It costs a lot to be poor, especially when you want to access your own money.
People without bank accounts pay outrageous fees to cash a paycheck and massive interest rates for small loans.
Banks are not interested in servicing accounts that come with small deposits, and leave the market to payday lenders, who collectively draw billions out of the pockets of the poorest Americans.
New regulations are set to go into effect this year that are designed to end the worst predatory practices, and lobbyists for the industry claim it will kill off their businesses. The hope is that big banks will step in and expand their services to areas that they have ignored in the past. But until they invest in new branch offices, millions of low-income workers would still have no place to cash a check or get credit.
A better solution might be right in front of our eyes. The U.S. Postal Service has retail offices in every community in America and it already provides financial services such as money orders and electronic transfers. It wouldn’t take much to add services like savings accounts, check cashing and debit cards.
Turning the postal service into the bank for people who don’t have banks has been kicking around Washington for a while. It’s a part of Sen. Bernie Sanders’ presidential campaign platform, and it’s a good issue for the fall campaign. It’s a solution to more than one problem and makes a lot of sense.
People who say that the postal service doesn’t belong in banking should take a look at history. Up until 1967, post offices operated as banks, keeping savings accounts and selling savings bonds. The program was created in the William Howard Taft administration and was meant to address the cash hoarding that was rampant in immigrant communities where people did not trust banks.
The program ended in the 1960s because bankers argued it was no longer necessary since deposits in their institutions were insured by the federal government. No one anticipated the banks’ abandonment of poor neighborhoods, and the rise of payday lenders.
The post office could fill that niche much more equitably. It already has the infrastructure and the manpower. It doesn’t need to make profit on the transactions so it can keep its fees low.
It’s time to drive out the predatory lenders and make reasonable financial services available everywhere. It’s time to bring back postal banking.