Wednesday, January 06, 2016

Having post offices offer banking services could help USPS and low-income residents, advocates say

If the U.S. Postal Service began offering services such as paycheck cashing, bill payment and free ATMs, it would help revive the Postal Service's dire outlook while also helping low-income residents who rely on high interest lenders, says consumer advocates, financial reform groups, postal labor unions and some leading liberals, such as Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.), Jim Puzzanghera reports for the Los Angeles Times. (Getty images by Joe Raedle)

Sanders said on an appearance in October on ABC's Jimmy Kimmel Live, "We have millions and millions of low-income people who have to go to these payday lenders and pay outrageous interest rates. They're getting ripped off right and left. We can have our Postal Service provide modest banking to low-income people where they can cash their checks and they can do banking. I think it will help the post office and it will help millions of low-income people."

Puzzanghera writes, "The Postal Service's inspector general's office agrees. It estimates that expanding financial services beyond the current limited offerings, which include money orders and international funds transfers, could pump $8.9 billion a year into the financially struggling agency." The American Postal Workers Union is also on board, forming a coalition, the Campaign for Postal Banking, which garnered 150,000 signatures for a December petition urging USPS to expand its financial offerings. (Times graphic)
About 9.6 million U.S. households in 2013 did not have anyone with a bank account, according to a Federal Deposit Insurance Corp., Puzzanghera writes. "An additional 24.8 million households had accounts but also used alternative financial services, such as payday loans." USPS, which hasn't ruled out the idea of expanded banking services, said in a statement, "While we currently provide our customers with certain financial services, including money orders, electronic funds transfers and cashing of U.S. Treasury checks, our core function is not banking."

Having post offices serve as banks isn't a far-fetched idea, Puzzanghera writes. Post offices in Britain, France, China and Japan, also serve as banks, and from 1911 to 1967 the United States Postal Savings System "offered accounts with annual interest capped at 2 percent, to reduce competition with commercial banks." (Read more)

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