Are New Payday Loan Reforms Meaningful? Is Postal Banking a Solution?

The radio program “Marketplace” reports that on “Thursday, the Consumer Financial Protection Bureau (CFPB) is set to release new rules to crack down on payday lenders.” The segment cites a trade association representative, as well as an analyst from the Cato Institute arguing that people in need of short term loans “will likely be out of luck under the new rules.”

MATT STANNARD, matt@commonomicsusa.org,@commonomicsusa Policy director at Commonomics USA and a member of the Public Banking Institute‘s board of directors, Stannard said today: “The new rules won’t help ordinary Americans. They ‘permit’ rather than mandate more flexible options for borrowers, which the lenders will be under no obligation to make widely available.

“The CFPB’s approach seems to be more concerned with getting tough on borrowers rather than lenders. Poor people don’t need more discipline. They need access to credit and inexpensive financial services. The rules will make it harder for people to access the short-term cash they need to get through tough spots at a time when wages are low, partial employment has replaced full employment, and being poor is expensive. Over 60 percent of Americans currently lack the financial security to survive a $500 emergency. And, of course, if the CFPB really did get tough on lenders, they could simply stop making short-term loans available altogether. That tells me that a regulated private sector isn’t the appropriate way to solve this problem.

1024px-Mineola_post_office“In fact, there is a better alternative: financial services made available through the United States Post Office. Postal banks could offer short-term cash advances at extremely low interest. They could offer other low-cost financial services currently unavailable to tens of millions of Americans who live in ‘banking deserts.’ And we already know that these banks work. The USPS had a successful bank system from 1911-1967. Many other countries have either public postal banking systems or public-private hybrids, all dedicated to provided low-cost financial services to working people.

“Non-profit community lending organizations are another good alternative, but those will require capitalization from local governments or philanthropic organizations.”

Stannard’s recent pieces include: “How Payday Lenders Are Beating Back Reform in Alabama,” “In Oakland, Replacing Predatory Lenders with Community Finance,” “Postal Banks Are People’s Banks: 6 Things You Need to know about Postal Banking.”

ACORN Canada and CUPW Come Together to Replace Predatory Lending with Postal Banking

HomeOTTAWA, ONTARIO–(Marketwired – May 2, 2016) – On Thursday May 5 The Association of Community Organizations for Reform Now (ACORN) and the Canadian Union of Postal Workers are coming together to call on the Federal government to bring back postal banking and ensure that fair banking is a reality for low and moderate income Canadians.

A Fair Banking campaign backgrounder (clink link to view) recently released by ACORN Canada shows it’s expensive to be poor in Canada. As mainstream banks leave lower income communities and deny its residents products and services to meet their needs, lower income Canadians are forced to depend on the predatory fringe financial sector that take their place.

“Payday lenders have moved in and filled the void left by banks in many communities, and people are being driven to payday lenders and installment loans when banks deny them basic banking services like overdraft protection, lines of credit and hold-free accounts,” says ACORN Canada spokesperson Donna Borden. “As a result, predatory lenders are the only option for many people living pay-cheque to pay-cheque when their car breaks down or hours are cut.”

On Thursday May 5, ACORN and CUPW members will be holding a National Day of Action with rallies planned in Halifax, Montreal, Ottawa, Toronto, and Vancouver to say that low-income earners need a postal bank as an alternative to payday lenders.

“People need an alternative to payday lenders, somewhere they can go and not be gouged,” said Mike Palecek, National President of the Canadian Union of Postal Workers. “A postal bank could be that alternative.”

CUPW and ACORN are calling on the government review of Canada Post to recommend the addition of financial and banking services at Canada Post, or at a minimum, a task force to determine how to deliver new financial and banking services through our postal service.

Never mind banking- Finland’s postal workers will mow your lawn

From the BBC:

Finland’s postal service will be doing more than just delivering letters and parcels this summer – its workers will be mowing lawns, too.

The state-owned Posti company is offering a weekly grass cutting service, with customers able to choose either 30 minutes or 60 minutes of lawn-mowing time, the national broadcaster YLE reports.

