Viewpoint: Postal Service banking system possible in U.S. – if past pitfalls avoided
By Richard Grossman and Masami Imai
Depending on who you ask, payday lending is either the market’s way of providing small loans to borrowers who do not have sufficient credit to get them through established and regulated financial institutions, or predatory lending that takes advantage of consumers that have no alternative. If you ask us, it is both, which is why Sen. Kirsten Gillibrand’s (D-N.Y.) proposed Postal Banking Act is so promising.
The law would mandate that the United States Postal Service (USPS) offer low-cost retail banking services through its 30,000 nationwide branches. If properly implemented, this would expand banking access to many low-income and rural families, improving their financial well-being, while also helping to shore up the USPS’s finances.
As of 2015, about 7 percent of U.S. households were “unbanked,” meaning that no one in the household had a checking or savings account. An additional 20 percent of households were “underbanked,” meaning that they relied, at least in part, on payday lenders, check cashing services, pawn shop loans, or other non-traditional sources for financial services.
Photo courtesy of Mandy.