A Post Office Bank — An Institution that Could Greatly Reduce the Usury of Predatory Lenders

A concept that is very closely related to a Public Bank is that of a Post Office Bank. They are both institutions that can help wrestle power away from the big Wall Street Banks and better support Main Street. Post Office Banks could be part of the transformation of our financial sector by providing services to those individuals in underserved communities for whom banking is not possible. One-in-four American households are “unbanked” — either partially or completely excluded from the current banking system. These individuals generally live in underserved communities that are routinely victimized by predatory payday lenders and where there is almost always a United States Postal Service (USPS) branch.

The idea of Post Office Banking is not a new one. The first Postal Bank was started in Great Britain in 1861. Other nations followed so that today many countries provide banking services through their national post office. These include Japan, Germany, Israel, Brazil, France, Korea, India, and South Africa. Even the USPS provided some banking services from 1910 to 1966.

This concept has more recently been discussed in policy circles in Washington, DC and has been recently put into the spotlight by the USPS Inspector General, who endorsed USPS Banking in a comprehensive white paper on the subject, Providing Non-Bank Financial Services for the Underserved. It has been further endorsed by Senator Elizabeth Warren (D-MA), who states in her Huffington Post Op-Ed, Coming to a Post Office Near You: Loans You Can Trust?,

“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.”

A piece by David Dayen in the New Republic entitled, The Post Office Should Just Become a Bank, summarizes the USPS Inspector General’s white paper and discusses the possibility for creating such a bank by executive order, not requiring action by congress.

Up-to-date information about the status of Postal Banking initiatives can be found at the website of BankACT – http://bankact.org, a nonprofit and nonpartisan advocacy organization that is an outgrowth of and aligned with the Public Banking Institute.

Banking on Colorado supports the concept of a USPS Bank.

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