It will only be available on Tuesdays, though, as the volume of post tends to be lighter than on other days, and customers will have to provide their own lawnmower. They’ll also have to be willing to pay 65 euros a month for the half-hour sessions.

Read more: Finland’s postal workers to mow lawns – BBC News

OIG Report Paints Bright Future for Postal Banking

From the American Postal Workers Union:
Clipboard0105/21/2015 – A report by the USPS Office of Inspector General (OIG) released May 21 outlines the next steps for implementing postal banking, in which post offices would offer basic financial services – providing affordable banking transactions to every zip code in the US, while strengthening the Postal Service.

The May 21 report titled, “The Road Ahead for Postal Financial Services,” states that expanding and enhancing existing financial services such as money orders, international money transfers, check cashing and bill payments could be accomplished without an act of Congress.

According to the OIG’s “conservative estimate,” this expansion could bring the Postal Service $1.1 billion in annual revenue within five years while serving  68 million Americans who either who don’t have bank accounts or who “rely on expensive services like payday lending and check cashing.” Some refer to these predatory businesses as “alternative financial services;” APWU President Mark Dimondstein calls them “legal loan sharks.”

While highlighting the impact postal banking would have on the financial health of the Postal Service, the OIG also recommends that the USPS focus on the affordability of the services it could provide.

Among the expanded offerings, post offices “could provide ATMs where recipients of government benefits could withdraw funds without paying a fee,” the report says.

Dimondstein praised the idea.  “It’s a no-brainer,” he said. “The Inspector General’s report confirms that the Postal Service can act now to provide consumers with affordable financial services while strengthening our trusted national treasure, the public Postal Service.

“We look forward to the day when people can get their checks cashed by their trusted neighborhood window clerk,” he said.

The APWU is a member of the Campaign for Postal Banking, a coalition of consumer, worker, financial reform, economic justice, community, civic, and faith-based groups that is organizing support for the concept. For more information, visit www.CampaignForPostalBanking.org.

Source: OIG Report Paints Bright Future for Postal Banking | APWU

NALC statement on OIG’s report regarding USPS financial services

The U.S. Postal Service’s Office of Inspector General (OIG) issued a report today on “The Road Ahead for Postal Financial Services.” Below is a statement from Fredric Rolando, president of the National Association of Letter Carriers:

NALC-LOGOThe OIG’s report contains interesting observations and recommendations on ways the Postal Service can begin to serve the needs of 68 million adults in this country who have either no access or only limited access to basic financial services.

Of particular interest are services that the Postal Service could immediately pursue since it already has the authority to provide such services as money orders, post-office-to-post-office money transfers, bill payment, check cashing, international remittances and automatic teller machine (ATM) access. These basic services would give a much-needed option to those with no alternative available in their communities.

Because post offices are located everywhere—urban centers, suburbs and rural America; not simply located according to profit models—they are a ready-made network for people to come to, to obtain affordable financial services administered by highly trained, experienced and trusted public servants. This infrastructure includes more than 30,000 post offices and is the largest, best-distributed physical network in the country.

This model has been successful in many other countries and has the potential, according to the OIG, to generate at least $1.1 billion of revenue annually, which would allow the Postal Service to continue its innovative efforts.

The OIG’s recommendations are a good place to start, and we urge the Postal Service to take steps to immediately pursue these opportunities to fill the unmet needs of those in underserved communities.

Source: NALC statement on OIG’s report regarding USPS financial services | National Association of Letter Carriers AFL-CIO

NALC joins postal banking coalition

NALC-LOGONALC President Fredric Rolando has announced that the union has joined a new coalition to explore ways the U.S. Postal Service could provide affordable financial services to the tens of millions of Americans who lack access to such services.

The coalition, the Campaign for Postal Banking, is made up of consumer advocates, community groups, worker representatives, faith-based groups and civil rights organizations.

“As we celebrate the birthday of the Rev. Dr. Martin Luther King Jr. today, we honor the memory of a great friend of the American labor movement,” Rolando said. “But it’s also an opportunity for us to reflect on the fact that millions of our customers—notably those in predominantly African-American and Latino communities—do not have access to affordable financial services.”

