Elizabeth Warren’s Fight Against Payday Lenders Comes to the Post Office

[eridani]

https://www.thenation.com/article/elizabeth-warrens-fight-against-payday-lenders-comes-to-the-post-office/

Nearly 10 million households qualify as “unbanked,” meaning they don’t have any traditional banking products such as a checking account. Another 25 million are “underbanked,” meaning they have an account but still turn to payday loans or similar products. Together, these two groups comprise nearly a third of all households in the country. The so-called alternative products they rely on—payday loans, prepaid debit cards, check-cashing services—cost them almost $90 billion a year in interest and fees, or an average of about $2,400 per family.

The United States Postal Service would be a much friendlier lender. If the USPS were to offer debit cards, savings accounts, and small-dollar loans, it could save the average underbanked family more than $2,000 a year. Even if just a tenth of the 12 million people who take out payday loans every year instead got a small loan from the post office, they would save more than half a billion dollars.

This notion might sound odd, but it doesn’t take much imagination to see how the post office could get into the business. The USPS already has a large footprint, with more than 30,000 locations across the country, including small towns and rural areas; nearly 40 percent are in places without any bank branches. The post office also offers money orders and prepaid debit cards through American Express: In fact, it sold 97 million money orders in 2014, to about 13 million people.

? We even had a rudimentary postal-banking system in the past. Between 1911 and 1967, the USPS operated a postal savings system that let people make deposits at certain locations. At its peak, more than 4 million people were using it, having deposited a collective $3.4 billion. Plus a number of other countries, from France to New Zealand, offer banking services through their post offices.

[That Guy 888]

1. She has an ally in Senator Sanders

Bernie Sanders's Highly Sensible Plan to Turn Post Offices Into Banks

They're much less crazy than payday-lending services, and the rest of the world agrees.


If you are a low-income person, it is, depending upon where you live, very difficult to find normal banking. Banks don’t want you. And what people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off. And, yes, I think that the postal service, in fact, can play an important role in providing modest types of banking service to folks who need it.

It’s something Sanders alluded to in a 2014 Wall Street Journal op-ed, and it’s not even the craziest idea proposed to save the USPS—a report last year explored the implications of turning post offices into hubs for 3-D printing.

In fact, Sanders’s idea is quite sensible. “Postal banking”—which just means that post offices run savings accounts, cash checks, and perform other basic financial services—is common in most of Asia and Europe, and only about 7 percent of the world’s national postal systems don’t offer some bank-like services. Postal banking is a really good way to reach people who haven’t had access to standard savings accounts. One estimate figures that more than 1 billion people have used post offices for making deposits.

The reason why this would be so useful in the U.S. is that somewhere between 20 and 40 percent of the population has to rely on check-cashing or payday-lending services, which in some places charge usurious rates that send people into spirals of recurring debt. Mehrsa Baradaran, a professor at the University of Georgia School of Law and the author of How the Other Half Banks, touched on the promise of postal banking in a book excerpt published in The Atlantic last week: "The basic idea of modern postal banking is a public bank offering a wide range of transaction services, including financial transactions, remittance, savings accounts, and small lending. These institutions would remain affordable because of economies of scale and because of the existing postal infrastructure in the U.S. Plus, in the absence of shareholders, they would not be driven to seek profits and could sell services at cost."

http://www.theatlantic.com/business/archive/2015/10/bernie-sanders-lets-turn-post-offices-into-banks/411589/

[Ilsa]

2. It's past time to make this happen. nt

[TreasonousBastard]

3. In concept, it's an excellent idea, but...

I haven't heard anything about access. My post office is 6 miles away and not accessible by bus or train. Other areas are worse, with some PO's having been closed.

Yes, no doubt there are areas where PO access is better than banks, but it still needs some more thought. Check cashing places and payday lenders have filled a niche, albeit often cruelly, but how to compete with them with a fairer product is still a little up in the air.

[Proud Public Servant]

5. The perfect is the enemy of the good

A postal banking system -- a revival and expansion of the United States Postal Savings System, which existed from the early 20th century until the late 1960s -- would benefit a massive number of people, the vast majority of whom live in cities, and save the Postal System. There is no reason to further study it or further think it through; implement it, then figure out what else we have to do to make it more inclusive. Go Sen. Warren!

[hueymahl]

6. nailed it.

OP is great, so is this response.

[rhett o rick]

7. It wasn't that many years ago the same argument could be used to justify the mob loan sharks.

While that was frowned upon, many are ok with corporations doing the same thing. There is a slight difference, the mob would hurt you if you failed to pay the vic, now days you just get thrown in jail and have to pay the local government fines.

We should not allow the poor to be preyed upon.

[TreasonousBastard]

14. What argument justifies loan sharking? I simply said...

that the legal sharks out there are filling a need that more legitimate entities aren't. Simply restarting Postal savings may not solve that need.

I've seen bodegas with some interesting financial schemes that seem to be beneficial to the neighborhoods. Sometimes they even bypass Western Union's horrendous charges.

[rhett o rick]

16. "Check cashing places and payday lenders have filled a niche,"

And we need to fix that, but allowing legal loan sharking isn't the way.

[TreasonousBastard]

18. Well, they have filled a niche-- the point is to get something else for that niche...

Crack dealers fill a niche, too, as do prostitutes and bookies.

"Filling a niche" is a statement, not approval.

[rhett o rick]

19. We can put crack dealers into jail but we can't do the same for the pay-day loan sharks, esp

since they are paying graft to their Congressional representatives.

[cstanleytech]

10. The only niche they have filled is that of a legal loan shark and the people are the

fish being fed upon by them.

[TreasonousBastard]

15. That's true, but my point is find an alternative to the neighborhood loand shark...

and Postal Savings may be part of it, but still may not provide full access to the neediest.

[Dustlawyer]

4. My brother past away a couple of weeks ago. For many years before his death he was on Social

Security Disability and lived in a subsidized apartment for the disabled. We cleaned out his apartment and started going through his papers etc., but couldn't find the title to his old truck. What we did find were statements of a 130.00 loan from May 26th which was now $307.00 with interest, AND HE HAD BEEN MAKING PAYMENTS ALREADY!

I had called to see if they had his title, expecting they did. Nope, they did not, the lady told me it was a payday loan. I said that you must take SS disability checks, she happily said yes we do! Since I knew they didn't have the title I told them good luck on collecting!

My brother was never a mental giant and had always been picked on for being slow. He was brain damaged from birth and would have weighed 90 lbs when he got that loan.

Did they feel any guilt when they sucked up his disability check like a vacuum? DWS supports this horrible industry? Whatever happened to Usury laws?

[Scuba]

8. ISP too, please.

[rhett o rick]

9. Won't this put her on the wrong side of Debbie "payday loan" Wasserman-Schultz? nm

[cstanleytech]

11. Schultz is a nothing, she has some sway but in the end the ones

we need to really focus on are all the other politicians.
Get enough of them on board and the days of the payday loan sharks would be over.

[rhett o rick]

12. In her current position she wields a lot of power and I bet Hillary shows her gratitude

by giving Debbie a position in her administration. I hope the Progressive in Congress start speaking out in support of Sen Warren's position on this.

[cstanleytech]

13. I wouldnt object to Hillary giving her a position.

How about US ambassador to Lesotho?

[rhett o rick]

17. I want to see her fight for her seat in Congress against other Democrats, of course. nm