U.S. News and World Report
About 68 million Americans depend on nonbank financial services, such as check cashing or payday lending, because they have been shut out of traditional banking, writes Sen. Elizabeth Warren (D-Mass.).
Such households often end up paying more for basic financial services. In 2012, the average income for these families was about $25,500; but they spent almost 10 percent of their annual income on interest and fees for nonbank financial services. Fewer banks and credit unions are operating in low-income and rural neighborhoods, and they are concentrating new branches in areas where the median income is greater than $100,000.
Warren believes that using the U.S. Postal Service to provide financial services for underbanked and unbanked consumers is a "win-win" situation. A recent report from the USPS inspector general found the Postal Service already has statutory authority to work with banks and credit unions to provide financial services such as check cashing and small-dollar savings accounts at its branches. Such services could be offered to customers at lower prices than private alternatives. The U.S. Postal Service already operates in low-income and rural communities, and it could provide additional financial services to regain its own financial footing. Warren points out that the Postal Service already has a proven record in providing other financial services, such as international money transfers and domestic money orders.