Post offices could give low-income Americans access to financial services

Would you or should you bank at the post office?

By STEVENKUTZ – You can follow him on Twitter @StevenKutz.

“I’ll have a book of stamps, one of those Priority Mail envelopes, and I’d like to deposit my paycheck, please.”

If U.S. Postal Service (USPS) branches offered banking services, more lower-income people and minorities could benefit, according to a new study, “Can Post Offices Increase Access to Financial Services?” by researchers Mathieu Despard, Terri Friedline, and Kevin Refior, as part of the Mapping Financial Opportunity project, which is part of the University of Kansas. Mapping-Financial-Opportunity MetLife Foundation financially supported the research.

The study found that rural communities could benefit the most, because they have more post offices than banks (0.89 Post Offices for every 1,000 people) compared with cities (0.04 per 1,000). In fact, almost 40% of the zip codes in the U.S. don’t have a bank or a credit union — mostly in rural areas.

If a community has a bank, the study notes, people are more likely to get a mortgage, and bank closures diminish small business lending and job growth. The lack of a bank could also lead people to use payday lenders and check cashers, which can charge high-interest rates and fees.

“The households that live and raise their children in communities underserved by banks and credit unions suffer the consequences of struggling to manage their day-to-day lives without access to safe and affordable financial products,” the researchers wrote.

And it wouldn’t be the first time Post Offices provided banking services. According to the USPS, an Act of Congress in 1910 established the Postal Savings System in designated Post Offices. “The legislation aimed to get money out of hiding, attract the savings of immigrants accustomed to saving at Post Offices in their native countries, provide safe depositories for people who had lost confidence in banks, and furnish more convenient depositories for working people.”

By 1929, $153 million was on deposit, and by 1947 there was over $3 billion. When the post office stopped providing banking services in 1967, $50 million in unclaimed deposits was given to the U.S. Treasury Department to be held in trust indefinitely.

“Postal workers already support the idea of postal banking,” the study said, and by adding banking services, the U.S. Postal Service would be less reliant on charging fees to consumers to make money.

But much would need to be figured out before such a plan could be implemented. Also, there are around 82,000 bank branches nationwide compared with 32,000 post services. And even though postal lending thrived in the early part of the last century, the USPS may have bigger problems: Last year it reported a net loss of $5.6 billion.

In a statement, the Postal Service said that it “currently provides certain financial services appropriate to our existing infrastructure including money orders, electronic funds transfers and U.S. Treasury check cashing to meet customers’ needs.” It added that its mission is to provide the American public with trusted, affordable, universal mail service. “Our core function is delivery, not banking.”

“To the extent our research concludes that we can legally provide additional services at a profit and without distracting from our core business, we would consider these. However, public policy and regulatory discussions must be addressed before the Postal Service invests in an area outside our core function.”

Exploring ways to help Americans save is worthwhile: More than 20% of working Americans aren’t saving any of their income.

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