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Elizabeth Warren Proposes Replacing Payday Lenders With The Post Office
Elizabeth Warren Proposes Replacing Payday Lenders With The Post Office
By Alan Pyke
The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).
“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.
Those companies are among the most predatory actors in the money business. Payday loans with annual interest rates well north of 100 percent suck billions of dollars out of poor communities every year, with the average customer paying $520 to borrow $375. After decades of operating in a regulatory blind spot and ducking state-level reforms, the payday lending business now faces a crackdown from the Consumer Financial Protection Bureau. The threat of new rules for short-term cash loans in general has caused traditional banks to stop offering deposit-advance loans with similar features.
But while ending triple-digit interest rates and fine-print tricks is a good thing for consumers, it doesn’t reduce the demand for those financial services. The USPS could slide into that space and meet that need without preying upon those communities. “Instead of partnering with predatory lenders,” David Dayen writes in The New Republic, “banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly.” America’s post offices are an ideal physical infrastructure for furnishing these services to communities currently neglected by banks. Roughly six in 10 post offices nationwide are in what the USPS report calls “bank deserts” — zip codes with either one or zero bank branches.
- more -
http://thinkprogress.org/economy/2014/02/03/3239261/elizabeth-warren-post-office-financial-services/
By Alan Pyke
The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).
“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.
Those companies are among the most predatory actors in the money business. Payday loans with annual interest rates well north of 100 percent suck billions of dollars out of poor communities every year, with the average customer paying $520 to borrow $375. After decades of operating in a regulatory blind spot and ducking state-level reforms, the payday lending business now faces a crackdown from the Consumer Financial Protection Bureau. The threat of new rules for short-term cash loans in general has caused traditional banks to stop offering deposit-advance loans with similar features.
But while ending triple-digit interest rates and fine-print tricks is a good thing for consumers, it doesn’t reduce the demand for those financial services. The USPS could slide into that space and meet that need without preying upon those communities. “Instead of partnering with predatory lenders,” David Dayen writes in The New Republic, “banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly.” America’s post offices are an ideal physical infrastructure for furnishing these services to communities currently neglected by banks. Roughly six in 10 post offices nationwide are in what the USPS report calls “bank deserts” — zip codes with either one or zero bank branches.
- more -
http://thinkprogress.org/economy/2014/02/03/3239261/elizabeth-warren-post-office-financial-services/
Sen. Elizabeth Warren
Democratic Senator from Massachusetts
Coming to a Post Office Near You: Loans You Can Trust?
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.
<...>
But it doesn't have to be this way. In the same remarkable report this week, the OIG explored the possibility of the USPS offering basic banking services -- bill paying, check cashing, small loans -- to its customers. With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don't have basic banking services because there are almost no banks or bank branches in their neighborhoods.
<...>
This is not a new problem, and policymakers in Washington have long sounded the alarm. Michael Barr -- an assistant secretary of the Treasury under President Obama and law professor at University of Michigan -- has pushed on this issue for years. As Chair of the FDIC, Sheila Bair put in place a Committee on Economic Inclusion to generate ideas for expanding access to lower-cost banking services. (I had the honor of serving as a committee member.) And we've taken some important steps forward. The new Consumer Financial Protection Bureau (CFPB), for example, is a cop on the beat that is putting in place commonsense rules to protect consumers and ensure that payday lenders are held accountable when they break the law.
There has been momentum in the right direction, but there is so much more work to do to make sure that families have access to affordable and fair financial services....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. (The postal services in many other countries, it turns out, have taken steps in this direction and seen their earnings increase dramatically.) The report has provoked a great deal of discussion, and it is worth reading David Dayen's article about it at the New Republic -- "The Post Office Should Just Become a Bank: How Obama can save USPS and ding check-cashing joints."
- more -
http://www.huffingtonpost.com/elizabeth-warren/coming-to-a-post-office-n_b_4709485.html
Democratic Senator from Massachusetts
Coming to a Post Office Near You: Loans You Can Trust?
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.
<...>
But it doesn't have to be this way. In the same remarkable report this week, the OIG explored the possibility of the USPS offering basic banking services -- bill paying, check cashing, small loans -- to its customers. With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don't have basic banking services because there are almost no banks or bank branches in their neighborhoods.
<...>
This is not a new problem, and policymakers in Washington have long sounded the alarm. Michael Barr -- an assistant secretary of the Treasury under President Obama and law professor at University of Michigan -- has pushed on this issue for years. As Chair of the FDIC, Sheila Bair put in place a Committee on Economic Inclusion to generate ideas for expanding access to lower-cost banking services. (I had the honor of serving as a committee member.) And we've taken some important steps forward. The new Consumer Financial Protection Bureau (CFPB), for example, is a cop on the beat that is putting in place commonsense rules to protect consumers and ensure that payday lenders are held accountable when they break the law.
There has been momentum in the right direction, but there is so much more work to do to make sure that families have access to affordable and fair financial services....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. (The postal services in many other countries, it turns out, have taken steps in this direction and seen their earnings increase dramatically.) The report has provoked a great deal of discussion, and it is worth reading David Dayen's article about it at the New Republic -- "The Post Office Should Just Become a Bank: How Obama can save USPS and ding check-cashing joints."
- more -
http://www.huffingtonpost.com/elizabeth-warren/coming-to-a-post-office-n_b_4709485.html
Providing Non-Bank Financial Services for the Underserved
http://www.uspsoig.gov/sites/default/files/document-library-files/2014/rarc-wp-14-007.pdf
47 replies
= new reply since forum marked as read
= new reply since forum marked as read
- I mean, who owns these payday loan/check cashing stores? Hmm? Although it's a great idea. England's been doing it successfully for years.
K&R
She is a genius. Love her. 
line for that! Lines are always so long as it is ... but, yes, it is actually a very good idea. 
I like her more every day.
