The US Postal Savings System came into its own during the banking crisis of the early 1930s, when it became the national alternative to a private banking system that people could not trust. Demands increased to expand its services to include affordable loans. Alarmed bankers called it the „Postal Savings Menace“ and warned that it could result in the destruction of the entire private banking system.

But rather than expanding the Postal Savings System, the response of President Franklin Roosevelt was to buttress the private banking system with public guarantees, including FDIC deposit insurance. That put private banks in the enviable position of being able to keep their profits while their losses were covered by the government.