Replace payday lenders with the post office?

[Luddly Neddite]

Elizabeth Warren Proposes Replacing Payday Lenders With The USPS

The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

Needless to say, some will be against this for no other reason than Elizabeth Warren's name being on it but we need more people like her working for the benefit of the poor and working class. Whether or not Hilary is our first woman president, Warren could and should be considered in the future.

 

[RandomVariable]

Elizabeth Warren Proposes Replacing Payday Lenders With The USPS

...
Those companies are among the most predatory actors in the money business. Payday loans with annual interest rates well north of 100 percent suck billions of dollars out of poor communities every year, with the average customer paying $520 to borrow $375. After decades of operating in a regulatory blind spot and ducking state-level reforms, the payday lending business now faces a crackdown from the Consumer Financial Protection Bureau. The threat of new rules for short-term cash loans in general has caused traditional banks to stop offering deposit-advance loans with similar features.
...
Doing business in those communities in more ethical fashion would still be profitable enough to inject about $9 billion into the struggling federal mail agency’s books. The USPS is dealing with a fiscal crisis, one largely manufactured by Congressional choices. The agency gets no taxpayer money for its operations but is still under Congress’s authority, and lawmakers have used that authority to impose arbitrary financial requirements and service constraints that have the post service on the verge of bankruptcy. USPS is legally obligated to hold assets in its pension funds that cover the next 75 years of projected pension costs, a unique and crippling requirement that Congress refuses to lift despite evidence that it is almost solely responsible for the agency’s financial woes.

Some people see the poor as having less than most. Some see the poor as just one more group they can rip off. Best part is the poor can't even complain. Time to take our country back.

 

[Kimura]

Elizabeth Warren Proposes Replacing Payday Lenders With The USPS

The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

Needless to say, some will be against this for no other reason than Elizabeth Warren's name being on it but we need more people like her working for the benefit of the poor and working class. Whether or not Hilary is our first woman president, Warren could and should be considered in the future.

I think it's a great idea. For example, in Switzerland, all transactions, such as paying rent, electric, utilities, creditors, mortgage payments, etc. are handled by their post office. You technically don't even need a bank account, and many people use their services. This is what public policy is all about.

The probably won't sit well with many conservatives and neoliberals since they want to privatize the USPS and sell it off to their buddies in the private sector.

 

[Mr. H.]

The probably won't sit well with many conservatives and neoliberals since they want to privatize the USPS and sell it off to their buddies in the private sector.

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

 

[Kimura]

The probably won't sit well with many conservatives and neoliberals since they want to privatize the USPS and sell it off to their buddies in the private sector.

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

Also, using the USPS as a service to replace the pay-day lending crowd is an AWESOME idea. These predatory outfits needs to go anyway.

 

[Mr. H.]

The probably won't sit well with many conservatives and neoliberals since they want to privatize the USPS and sell it off to their buddies in the private sector.

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

I like free enterprise and the profit motive.

The "Forever" stamp is now 49 cents...

USPS lost $16 billion in FY 2012

They are abandoning architectural treasures across the country, only to be snapped up by Nancy Pelosi's husband.

 

[Kimura]

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

I like free enterprise and the profit motive.

The "Forever" stamp is now 49 cents...

USPS lost $16 billion in FY 2012

They are abandoning architectural treasures across the country, only to be snapped up by Nancy Pelosi's husband.

So do I. Again, we're talking USPS, they aren't supposed to be run for profit, since the government doesn't need to make a profit off its own fiat. We're talking public purpose, not a for-profit enterprise. Banking services being offered by USPS would be awesome, it would help a large segment of Americans save money.

Using your argument, we should also privatize the DOD and military since they lose $$$$ left and right.

 

[RandomVariable]

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

I like free enterprise and the profit motive.

The "Forever" stamp is now 49 cents...

USPS lost $16 billion in FY 2012

They are abandoning architectural treasures across the country, only to be snapped up by Nancy Pelosi's husband.

So do I. Again, we're talking USPS, they aren't supposed to be run for profit, since the government doesn't need to make a profit off its own fiat. We're talking public purpose, not a for-profit enterprise.

Using your argument, we should also privatize the DOD and military since they lose $$$$ left and right.

Using your argument stamps should be free. I understand what you are saying but saying that a federal service must charge less than cost does not make sense.

 

[Kimura]

I like free enterprise and the profit motive.

The "Forever" stamp is now 49 cents...

USPS lost $16 billion in FY 2012

They are abandoning architectural treasures across the country, only to be snapped up by Nancy Pelosi's husband.

So do I. Again, we're talking USPS, they aren't supposed to be run for profit, since the government doesn't need to make a profit off its own fiat. We're talking public purpose, not a for-profit enterprise.

Using your argument, we should also privatize the DOD and military since they lose $$$$ left and right.

Using your argument stamps should be free. I understand what you are saying but saying that a federal service must charge less than cost does not make sense.

They can, though, that's the point. For example, it's like the federal government charging interest on student loans, which makes zero economic sense. We have the government charging interest on its own fiat. It's a baffling and nutty policy.

