Elizabeth Warren supports U.S. Post Offices becoming banks


WASHINGTON, February 4, 2014 —Would the U.S. Post Office make a better bank than a letter delivery service?

In an op-ed piece in the Huffington Post, Senator Elizabeth Warren (D-Mass.) has supported just such a plan.

The Postmater General proposed last week the Post Office step into an arena that banks have never been interested in: financial services directed specifically at America’s poorer citizens.

The Postal Service ended 2013 with a net loss of $5 billion, marking the seventh consecutive year in which the Postal Service incurred a loss, leading it to search for a long term solution to the organization’s financial difficulties.

The U.S. Post Office says poor Americans who are not served by the traditional banking system spent $89 billion in fees for nontraditional financial services in 2012, such as those offered at Wal-Mart stores and check cashing services.

Two major issues facing the Postmaster General’s proposal: these services are often seen as unsavory and untrustworthy institutions who are taking advantage of the most vulnerable members of American society; and, more important, a 2006 law forbids the Postal Service from offering any non-postal services.

Warren wrote in her op-ed the Postal Service taking on a new banking business could be a solution for everyone. “Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees — about the same amount they spend on food.”

“Families rely on financial services more than ever, but those who need them most — who struggle to make ends meet — too often must contend with sky-high interest rates and tricks and traps buried in the fine print of their loan products.”

“That is why the OIG report is so interesting. If the Postal Service offered basic banking services — nothing fancy, just basic bill paying, check cashing and small dollar loans — then it could provide affordable financial services for underserved families, and, at the same time, shore up its own financial footing.” Warren concluded

The 2006 Postal Accountability and Enhancement Act, requires the Postal Service to  “prefund its future health care benefit payments to retirees for the next 75 years,” a requirement no other agency has, yet receives no tax payer money leaving them perpetually on the verge of bankruptcy.

The Postal Service already participates in some non-postal businesses such as issuing passports and money orders, but will need an act of Congress to go into the banking business.

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  • Persuasive

    This appears to be a fantastic initiative idea. It must, however not be pillaged in future years, if the idea moves to completion, for other political or major interest group benefit. In Italy the idea has worked very well for decades but has come into some resent problems due to political mischief. I see a valuable use for the societal assistance of those less well of, to practice saving (thrift) and to pass along these habits to their younger family members. Our postal employees get a very bad rap, even from those in high political office due to this self-funding of their pensions 75 years into the future. Something that big business does not do and that they have stepped clear away from dumping their bankrupt pension plans onto the federal government for taxpayers to then repair even if at deflated sums for those poor workers who’ve spent a lifetime often trying to put something away. Big business has hoodwinked many of its employees and the American people in these less than ethical avenues to profitability. Applause to Elizabeth Warren for thinking outside the box even if there has been such ideas from which to get solutions from which to further discuss and hopefully execute in a much better way than, say, the ACA.

  • Mark Holcomb

    In the smallest rural communities-like Bickmore, WV this would be a godsend. Why should the elderly and disabled have to drive up to thirty-plus miles to do their banking? Restrict to the outland communities, so it will compete less with banks and federal credit unions.

    • Guest

      Don’t turn them into banks. Can you just imagine government run banks? If you can, just open banks in the DMV too! Have a bank rep visit the local post office once or twice a week. Problem solved.