A “Public Option” for Banking – Take on Wall Street

By Take on Wall Street | Originally published in February 2019

Take on Wall Street discusses how options for public banking could benefit low-income families by providing access to high-quality, low-cost financial services they could not otherwise afford.

Regulating abusive and aggressively marketed products is important, but more can be done to broaden access to high-quality, low-cost financial services. As many as 8 million American households don’t have access to basic banking, like a checking account, and 1 in 5 Americans don’t have access to affordable accounts, debit cards, and credit. The big banks no longer offer free checking, and fees for basic banking have skyrocketed.

Worse still, nearly 28% of U.S. households rely on fringe and often predatory financial institutions for banking and credit. Fees to payday lenders and check-cashers cost these households an astonishing $89 billion a year. That’s more than $2,400 per household, or 10% of their average income. These predatory services are concentrated in low-income neighborhoods and communities of color, stripping additional wealth from those who can least afford it.

The U.S. Postal Service (USPS) is well placed to provide such basic banking services. In past decades, the USPS offered savings accounts on a significant scale, and postal systems in countries around the world currently provide financial services to more than a billion consumers.

The Postal Service is geographically well-positioned to reach people with little or no access to retail banking. Increasingly, banks are closing branches, particularly in low-income communities. The USPS has more than 31,000 branches serving every urban, suburban, and rural community in the country. Fifty-nine percent of post offices are in zip codes with either no bank or only one bank.  

The USPS is legally required to serve all Americans, regardless of geography, at uniform price and quality. Its not-for-profit, universal mandate contrasts sharply with exorbitantly-priced financial services that target some vulnerable communities and decline to serve others.

The USPS already offers some very limited financial products, including the sale of money orders, international money transfers to nine countries, and cashing of U.S. Treasury checks. The Postmaster General can take action under the Postal Service’s existing authority to offer more basic banking services, including:

  • Low-cost ATMs with free access for Treasury Direct Express cards, providing Social Security benefits at no cost;
  • Electronic money transfers to other U.S. post offices and more foreign countries  
  • Cashing paychecks; and
  • Bill payment services, allowing the unbanked to make fast, convenient payments for utilities and other essential services.  
  • Pilot projects could explore additional products

Read the full article from Take On Wall Street.

Read Postal Banking Factsheet: https://bit.ly/2vO8GzW

Take on Wall Street is working to build a financial system for working families, white, Black, and brown, not big Wall Street banks. Their mission is to envision a better financial system together, train activists, cultivate political champions, and deliver policy change to restore the financial sector to its rightful place in service of the real economy. 

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