Like millions of others this holiday season, perhaps you’ve already made the trip to your local, friendly Post Office. While you were there, did you hear how the US Postal Service is in financial trouble? Was there talk among your neighbors in line about closing the local branch or losing Saturday deliveries?
The USPS financial problems are not a surprise. Reforms enacted in 2006 required the USPS to save up to 75 years health and retirement benefits—unlike every other Federal agency. Without these provisions, it’s like the USPS would be in the black and not the red. That’s not to say there isn’t room for improvement or modernization. But there is another way to remake the USPS that wouldn’t depend on shutting down offices or laying off mail carriers—low-cost banking.
Currently, there are millions of lower-income Americans who don’t own a bank account where they can save or conduct basic financial transactions. They fend for themselves in the high-cost and poor-quality alternative financial sector of payday lenders and check cashers. Recognizing the nefarious practices of this fringe sector was one of the factors which led to the creation of the Consumer Financial Protection Bureau. Once that agency gets up and running, they have a mandate to shut down abusive practices that have flourished without proper oversight. But even if the CFPB succeeds, we may still be left with scores of families who find it difficult to access a simple savings or transaction account. This isn’t a market segment the banks have been dying to serve.
Not only do unbanked families have to spend more of their limited resources managing their money but they don’t have a place to store and build up their savings. In fact, the small saver has largely been abandon in recent years. Traditionally, the US Savings Bond program was designed to serve the needs of the small saver, but that program has been refocused on larger and more institutional savers. Most banks have actually quick selling these as well, directing interested parties to the Treasury website.
The Postal Service could step into the breach.