Richard (RJ) Eskow • Huffington Post • February 6, 2014
It seems like an idea whose time has come. With one in four American households partially or entirely excluded from the current banking system, and with the U.S. Post Office in search of additional revenue, why not use the postal system to offer banking services to lower-income households?
In fact, this is an idea whose time has already come, more than once. Many nations — among them Great Britain, Japan, Germany, Israel, and Brazil — provide or have provided some form of postal banking services. So did the United States, until 1966.
It’s hardly a radical idea. The U.S. system was voted into law in 1910, during the presidency of William Howard Taft. In any case, a better way to describe it would be as a beginning.
What better way to start a much-needed transformation of our financial sector than by providing services to those communities the financial industry refers to as the “unbanked”? Right now those communities are routinely victimized by predatory payday lenders. As we first reported in 2010,
“Studies have shown that payday lenders disproportionately exploit minority neighborhoods with loans that are issued at an average annual interest rate of 455%. The average number of loan each borrower takes out is nine per year, according to one study, as these high rates lead to a cycle of indebtedness.”
Sen. Elizabeth Warren has endorsed the postal-banking concept, which David Dayen describes in more detail here. As Sen. Warren wrote recently, “if the Postal Service offered basic banking services — nothing fancy, just basic bill paying, check cashing and small-dollar loans — then it could provide affordable financial services for underserved families, and, at the same time, shore up its own financial footing.”
The report that stimulated all this new discussion was written by the Post Office’s Inspector General, and it makes a compelling case.
Read the entire article here.