congress). These same dynamic would be there in banking though, which is why this seems like such a bad idea.

I don't think competition is the answer here, I think it's more similar to the healthcare debate.

Do you make people hard to deliver to have to pay more, or do you "average" out the cost and make everyone pay roughly the same amount?

With a combination of taxes, flat-rate fees, and delivery-distance based costs, I think it's more than possible to make a system where it's not "free" or extremely cheap to send somewhere hard-to-get, but it's also not prohibitively expensive.

And IMO the postal service is riding that line in a way that i'm happy with. I appreciate that I can send a small box across the country for $5, and I can do that whether I live in NYC or in middle-of-nowhere pennsylvania. And I'm more than happy to pay a bit more in taxes to make up for the difference that the flat-rate doesn't cover if it means that lower-income individuals won't need to pay as much to send mail at all.

I know that there are problems with not having competition, but I think mail delivery is along the same lines as other "naturally monopolistic" things like power, water, sewer, etc...

But competition is a problem in healthcare too. Why do you think health care is so expensive? A big factor is no one has to pay for anything out of pocket, and no provider has any incentive to compete on price. In fact, no one knows what the price of anything even is.

It's a hard problem to solve, but it's not impossible, and I'd argue most are better than the healthcare system we have currently in the US.

Yes, "state sanctioned monopolies" can be a problem, and they have their downsides, but I believe for natural monopolies they are the best solution.

Sounds a bit like socialism to me. Next, you'll want to be sharing the costs of healthcare so people who happen to have an accident aren't bankrupted and left in financial stress for life...

"It's obviously possible to NOT lose money delivering much more difficult things than paper. FedEx and UPS do it all the time. But they're private businesses who compete with each other (and Amazon and whoever else), so they have to figure it out or they won't be around."

They also do not have the requirements to serve the entire country, and they do not have the bonkers pension requirements placed on them like the USPS does.

"The USPS, meanwhile, doesn't have to compete with anyone (in fact, it's illegal for anyone else to deliver mail) and has no incentive or need to be efficient because they can draw on the US Treasury whenever they need to. It's not that they're bad people, it's just the nature of the incentives and system involved (and also it's run by congress). These same dynamic would be there in banking though, which is why this seems like such a bad idea."

Money is far from being the sole motivator.

> Why does the USPS need to make money?

Because it's obviously a service of value, and profitability is what tells you that the net value created is positive. If you're spending more on delivering mail than people are willing to pay, you're squandering resources that could be better put to other uses.

> Why isn't mail (and possibly other services that the USPS could provide) treated like road maintenance or police or whatever else?

It should be; all of these are also services that have value, and should be held to the standard of profitability to ensure that the net value created is positive.

"all of these are also services that have value, and should be held to the standard of profitability to ensure that the net value created is positive"

You've just guaranteed that no roads would ever be worked on in poor residential areas.

> You've just guaranteed that no roads would ever be worked on in poor residential areas.

Why not? I said net value created. That doesn't mean each individual road has to show a profit. It means the enterprise as a whole has to show a profit. If improving roads to poor residential areas gives those people more options so they can create wealth and not be poor any more, that's a profit.

> The USPS lost $2.7B last year

The USPS spent $2.7B more than it gained in revenue from sales of stamps etc. The idea that a government agency is supposed to be profitable, and the use of the business term "lost" is appropriate, is a politicized, partisan one. (The extent to which the USA's post isn't really a government agency any more is also extremely politicized and partisan.)

One way to tell that the profitability model isn't appropriate is, what would happen if the USPS did achieve profitability? The USPS's own press release attributes $1.1B of their "loss" to a refusal by regulators to let stamp prices remain at 49 cents, requiring them to go back to 47 cents. How is a "company" that already has extremely below-market prices and can't even get regulators to permit them to keep a 2-cent increase supposed to maintain profitability, should they ever achieve it?

That's the point though. The USPS costs more then it takes in, by a lot. Yeah, it's due to regulators, but they're not going anywhere. That's exactly the argument against having USPS pick up additional responsibilities like banking. The USPS opens a bank branch in every post office, now those same regulators (who can't even agree on increasing the price of a stamp) are pricing loans and opening checking accounts? What reason is there to believe that would end well, especially when it's a whole new line of business for them?

Not complaining, but the fact I'm getting hammered by downvotes on all of these responses is mind boggling to me. I'm surprised how much of the tech world apparently thinks this is a good idea.

Not that I downvoted, but I think the downvotes are because your statement reads as a criticism of the USPS's internal competence and ability to run a successful operation. "The USPS is required to suck by external forces that we will not realistically be able to get rid of" is I think a pretty different position and one I'm more likely to agree with.

Fair enough. Nothing personal against the people of the USPS. I do think those same "external forces we won't realistically be able to get rid that require the USPS to suck" would also make them suck at banking though.

  The USPS spent $2.7B more than it gained in revenue from taxes.

By taxes, did you mean fees (postage and other fees)?

In analyzing USPS financials, bear in mind that they have to pre-fund all of their potential long-term pension and healthcare liabilities[0], unlike other arms of government.

[0] https://www.uspsoig.gov/blog/be-careful-what-you-assume

I did, yes, fixed.

These losses are primarily the fault of congress, not the USPS.

ridiculous things like ePacket: https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-...

combined with lack of control over their business model and having to meet requirements that other businesses don't: https://blog.boomerangapp.com/2016/10/whats-killing-the-post...

Congress isn't going anywhere though, why would their impact on the ability of the USPS's money to make money banking be any different from mail?

Because physical logistics are labor and capital intensive, whereas banking is not. USPS can deliver banking services in a financially sound manner without needing to generate a profit from it.

A story related to regulation that I like to tell people is my experience trying to open a UK bank account when I first moved there. As an EU citizen, I expected the process to be done in jiffy – just walk in to any ol’ bank and ask to open an account. Except, my EU passport and an employment contract that said I’d certainly not be poor and national insurance number and what not apparently meant nothing. No, I had to have a UK address. The apartment hotel I stayed at while trying to find an apartment wouldn’t do either – I needed utility bills you see. (For some reason, utility bills in the UK are basically as good for identification as a passport or drivers license...) In order to get a utility bill of course I had to have a place to live, an apartment or house or what have you. Of course, I couldn’t sign a lease without also setting up a standing order (that’s monthly payments, for anyone as unfamiliar with the term as I was) and of course I couldn’t set up a standing order because to do so I had to have a – you guessed it! – bank account. A catch-22 which means to this day I keep a UK bank account, just to avoid the hassle of trying to set one up should I ever need it again.

Moving there from the US, I am so grateful that someone warned me about this ahead of time and told me to go to Lloyds bank.

I think Transferwise now allows you to sign up for a borderless account that has UK-local bank details.

Can't you have a dual currency bank account (e.g. a pound sterling side and a euro side) from your EU country and then pay from that? Or maybe there's some reason that won't work..

Depends on what employee you got an appointment with. Try the next bank if the first one was an asshole.

You have more than enough documentation.

>In my opinion, the main issue with many financial services today is heavy regulation.

Money (which is the root of finance) is incredibly strong stimulus for humans that evokes all kinds of human vices. Sooner or later, anything that deals with finance and mine will come down to the questions of human nature and morale. And these are tough matters to deal with.

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