 

[RandomVariable]

So do I. Again, we're talking USPS, they aren't supposed to be run for profit, since the government doesn't need to make a profit off its own fiat. We're talking public purpose, not a for-profit enterprise.

Using your argument, we should also privatize the DOD and military since they lose $$$$ left and right.

Using your argument stamps should be free. I understand what you are saying but saying that a federal service must charge less than cost does not make sense.

They can, though, that's the point. For example, it's like the federal government charging interest on student loans, which makes zero economic sense. We have the government charging interest on its own fiat. It's a baffling and nutty policy.

This is far from a complete explanation of the logic behind charging for federal services but two examples are: 1) To restrict usage. The post office should not put U-Haul out of business because everyone starts sending their household goods through the mail. 2) Benefit added. Where the basic service is free but above and beyond that has a fee. Such as getting a printed copy of an online document or insurance on a postal package. (Well the basic service is not fee either on that one.)

 

[Pennywise]

It's the tactic of the progressives (especially on the left) to use saving people from themselves as a ruse in order to control them.

Sacagewea Warren is a statist ****, and pretty fucking stupid too.

 

[RandomVariable]

It's the tactic of the progressives (especially on the left) to use saving people from themselves as a ruse in order to control them.

Sacagewea Warren is a statist ****, and pretty fucking stupid too.

No, but seriously, what do you really think?

 

[Kimura]

Using your argument stamps should be free. I understand what you are saying but saying that a federal service must charge less than cost does not make sense.

They can, though, that's the point. For example, it's like the federal government charging interest on student loans, which makes zero economic sense. We have the government charging interest on its own fiat. It's a baffling and nutty policy.

This is far from a complete explanation of the logic behind charging for federal services but two examples are: 1) To restrict usage. The post office should not put U-Haul out of business because everyone starts sending their household goods through the mail. 2) Benefit added. Where the basic service is free but above and beyond that has a fee. Such as getting a printed copy of an online document or insurance on a postal package. (Well the basic service is not fee either on that one.)

Oh, I know why USPS charges fees, that wasn't my point. My point is, besides my little tangent, that USPS offering banking services is a great idea. If pay-day loan operations (legal loans sharks) go out of business, so be it. They're predatory lenders and shouldn't exist to begin with.

Personally, I think USPS has a rich history and it's worth expanding the services they offer. USPS could offer financial services to roughly 68 million Americans. They could even get into small business loans, start their own credit union, all with minimal fees. It's a tremendous opportunity in my opinion.

 

[RandomVariable]

They can, though, that's the point. For example, it's like the federal government charging interest on student loans, which makes zero economic sense. We have the government charging interest on its own fiat. It's a baffling and nutty policy.

This is far from a complete explanation of the logic behind charging for federal services but two examples are: 1) To restrict usage. The post office should not put U-Haul out of business because everyone starts sending their household goods through the mail. 2) Benefit added. Where the basic service is free but above and beyond that has a fee. Such as getting a printed copy of an online document or insurance on a postal package. (Well the basic service is not fee either on that one.)

Oh, I know why USPS charges fees, that wasn't my point. My point is, besides my little tangent, that USPS offering banking services is a great idea. If pay-day loan operations (legal loans sharks) go out of business, so be it. They're predatory lenders and shouldn't exist to begin with.

Personally, I think USPS has a rich history and it's worth expanding the services they offer. USPS could offer financial services to roughly 68 million Americans. They could even get into small business loans, start their own credit union, all with minimal fees. It's a tremendous opportunity in my opinion.

Oh, I see. We do seem to agree most of the way. The debate on the rest of this would be government inefficiencies verses predatory practices by private industry. This would seem to be the purpose of regulation, the government does not really want to run the business but if the industry can not rein in their own lust for money, or any other practice which harms America/Americans, then the government is forced to do something, for the people by the people or something like that. With the case at hand, USPS offering banking services, regulation is impractical.

 

[CrusaderFrank]

The probably won't sit well with many conservatives and neoliberals since they want to privatize the USPS and sell it off to their buddies in the private sector.

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

Also, using the USPS as a service to replace the pay-day lending crowd is an AWESOME idea. These predatory outfits needs to go anyway.

Right, the USPS is supposed to lose billions annually

 

[CrusaderFrank]

Actually, it's not a bad idea. They can use the NSA to verify the payee and payee, see if they're legal, any outstanding warrants and they'd have to produce ID too, amiright?

 

[Kimura]

We can't go having such services become profitable ventures now can we?

UPS
FedEx
DHL

etc...

The USPS isn't supposed to be profitable, nor is any part of the public sector for that matter.

I like the fact I can send a letter anywhere in the US or its territories for 46 cents. Or the fact I can mail out packages - up to 70 pounds - in flat rate boxes. Don't you?

Also, using the USPS as a service to replace the pay-day lending crowd is an AWESOME idea. These predatory outfits needs to go anyway.

Right, the USPS is supposed to lose billions annually

It basically doesn't matter. The military loses billions annually. I don't see the Paultards and other reactionaries calling for the privatization of the DOD and military. It's the public sector, not the private sector, which means public purpose is the name of the game.

