Elizabeth Warren Backs Proposal to Make the USPS a ‘Public Option’ for Payday Lending
Post Office branches could replace payday lenders under a proposal endorsed by Sen. Elizabeth Warren (D-MA).
The Office of the Inspector General reported last week that 68 million Americans — more than one-fourth of all households - have no checking or savings account and spent about $89 billion in 2012 on interest and fees on non-bank financial services.
Those households spend about $2,412 a year on these fees - or roughly the same amount they spend on food, Warren noted in a column posted Saturday at The Huffington Post.
“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,” Warren wrote. “That’s more than a full month’s income just to try to navigate the basics.”
Warren said that same OIG report examined the possibility of the U.S. Postal Service offering some basic banking services, including bill payment, check cashing or small loans.
Under the proposal, which has been discussed in public policy circles for years, USPS would form partnerships with banks on a public option, with no shareholder demands, to offer financial services at post office branches to the most economically vulnerable Americans.
The inspector general’s report suggests that customers could cash paper checks at the Post Office and deposit the money onto a “postal card” that could be used like a debit card to pay for purchases or withdraw cash at ATM.
The report also suggested that USPS could offer interest-bearing savings accounts and small loans as a less-costly alternative to payday lending.
“Families rely on financial services more than ever, but those who need them most — who struggle to make ends meet — too often must contend with sky-high interest rates and tricks and traps buried in the fine print of their loan products,” Warren argued.