Post Office Banking Could Be the Start of Something Big

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.

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2 Responses

  1. Please see this policy as bad for our Post Office because it has a motive other than stated.  The intent is to blow up the Post Office with fraud and corruption just as the Federal Housing Agency and Federal Student Loans.  Wall Street didn’t want these public agencies competing for business so tying them to public private partnerships blew them up.  That is the goal with this Post Office as bank.

    Remember, the Post Office is fine the way it is ….it has simply had revenue sources outsourced and the ridiculous pre-funding of benefits meant to weaken it.  We want public banks….but neo-liberals are using this idea for bad policy!

    Cindy Walsh

  2. Whats to stop the county banks from becoming crooked like the wall street banks eventually? Most everything the govt has done turns out to be a nightmare. At least in recent times. Filled with corrupt politicians. If there is a way for the banks to create regulations for itself than undermines the safety, they will do it. I am in favor of county banks though. I am obviously concerned that the honesty so far in the county banks has been quite stellar, and precautions should be taken to make sure they don’t “follow the money trail” as so many supposed ethical ventures has not worked in history

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