Thursday, February 6, 2014

Let the Post Office be a bank or whatever the market will bear

As Sen. Elizabeth Warren recently wrote:

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. 

No, this is not just a gimmick to shore up the Post Office's balance sheet, it's about serving underbanked and overcharged Americans, the Little Guys, the ones we're supposed to be worried about (and not the top 20, 10 or 1 percent).  Indeed, as Sen. Warren wrote, "The poor pay more," for basic financial services, which is not only unfair, it's avoidable [emphasis mine]:

According to a report put out this week by the Office of the Inspector General (OIG) of the U.S. Postal Service, about 68 million Americans -- more than a quarter of all households -- have no checking or savings account and are underserved by the banking system. Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees -- about the same amount they spend on food.

Back in 2011, I complained that Congress wouldn't let the USPS offer more innovative services to their clients, including banking.  Here we are in 2014, still discussing the same no-brainer idea that has worked in many other countries, including Japan. In fact the U.S. Postal Service had a banking system from 1910 to 1967 with deposits valued at about $30 billion in today's dollars... until Congress shut it down.  

Congress must stop micro-managing the Post Office and let it compete in new lines of business, while using its inherent advantages, such as convenient locations in thousands of small U.S. towns.  

By Richard (RJ) Eskrow
February 5, 2014 | Huffington Post

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