Photo Caption: Image courtesy ThinkProgress.
May 3, 2018.
The step taken by Sen. Kirsten Gillibrand last week to introduce new legislation that would require every Post Office in the country to provide basic banking services has generated quite a few articles.
The Hill published an excellent opinion article by two economists articulating just how expensive it is to be poor in this country without any banking access: “The average payday loan charges the equivalent of nearly a 400 annual percentage rate (APR).” The authors describe the “banking deserts” that exist in many poor communities and praise the Public Bank model:
“To fully participate in the modern economy, people need access to financial infrastructure — the ability to cash and write checks, send money, pay bills, have access to credit, etc. A public bank, if done well, could address these glaring problem in the current financial services landscape.”
Another article in ThinkProgress makes the point that Gillibrand’s bill ups the stakes while riding on the coat tails of tireless work done for many years by behind-the-scenes advocates such as law professor Mehrsa Baradaran and Katherine Isaac of the Campaign for Postal Banking. Isaac said in response:
“We’re happy to have Sen. Gillibrand’s enthusiasm added to the chorus, but we’re still pushing for the things the postal service can do now.”
The article continues:
“However it might get done, some version of postal banking that includes alternatives to payday loans would be a huge lift for the masses of working poor who are currently one car repair away from a for-profit debt trap. …
“Under Gillibrand’s postal banking bill, USPS would charge $1.12 for the same three-month $400 loan product, Horowitz calculated.”