How the Other Half Banks is both the historical story of banking for the non-wealthy in America and why we once again need postal banks to serve the un- and underbanked, now in thrall to “alternative credit services” such as payday lenders.
When the book, authored by Mehrsa Baradaran, was published last Fall, Strike Debt Bay Area (SDBA) was all over it, having been advocating for Postal Banking for years. One of their members wrote the first Amazon review and they invited Professor Baradaran of Georgia University’s Law School to the Bay Area to speak.
That invitation came to fruition February, 12th and 13th, 2016, as SDBA arranged two events for her at two Bay Area bookstores, Green Arcade in San Francisco and Laurel Books on Oscar Grant Plaza in Oakland (below).
Professor Baradaran’s thesis is that
- There are tens of millions of Americans who, for various reasons, are unable to have access to standard financial services such as checking accounts, bill pay, and credit cards, and who have little or no emergency reserve to fall back on in case of an unsforseen problem like a car repair.
- This large constituency is left with no alternative but to use the “services” of the usurious payday lenders and ripoff check cashing outlets that have become ubiquitous in poorer areas across the country. Banks no longer want their business.
- As astounding as it seems, studies have shown that they end up paying on average some $2000 a year for financial services offered for far less or even for free to wealthier individuals.
- These people, and others, would be far better served by being able to access financial services through the Post Office. It would be a boon both to users, who would pay far less for these services than they do now through payday loans and check cashers, and to the Post Office, which could shore up its finances by offering these services and yet, because of its universality and existing infrastructure, could charge far, far less than what people have to pay now while clearing a small profit.
- Most countries around the world have some sort of postal banking.
During her talks Professor Baradaran related how she had been instrumental in having Bernie Sanders asked “the question.” It happened during an interview with Fusion senior editor Felix Salmon:
Salmon: You believe in postal banking?
Sanders: I think that’s a great idea. In fact, I just spoke to a postal union this morning. I want to see our post office be reinvigorated. And one of the ways that I think we can help not only the U.S. Postal Service, but help a lot of low-income people – if you are a low-income person, it is, depending upon where you live, very difficult to find normal banking. Banks don’t want you. And what people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off. And, yes, I think that the postal service, in fact, can play an important role in providing modest types of banking service to folks who need it.
As it happened, Baradaran was Salmon’s guest before he interviewed Sanders, and as she relates (paraphrased) “He asked me what I should ask Sanders, and I said ‘Ask him about Postal Banking!'” And so he did.
That interview went viral, with hundreds of articles and significant amounts of other publicity. However, postal banking seems no closer to reality. “Seems,” however, can be deceiving. The first step in any campaign is to make people aware, and Sanders’ statement, Mehrsa’s book (reviewed in the New York Times, and the subject of articles in The Atlantic and The Nation), and the attendant publicity given to both has been an important step.
Adding to the publicity efforts, Strike Debt Bay Area was able to get Professor Baradaran to pose with some of them in a Light Brigade, spelling out “Postal Banks.” Fittingly, she is near center holding the ‘B’ both for Baradaran and (Postal) Banks.