According to the latest Federal Deposit Insurance Corporation (FDIC) “National Survey of Unbanked and Underbanked,” 28 percent of U.S. households—or nearly 100 million people—are underserved by currently available banking options. This percentage is even higher for African-American households (54 percent) and Latino households (46 percent).

“The Postal Service already provides several affordable financial services,” Rolando noted, such as money orders, Treasury check cashing and international electronic money transfers. “Not only do we as letter carriers touch every community in America, six days a week—and sometimes seven—but every community in America has at least one post office nearby, something that can’t be said about banks and other similar financial institutions.

“This coalition will help us explore opportunities to close this gap and help move millions of Americans away from payday lenders and other predatory alternative financial services,” the president said.

The Campaign for Postal Banking coalition has begun to investigate the legislative, legal and financial considerations involved in providing additional affordable financial services at post offices.

“Our nationwide post office network, combined with its highly skilled and dedicated workforce, could help solve this serious public policy problem,” Rolando said.

An overview of the problem and discussion about the potential for postal banking is included in a new report from a member of the coalition, United for A Fair Economy, titled State of the Dream 2015, Underbanked and Overcharged.

via NALC joins postal banking coalition | National Association of Letter Carriers AFL-CIO.

US Mayors vote for postal banking, financial services; “trillion dollar issue,” says BankACT president.

DALLAS, TEXAS — At its June 20-23, 2014 annual meeting, the US Conference of Mayors (USCM) adopted a pair of resolutions endorsing postal banking, co-signed by eight mayors from six states. Their goal is to bring $1 trillion of job-creating economic stimulus primarily to low-income neighborhoods, over the next decade, at zero cost to taxpayers.

Post office-based financial services will generate sales tax revenues of as much as $3 billion a year, benefiting cities of the more than 200 mayors attending the USCM meeting, according to BankACT, a nonprofit advocacy group. Continue reading

Postal Banking to the rescue in both Canada and the U.S.

OTTAWA, June 4, 2014 /CNW/ – A study of banks and payday lending companies in the United States and Canada shows a real need for a postal bank exists, especially in areas where post offices abound but few banks offer their services. The paper, presented at the 22nd Rutgers University Conference on Postal and Delivery Economics, argues that restoring postal banking in the 21st century would help support post offices while offering much-needed financial services and jobs. Continue reading

Who Killed Canada Post's Banking Study?

Canada-Post-OTTAWA, Feb. 10, 2014 /CNW/ – Canada Post Corporation (CPC) conducted a secret four-year study on postal banking, which seems to indicate that getting into financial services would be “a win-win strategy” and a “proven money-maker” for the corporation. CPC’s research study was stopped cold in the fall of 2013, just before the post office announced a five-point plan of massive cuts and steep rate hikes.

Blacklock’s Reporter obtained the internal report, including a management report entitled Banking: A Proven Diversification Strategy, through an Access to Information request. 701 of its 811 pages were redacted.

“Based on what we have learned so far,” says Gayle Bossenberry, 1st National Vice-President of the Canadian Union of Postal Workers (CUPW), “it seems the report was on track to confirm the recommendations of the Canadian Centre for Policy Alternatives (CCPA), and vindicate what postal workers have been saying: there’s a great potential here to keep the public postal service self-sufficient. But instead they killed the research and buried the report.”

Other countries like Switzerland, New Zealand, Italy, and France have bolstered the fortunes of their post offices with revenues from postal banking. In these countries, the public enjoys a stable public postal service, and increased access to banking. According to the Blacklock’s article on the report, “profits in Canadian banking averaged 20.5 percent a year”, including President’s Choice and Canadian Tire’s financial services.

John Anderson — author of the Canadian Centre for Policy Alternative’s 2013 paper on postal banking — was surprised by the CPC study but not its content: “I think anyone seriously studying the subject would see the same opportunity. With 6500 post offices, Canada Post could have the most extensive financial services infrastructure in the country, right off the bat.”

“If they were looking at postal banking, why did they consistently tell CUPW that it was not an option they would consider?” asked Bossenberry, adding “And who killed the study?”

SOURCE Canadian Union of Postal Workers

Read more: Who Killed Canada Post’s Banking Study? — OTTAWA, Feb. 10, 2014.