A Postal Saving System. If the U.S. Postal Service began offering some limited banking services, it would a huge win for everyone.
One of the saddest things about today’s GOP is that it spends so much time trying to destroy things and people, they don’t see, or don’t care, about the good they could be doing. This is especially true when it comes to one of the true fixtures of Americana…the United States Postal Service.
Another sad fact in America today is that it’s very expensive being poor. One of the most obvious ways that this truth manifests is illustrated by what millions of Americans have to pay just to make sure their bills are paid.
When you’re poor, time and money interlace in ways that people who aren’t poor never have to worry about and therefore never think about. But when your income and your expenses are the same, or almost the same, you have to worry about timing constantly. For instance, if you’re not getting paid for another week, but you have a utility bill that is due in a couple days or you get your electricity turned off, but you have to set aside enough for food and gas for your family as well, how the hell would you handle that type of situation? It’s a question that millions of hard-working Americans have to ask, and somehow answer, evry single day.
Assuming I even have a checking account that charges me a monthly fee that I cannot afford, if I write my rent check on the same day as I get my paycheck, will the paycheck clear before the rent check I wrote? If not, it could cost me untold amount of money in returned check charges, or worse, getting evicted or having the power cut off.
One of the only available ways for paycheck-to-paycheck living Americans to avoid these types of catastrophic alternatives is to go to one of the payday lenders and check-cashing operations you can find in every poor neighborhood. And since those payday lenders know their customers have no other options, they make them pay through the nose. As an analysis by the Consumer Financial Protection Bureau showed, “Fees at storefront payday lenders generally range from $10 to $20 per $100, though loans with higher fees are possible…A fee of $15 per $100 is quite common for a storefront payday loan, and would yield an APR of 391% on a typical 14-day loan.” The median interest rate for the loans they examined is a contemptible 322%.
As sympathetic liberals, we want to do something about this inexcusable abuse of the poor, but what are our options? One solution would be tighter regulation of payday lenders, limiting their usurious interest rates and requiring them to offer reasonable terms to their customers. In fact, Colorado —as shown here(.pdf)–successfully passed requirements like that a few years ago, and they’ve succeeded in reducing the amount of misery payday lenders can impose upon the state’s most vulnerable citizens.
As admirable as that is, there’s a much better option. There’s an existing organization that has thousands of locations around the country, already performs some limited financial transactions—like selling money orders–and is desperate for new sources of revenue because the GOP wants to put them out of business to benefit ALEC members and major lobbyist/donors.
It’s U.S. Postal Service. If they began offering some limited banking services, it would a huge win for everyone—poor Americans would get access to banking without crippling interest rates, and the USPS would make some much-needed funds since the GOP has crippled them with outrageous requirements for funding their pension plan 75 YEARS into the future even though they are a non-profit, non-taxpayer-funded quasi-governmental organization.
Consider the scale of the problem. According to a report from the Postal Service’s Inspector General, Americans without access to full banking services paid $89 billion in fees and interest in 2012 on the substitutes they had no choice but to use. As many as a quarter of Americans are partially or completely outside the banking system, which makes participation in ordinary economic activities either impossible or incredibly costly when they’re forced to turn to payday lenders who impossibly strain their already paltry resources. That adds up to an average of $2,412 per household per year, or 10 percent of their entire income.
As Elizabeth Warren wrote in an endorsement of postal banking, “Think about that: about 10 percent of a family’s income just to manage getting checks cashed, bills paid, and, sometimes, a short-term loan to tide them over. That’s more than a full month’s income just to try to navigate the basics.”
Post offices are already located in thousands of neighborhoods where there are no bank branches, and they’ve done banking before (for decades in the middle of the 20th century, the postal service actually offered savings accounts). In a country where cash transactions are in decline, the Postal Service could offer a range of services, like a prepaid debit card for people who don’t have access to credit, small loans, online payments, and bank check cashing. The key is that because of the USPS’s size, it would be able to charge affordable fees and interest, and still make a considerable profit.
Senator Warren referred to this as a “public option” for banking, which is an accurate description, but makes it more likely that Republicans will recoil in disgust as they catch the scent of the dreaded Obamacare comparison to the proposal. But the big banks—the ones with all the power in Washington—should be perfectly fine with it, since they’re not interested in these customers anyway. Of course the cannibalistic payday lenders aren’t going to like it at all; they damn sure don’t want their customers to have choices since their business model is premised on exploiting those who have run out of choices. They’ll moan that competition will destroy jobs, and to some small degree, it will, which ironically is also the foundation of capitalism, not predatory monopolies. If some payday lenders and check-cashers are driven out of business, there are clerks who will, no doubt, have to look for work. But hell, maybe they might apply at the post office, which would have a lot more customers to serve. So much for the typical circular logic of the conservative “patriots” in this country.
As for the predatory lenders and check-cashers, they don’t deserve a single ounce of sympathy. They’re in the business of exploiting the poor, with fees and interest rates that would embarrass a mafia loan shark. Competition from the Postal Service would force them to change their products to make them more attractive, or go out of business. The market would speak. Wow, capitalism.
If Democrats are looking for an issue to advance their focus on inequality and opportunity, this is a perfect opportunity to provide equal access, provide an affordable, fair service, while saving an American institution.
As an added lagniappe, if Republicans decide to oppose it, they’d be forced to defend payday lenders, who are about as unsympathetic a group of characters as one can imagine. And maybe Republicans could be shamed into supporting postal banking(but I doubt it—it makes too much sense).
It doesn’t require spending a dime of public money, nobody would be getting a handout, and it would enhance the equality of opportunity they claim to believe in.
Wait. No, there’s no way this GOP would ever support something as fair and advantageous to the country, a fixture of Americana, and as sensible as that. It’s you or nobody Democrats.
Harvey A. Gold