In the past decade, over 2,000 local bank branches have shut down across the nation. It’s a sad fact, but most of these shutdowns have gone unnoticed by the public at large, because they have mostly been in neighborhoods and communities that are economically disadvantaged and undeserved.
Unfortunately, this places an even deeper impact on these communities, exacerbating an already tough situation. Learn how a community staple that still exists everywhere—the US Postal Service—might step in to fill that desperate gap.
US Postal Service as a Bank
Many people are stunned at the idea of the post office as a bank, but the truth is, this concept is nothing new. It first came into play in 1873, but wasn’t actually passed until 40 years later, in 1910. When it started, it lasted for 56 years. In addition, the U.S. is the only developed country that doesn’t use the postal service as banks.
More recently, just a couple of years ago, the Inspector General of the Post Office released a whitepaper on the subject of postal banking. We’ve seen major political figures from Bernie Sanders to Elizabeth Warren ponder the topic.
Saving the Future
It’s arguable whether the deregulation of financial institutions has been good or bad for banks, but it has resulted in higher and more fees for users. This has made it difficult for people in low-income communities to afford bank accounts. In addition, the post office itself, which stretches back throughout history, has struggled over the past decade or two in the wake of email and other electronic communications.
Many experts posit that adding banking services could save both the USPS and these communities from ruin. The US Postal Service already has a network that extends across the country, deals in cash and has all the resources necessary to offer loans and basic financial services.
Postal Workers as Bankers?
One of the biggest sticking points of getting the post office involved in finance is that people argue postal workers aren’t trained as bankers. However, at least at first, the financial services offered by the USPS would be very basic and wouldn’t require special training in things like underwriting in which bankers need to be expert.
One model has post office banks working on a “payday loan” model, where loans are for small amounts (capped at around $1,000 at a time) and are secured against future income, albeit with far lower interest rates, and the ability to pay in installments. Alternately, a model like the UK could be adopted which allows a negative balance on checking accounts, which accumulates interest until it’s wiped clean.
Convincing the Banks
The biggest hurdle is convincing banks that this is a necessary service that would shore up, rather than damage, their business. It’s been done before, but the lobby banks hold in Congress is powerful and it won’t be an easy road.
For now, one of the best ways to support the US Postal Service is to engage in traditional direct mailing. Using custom envelopes from Letter Jacket can take your business to the next level. Check out the services we offer, and give us a call for more information today!
