Washington, D.C. — A new issue brief from the Center for American Progress and the National Advisory Council on Eliminating the Black-White Wealth Gap examines how by allowing the U.S. Postal Service to expand its services into banking, policymakers could provide chronically unbanked and underbanked communities access to the financial system and in turn help protect consumers from wealth-stripping activities.
Due to the legacy of structural racism, the nearly one-quarter of American households that are either unbanked or underbanked are disproportionately composed of people of color. Today, only 50 percent of Black people are fully banked, meaning they have a checking and/or savings account, compared with 85 percent of white individuals. Because they do not have access to more traditional banking institutions, unbanked people are forced to rely on predatory financial services that can charge interest rates as high as 600 percent, stripping people of their wealth.
The United States Postal Service (USPS) is uniquely positioned to provide banking services in underserved communities because it is already one of the country’s most egalitarian institutions, with offices in communities across the country. Restructuring the U.S. financial system to leverage the reliability and distribution of the Postal Service would help automatically provide banking to communities across the nation and minimize reliance on predatory lenders. Postal banking would provide millions of Americans with a universal, easily accessible, and essential service that has low, uniform costs and no motive to extract profits from communities.
“The recovery from the COVID-19 financial crisis provides an opportunity to make long-term structural changes to make the financial system more equitable,” said Mehrsa Baradaran, associate dean for Equity, Diversity and Inclusion at the University of California, Irvine School of Law and a member of the National Advisory Council on Eliminating the Black-White Wealth Gap. “Postal banking is one simple way to ensure that people of color have access to high-quality, reliable financial services and to mitigate the harm that many Black Americans face from predatory lenders. If we want to close the wealth gap, we must ensure that wealth-stripping vehicles are not the only option available to consumers.”
Read: “Creating a Postal Banking System Would Help Address Structural Inequality” by Danyelle Solomon, Mehrsa Baradaran, and Lily Roberts
For more information on this topic or to speak to an expert, contact Julia Cusick at gro.ssergorpnacirema@kcisucj.