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.

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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.

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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.”