The Post Office Could Provide a Public Option for Banking

This proposal has been around for awhile; Elizabeth Warren endorsed the idea a few months ago.  And now legislation has been introduced in Congress by Rep. Cedric Richmond, D-New Orleans, which would allow the U.S. Postal Service to offer basic financial services — check cashing, savings and checking accounts and small loans.  This would be a Godsend for millions of low-income people who don't have checking or savings accounts.  Payday lenders  — America's favorite sleazebags — would become practically irrelevant.  And the U.S. Postal Service would earn back some of the billions of dollars they've lost because of Congress' mandate that all postal employees' retirement benefits must be pre-paid several decades in advance.

Needless to say, the banking industry's congressional prostitutes will never ever agree to such Communist claptrap.  Helping the Post Office?  Helping poor people?  Government bureaucrats meddling in the loan shark industry?

But the good news is, the Postal Service might be able to implement this plan without congressional approval.  It's too bad everything has to be accomplished via executive authority because of our corrupt gridlocked Congress, but there you have it.  When there's a giant blob of shit blocking the highway, you have to take a detour and go around it.

The Postal Service used to offer small savings accounts.  Congress put a stop to this in the 1960s (three guesses why).  But according to the Office of the Inspector General of the Postal Service, the precedent for these banking services has already been established.  Post Offices wouldn't be starting something new; they'd simply be reinstating a service they used to offer.

This will be open to different interpretations, of course.  And with the 2014 midterm elections coming up, what are we waiting for?  Sounds like a campaign issue to me.  

Let's see, which of these themes will resonate more with the public?

A)  Helping the Post Office avoid bankruptcy, and simultaneously saving millions of banking consumers from being ripped off; or

B) Sympathy for those poor payday lenders who might actually have to start working for a living.

Let the soundbites begin.

How to Marginalize Payday Lenders AND Help the Post Office

Senator Elizabeth Warren has endorsed the idea of allowing the U.S. Postal Service to replace a lot of the payday lenders that are monopolizing the poorest neighborhoods.  The Post Office would use its huge already-existing infrastructure to offer debit cards and small loans to millions of low-income workers.  These are the people who don't have enough money to open a bank account and are therefore at the mercy of payday loansharks.

People who don't have a bank account spend about ten percent of their income just to access their own money.  In addition to saving these people billions of dollars, the Postal Service would be adding $9 billion to its own coffers.

The Postal Service would be operating in partnership with banks.  Big banks' reputations are getting more and more damaged (in case they care) by their partnerships with payday lenders.  Banks that work in conjunction with the Postal Service will still have as many customers as they've always had, without the PR disaster caused by their association with payday loansharks.  It's a win win.

Roughly sixty percent of all post offices are located in a bank desert — a zip code that has one or zero bank branches.  These are the exact neighborhoods that are easy pickin's for payday lenders and would be helped by the Post Office's new banking service.

I'm glad Elizabeth Warren is pushing this idea.  She has that unbeatable combination of populism and pragmatism.  No wonder Republicans hate her.

Arizona Cracking Down on Payday Lenders

Finally, some good news about Arizona. This state is a hotbed of rightwing activity. Everyone’s heard of Sheriff Joe “Have You Killed A Swarthy Immigrant Today?” Arpaio. And there’s a rightwing Republican who might unseat John McCain this November because McCain is too liberal. (???)

But Arizona is just about to remove one of our society’s most malignant tumors: the payday loan industry.

Several years ago Arizona established a 36% cap on annual interest rates. Payday lenders were granted a temporary exemption from the law, and that exemption expires this June. Arizona’s payday lenders often charge more than 400% annual interest. (No, that wasn’t a typo.) And now they’re wailing that a 36% cap is so restrictive, they’ll just have to shut down their entire loanshark operation in Arizona. Good fuckin’ riddance.

Checksmart is a nationwide payday lender that operates in eleven states, including Arizona. Make that ten, as of this June. Their CEO, Ted Saunders, sobbed that consumers “are looking for a dog to kick. They want to find a villain. They’ve done a good job of painting a big X on my back.”

Bang!

Arizona won’t be the first state to get rid of payday loansharks. North Carolina — another state you don’t associate with meddling socialist bureaucrats — and the District of Columbia have already done this. Hopefully more states will follow suit.

If the Republicans were still in power, the payday loan industry could have fallen back on the banking industry’s favorite tactic: bribing Congress into deleting all of those pesky state laws. When it comes to state versus federal authority, the Right has two soundbites: “States’ Rights!” and “a patchquilt of state and local regulations.” And whichever soundbite they’re blurting out at the moment, they completely forget about the other one. It never existed.