At the Democratic debate, Bernie Sanders famously suggested that the only way to fix our country was with a political revolution. He suggested that in order to get our country back on track, millions of people would need to take to the streets and demand that the government return to its mission of helping people, not corporations. And by all these measures, one of his ideas would revolutionize the way people interact with our economy: postal banking.
The idea of using post offices to provide banking services is not a new one. In fact, from 1911 to 1967, post offices offered savings accounts. The idea was to get the “money out from under mattresses” and over time, encourage savings and wealth building. Many unbanked or underbanked people already frequent post offices, as the postal service offers money orders at a lower cost than nearly anywhere else.
In the United States, one in five households are underbanked, meaning that while they may have a checking account, they also rely on a network of predatory financial service providers (such as check cashers, payday lenders, auto title lenders, etc) to make ends meet. For Blacks, this number is closer to one in three households, and for Latinos, Native Americans, and Native Hawaiians/Pacific Islanders, one in four families are underbanked. Eager to profit off of this exclusion, alternate financial service providers rake in $103 billion per year in fees and interest at the expense of the most financially vulnerable. Postal banking could change this completely.
One type of predatory financial service that has been in the news lately is the RushCard, Russell Simmons’ self described effort to “empower” black and low-income communities with prepaid debit cards. This week, thousands of users have been locked out of their accounts, told they have no account, or unable to access the wages that they worked for. On top of this, prepaid debit cards such as Rushcard often charge fees for inactivity, activation, adding money manually, or calling customer service, making it incredibly expensive to be poor.
This idea is not only possible, we have done it before. But more importantly, it puts people back in the center of our economy, not the big banks. Postal banking could revolutionize our relationship to our economy for millions of workers, and make our economy a more fair place for everyone.
Mike Leyba is the Director of Communications for United for a Fair Economy and the primary author of State of the Dream 2015: Underbanked and Overcharged.
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