Sen. Elizabeth Warren is embracing an idea to fix two of the country’s problems at the same time by allowing the country’s money-losing post offices partner with banks to handle basic services for low-income Americans without bank accounts.
The Office of the Inspector General released a report last week, finding that 68 million Americans – that’s more than a quarter of all households – have no savings or checking accounts. Those Americans handed over nearly $90 billion in interest and fees to (oftentimes predatory) non-banking financial services, like check cashing and payday loans services.
For the average household, that comes out to about $2,412 a year.
“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,” said the Massachusetts Democrat in an op-ed for the Huffington Post. “The poor pay more, and that’s one of the reasons people get trapped at the bottom of the economic ladder.”
That, combined with the U.S. Post Office losing billions of dollars every year, has resulted in the OIG looking into the possibility of post offices offering services like small loans, check cashing, and bill paying to its customers.
“With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” wrote Warren.
The OIG report says customers would be able to cash paper checks and put money onto a postal “card,” which would be used like a debit card.
It is not clear how the plan would play out in D.C., but banks – who may see it as posing a threat to their own services – have vehemently criticized the idea.