Monday, March 24, 2014

Let the Post Office fight off predatory lenders

One of the biggest unionized workforces in the United States, Post Office employees, may be able to help lift families out of poverty.

Postal workers provide reliable mail service to almost every American. They may also be able to help working families with basic financial services. Lawmakers like Sen. Elizabeth Warren (D-Mass.) want to use the Post Office to help the 68 million Americans who do not have access to basic financial services.

Warren articulates the problems those families face:
Collectively, these households spent about $89 billion in 2012 on interest and fees for payday loans and check cashing. 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.
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. That's more than a full month's income just to try to navigate the basics. The poor pay more, and that's one of the reasons people get trapped at the bottom of the economic ladder.
Warren goes on to propose that the Post Office could generate a badly needed additional revenue stream and fight off lenders that prey on the middle and working class families by offering check cashing, small loans and banking services at reasonable rates.

Warren's proposal could be especially helpful in parts of the country where banking services are hard to access.