Plain vanilla banking

Elizabeth Warren proposes simple banking needs through the Post Office:

According to a report put out this week by the Office of the Inspector General (OIG) of the U.S. Postal Service, about 68 million Americans — more than a quarter of all households — have no checking or savings account and are underserved by the banking system. Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees — about the same amount they spend on food.

This is not a new problem, and policymakers in Washington have long sounded the alarm. Michael Barr — an assistant secretary of the Treasury under President Obama and law professor at University of Michigan — has pushed on this issue for years. As Chair of the FDIC, Sheila Bair put in place a Committee on Economic Inclusion to generate ideas for expanding access to lower-cost banking services. (I had the honor of serving as a committee member.) And we’ve taken some important steps forward. The new Consumer Financial Protection Bureau (CFPB), for example, is a cop on the beat that is putting in place commonsense rules to protect consumers and ensure that payday lenders are held accountable when they break the law.

The report has provoked a great deal of discussion, and it is worth reading David Dayen’s article about it at the New Republic— “The Post Office Should Just Become a Bank: How Obama can save USPS and ding check-cashing joints.”