 

[JimmieD]

Elizabeth Warren Proposes Replacing Payday Lenders With The USPS

The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

Needless to say, some will be against this for no other reason than Elizabeth Warren's name being on it but we need more people like her working for the benefit of the poor and working class. Whether or not Hilary is our first woman president, Warren could and should be considered in the future.

I think it sounds like a terrible idea for the taxpayers to act as payday lenders.

I'm going to use QC Holdings and Cash America International as proxies in what follows since they are (a) a publicly traded payday lender and (b) staying in business.

(1) Payday lenders are not reaping gigantic profits. Their profit margins are razor thin. So it's not like this is exactly a good business. It's a business where one must be extremely efficient in order to make a tiny margin. High interest rates and high fees do not automaticaly translate to big profits. Is the post office ready for this kind of efficiency? Should taxpayers risk this?

(2) Quarter to quarter, half of their current assets have yet to be received or are accounted for as "goodwill" or some other illiquid measurement. A large percentage of these outstanding loans are never received, especially considering these loans are usually unsecured and maybe not even reported to a credit agency. These businesses are businesses that are not well capitalized and are highly risky.

(3) Looking at their cash flow statements, most of their operations are financed by debt of various sorts. It's not hard to reason that the post office would have to finance this sort of operation the same way - by borrowing heavily.

(4) The interest rates offered by pay payday lenders are of course outrageously high on an annualized basis. But most loans are not held for the entire year and if they are, it means they aren't getting their money back. Without these high interest rates and fees, these places probably would be at a high risk of a liquidity and solvency crisis. Basically, they would go out of business.

I assume that Sen. Warren wants to offer lower interest rates for political reasons rather than economic reasons. She doesn't want people who need credit to pay outrageous interest rates. But interest rates are a function of risk and payday loans are some of the riskiesy loans that can be made. There's a good chance that if you make a collection of payday loans, a large percentage aren't going to pay back. Default rates on these are extremely high. If your interest rate and fees are not high enough, your revenue will not cover your costs.

With offering low interest rates, Sen. Warren iwould be passing off excess risk to the taxpayers in the form of higher default rates, undercapitalization, illiquidity, insolvency, and increased financing by borrowing. Why not just leave this risk with the individuals engaged in this business? Let them suffer the loss.

This isn't a matter of helping or not helping the poor. This is a matter of statistics and honoring one's debts. This is exactly why there is a "problem" of the banking industry ignoring this area, because for a bank the real problem is the risk involved. The taxpayers should learn this lesson from the banks.

 

[RandomVariable]

Elizabeth Warren Proposes Replacing Payday Lenders With The USPS

The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

Needless to say, some will be against this for no other reason than Elizabeth Warren's name being on it but we need more people like her working for the benefit of the poor and working class. Whether or not Hilary is our first woman president, Warren could and should be considered in the future.

I think it sounds like a terrible idea for the taxpayers to act as payday lenders.

I'm going to use QC Holdings and Cash America International as proxies in what follows since they are (a) a publicly traded payday lender and (b) staying in business.

(1) Payday lenders are not reaping gigantic profits. Their profit margins are razor thin. So it's not like this is exactly a good business. It's a business where one must be extremely efficient in order to make a tiny margin. High interest rates and high fees do not automaticaly translate to big profits. Is the post office ready for this kind of efficiency? Should taxpayers risk this?

(2) Quarter to quarter, half of their current assets have yet to be received or are accounted for as "goodwill" or some other illiquid measurement. A large percentage of these outstanding loans are never received, especially considering these loans are usually unsecured and maybe not even reported to a credit agency. These businesses are businesses that are not well capitalized and are highly risky.

(3) Looking at their cash flow statements, most of their operations are financed by debt of various sorts. It's not hard to reason that the post office would have to finance this sort of operation the same way - by borrowing heavily.

(4) The interest rates offered by pay payday lenders are of course outrageously high on an annualized basis. But most loans are not held for the entire year and if they are, it means they aren't getting their money back. Without these high interest rates and fees, these places probably would be at a high risk of a liquidity and solvency crisis. Basically, they would go out of business.

I assume that Sen. Warren wants to offer lower interest rates for political reasons rather than economic reasons. She doesn't want people who need credit to pay outrageous interest rates. But interest rates are a function of risk and payday loans are some of the riskiesy loans that can be made. There's a good chance that if you make a collection of payday loans, a large percentage aren't going to pay back. Default rates on these are extremely high. If your interest rate and fees are not high enough, your revenue will not cover your costs.

With offering low interest rates, Sen. Warren iwould be passing off excess risk to the taxpayers in the form of higher default rates, undercapitalization, illiquidity, insolvency, and increased financing by borrowing. Why not just leave this risk with the individuals engaged in this business? Let them suffer the loss.

This isn't a matter of helping or not helping the poor. This is a matter of statistics and honoring one's debts. This is exactly why there is a "problem" of the banking industry ignoring this area, because for a bank the real problem is the risk involved. The taxpayers should learn this lesson from the banks.

Link? I swear, some of you people sound like you have a person interest in misrepresenting the facts.

 

[JakeStarkey]

Remember that government is to serve. The people come first, business second. Always.