Had an idea for a way to put "check cashing" shops out of business. Looking for feedback.

[Ken Burch]

People who go to check-cashing shops(where they cash your check in exchange for a significant percentage of the check) are pretty much the poor. They go to such places usually because, due to their economic situation(and since they often also have horrible credit ratings) they are unable to set up checking or savings accounts at most banks. If they are unemployed, they usually aren't going to have the option of joining a credit union(since most of those are tied to not only having jobs but being in a particular line of work, such as government employment)

I was thinking that what might be a solution would be for the feds to set up something like a national People''s Credit Union, in which anybody who wanted to set up an account, including anyone receiving unemployment compensation or Social Security or disability payments, or anyone in low-paying jobs who had debts they were trying to repay but were unable to repay due to the hard economic realities of their lives.

This would create a non-predatory alternative to the check-cashing industry, which would significantly reduce the number of people feeling obligated to use "payday loan" shops(since they would now be able to keep the entire amount of any checks they receive, thus having slightly more funds at hand), would potentially help a large number of people at least begin to move away from poverty, and, since credit unions, as opposed to banks, make many decisions based on the votes of anyone who shows up at membership meetings, would begin the process of democratizing our financial system and turning the use of its assets in a more community-minded and humanistic direction.

What do people here think of this as a general concept? Anyone have suggestions for refining the idea?

Have their been other people talking about anything like this?

Also, if there are threads on DU where people are talking about something along these lines, could somebody point me towards them?

Thanks.

[drray23]

1. interestingly enough

There is something like that in France. La poste ( the equivalent of our usps ) has been offering banking services for decades. The advantage is that even in small rural town there is a post office where you can also bank.

no fees involved to open a checking account. no minimum or any other requirements, just be 18 yr old. If you are under 18 yr old you can have an account too if your parents give the authorisation.

[Igel]

18. The 'net says otherwise for fees and initial opening balance.

There's a pitifully small opening balance requirement, and the most basic account is free (and has no interest). You don't have to keep the minimum in the bank.

It's the overdraft protection that's a killer. You pay for authorization to be overdrawn, and if you're overdrawn it's spendy--not payday-loan interest rates, but still more than you'd want to pay.

If you overdraw without protection, exceed the agreed-upon and paid-for overdraft protection amount or the number of days you can be overdrawn, your account's subject to being frozen and you may be blacklisted. Not just by the BP, but other banks. The BP doesn't receive government money. It's mostly self-financing, as it's set up, but it would require a lot of rethinking the US postal system.

Given the way things are in the US, I'd imagine a fair number of families below the poverty line would have rather large overdraft protection fees and tend to use the overdraft protection a lot. If interest on overdrafts is 14% and the fees are another few percent (even if the service isn't used) that can quickly start approaching payday-loan levels and that would suddenly become not much better than what we have in the US now.

If we dispose of the overdraft charges, then it's another government subsidy, with the government making what amounts to low-interest loans to the poor for indefinite time periods. I doubt such a topic would form part of the publicly managed debate on setting up something like the BP in the US. Now, we could have that discussion, but I'd also want to have a third point brought up, something that would almost certainly become an evergreen issue in election years: "Vote for me, and there'll be an past-due loan amnesty." The response would be, "It would never happen," but it would. Then it would become a big moral thing--do we forgive the loans and be good atheists/Xians or be nasty, mean-spirited conservatives? A fourth point would also have to be, "If you declare bankruptcy are federally-backed postal overdrafts included?"

Something else to keep in mind is that bank fees in France are larger than the bank fees here. My checking and savings accounts are free. I'd be paying $300+ for the same services in France. It's likely that in the US the postal bank would receive really stiff competition from private banks--the BP does in France with the high fees. BP does well because it handles the poor but also it handles small bergs that otherwise wouldn't have a bank. It's likely the US version would wind up with a very large overdraft balance very quickly, requiring either government subsidy or higher fees.

[TDale313]

2. I like the idea of letting the Post Office offer some basic banking services.

Not too far from what you're talking about, with added bonus of strengthening the post office.

[TeamPooka]

25. yup

[Schema Thing]

3. Like Bernie's Post Office proposal.

[SoLeftIAmRight]

13. YES YES YES

Bernie's Post Office proposal.

[TransitJohn]

17. Yes, bring back our postal savings system.

https://en.wikipedia.org/wiki/United_States_Postal_Savings_System

[annabanana]

23. Wow.. I had no idea that there HAD been such a thing..

and for such a long time too! (from January 1, 1911 until July 1, 1967)

[Cassiopeia]

4. I like the direction.

I also like the idea of the postal service getting into "banking". The infrastructure is mostly in place. They would need additional labor and many buildings would need to be upgraded at minimum, but they already have a national presence regardless of town size. Even tiny 1 stop sign towns often have a post office in place.

[villager]

5. Is this the along the lines of using Post Offices for banking services?

http://www.latimes.com/business/la-fi-post-office-banking-20160102-story.html

I'm sure that "our" Congress would oppose it, in order to serve the interests of their true masters.

[upaloopa]

6. It is a good idea. Another one is to use post offices as banks similar to your idea

[Ken Burch]

8. That could also work.

It could be run on credit union lines.

[upaloopa]

9. My brother is a Catholic priest. He was in charge of Catholic Charities years ago.

He had projects in different parts of the country. In El Centro he started a credit union for farm workers. His idea was to keep the farm workers money in their community.

[Laffy Kat]

7. Big business would nip your idea in the bud so fast.

It's predatory out there. I've always told my kids to resort to prostitution before taking out a pay-day loan.

[rickford66]

10. The Post Office used to offer banking services.

https://en.wikipedia.org/wiki/United_States_Postal_Savings_System

[FrodosPet]

12. Will fingerprinting still be required to open an account?

From Wikipedia:

From 1921, depositors were fingerprinted. This was initially 'not to be associated with criminology' but in some instances the Yours Truly, Johnny Dollar radio show in the early 1950s suggests Postal Savings account fingerprints were used for positive identification in criminal cases.

As paranoid as people are about the government, will they accept being fingerprinted to receive banking services?

[yeoman6987]

16. I think many people will if it allows them to set one up

Maybe 2 percent will refuse and be turned away. Most will take the fingerprinting as part of this benefit.

[Hoppy]

11. Britain has this.

[Sgent]

14. Many of the people I know

who use check cashing places do so because they have a judgement, child support, or other outstanding amount due, and anything deposited into a bank would be instantly grabbed by the creditor.

[840high]

15. Good point.

[Iggo]

19. So, sort of a public option?

[Ken Burch]

21. Yes. That's one way of putting it.

n/t.

[DesMoinesDem]

20. Check cashing at walmart is $3. People aren't getting payday loans

because of a 3 dollar fee when they cashed their check.

[Ken Burch]

22. That's WalMart. There are lots of places in the cities

where the fee is MUCH higher than that.

In any case, no one should have to pay just to cash a check-especially people who are struggling to get buy.

If you are in a minimum wage job, even losing $3 each time you need to cash a check is a huge thing.

[Lee-Lee]

24. You don't even need the Feds- you could establish a community credit union that does that

It could either non-profit or do like a typical credit union and any profits go to members.

Charge only the fees needed to cover operating costs.

A motivated group could probably find raise and have it started small scale in a neighborhood far faster than Congress would ever act and if it was community owned and run it would probably be far more responsive to the unique needs of that community.