Massachusetts Senator Elizabeth Warren wants to solve two American problems with one solution — turn the country’s increasingly empty post offices into simple retail banks for low-income citizens without bank accounts.
In an op-ed in the Huffington Post, Warren writes that “about 68 million Americans — more than a quarter of all households — are underserved by the banking system. Collectively, these households spent about $US89 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 $US2,412 per household.”
That means poor Americans spend roughly 10% of their income on basic banking services according to a recent report from the Office of the Inspector General.
Meanwhile, we’ve got an entire infrastructure of post offices and postal employees who are seeing the number letters and packages they deliver dwindle more and more by the day.
The services Warren and the OIG are suggesting aren’t complex — just check cashing, small international money transfers, small loans, reloadable prepaid cards, and bill paying. The OIG insists that the USPS wouldn’t become a bank. In fact, it insists that these services would merely use the USPS’s ubiquitous network to compliment what banks do and go where banks can’t go.
Other countries have already done this, and the OIG says that if even 10% of what underserved Americans pay on interest and fees went to the USPS it would generate $US8.9 billion in new revenue for per year.
Hey, if it works…
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