Massachusetts senator Elizabeth Warren has been making waves by proposing a number of consumer-friendly changes to the financial system. One of the most interesting changes she suggested recently, in an op-ed published on the Huffington Post, is revamping the Post Office so that it can offer basic banking services — including loans — to the 68 million Americans who have no checking or savings accounts.
One of the places that these consumers turn to in times of need is the pay day loan company. Instead of saddling Americans with the crippling interest rates that can come with pay day loans, Senator Warren wants to the US Postal Service to offer some of these services. Loans could be made at lower rates, and the USPS could also offer other services — such as cash checking — at affordable rates that would help the poor and underserved.
Killing Two Birds With One Stone
Senator Warren points out that many families spend a good chunk of their incomes on services like check cashing, bill pay, and small dollar loans, that are expensive when you don’t have a bank account to help you manage these transactions. However, some of these Americans can’t qualify for banks, or have other reasons for eschewing the traditional banking options many of us take for granted.
Rather than spending so much money on these basic services, Americans could save by performing these transactions at a post office. These Americans end up with more money for things like food, and the USPS can shore up its own balance sheet, which has been struggling.
With this setup, there is a good chance that everyone affected could come out ahead. What do you think? Should basic banking be offered through the post office?