The ACLU Pushes for Banking Via the United States Postal Service (USPS)
In an effort to address our nation’s history of systemic racism that has resulted in, among other things, the homeownership rates for Black and Hispanic Americans at 42% and 46%, respectively, many institutions and societal norms deserve to be dissected for the role they play in systemic racism and oppression of underrepresented poor and minority Americans. One such institution, banking, has recently come under the scrutiny of the American Civil Liberties Union (ACLU).
According to a number of reports gathered and commissioned by the ACLU, approximately 50% of Black Americans are unbanked or underbanked. This shocking figure comes directly from the FDIC, who recently released a survey of the percentages of Americans with access to banks or other financial institutions. What that means is that the banking options most non-Black Americans take for granted—the ability to cash a paycheck, or use direct deposit, apply for a credit or debit card, or even small loans—are unavailable to half of our nation’s Black citizens.
The result, according to the ACLU, is that “many [Black Americans] pay more than $2,000 in fees associated with subprime financial institutions. Over their lifetime, those fees can add up to as much as two years of annual income for the average Black family.” Despite the fact that Black Americans are supposedly given equal access to the same services as their White counterparts, the reality on the ground is dramatically different. The result is that, “Over the course of a 30-year working career, being unbanked can cost the median Black family more than $86,000 in fees, representing twice their annual income.”
It goes without saying, then, that this overlooked issue is one that carries just as much weight in terms of wealth disparities as so many other issues we have outlined in a previous blog series.
While most people work under the assumption that a checking or savings account is simply a given, the truth of the matter is that in Black communities, banks close at the rate of 50% more often than they do in White communities. This shocking statistic means that for Black Americans who are unbanked or underbanked, the only option available for banking needs like cashing paychecks, paying bills online, or getting money orders is to use the services of check-cashing stores or pay high fees to grocery stores or traditional banks to access the money from their paycheck.
In Chicago alone, check-cashing fees range from $4 to $8 at most banks, with often much higher fees for standalone check-cashing stores. Obviously, these fees add up quickly, and are basically a tax for being unbanked. Despite the lack of banks in communities of color throughout the U.S., there are no shortage in these same communities of check-cashing stores and payday lenders.
Not only does this mean that Black Americans in these “banking deserts” have no access to standard checking accounts and services, it also means that they are much more likely to have to rely on predatory lenders who charge exorbitant interest rates and fees, all because they are the only “banking” or “lending” services available in these communities. There is no secret how dangerous these predatory lenders can be, and how a person who uses their services often finds himself in a debt trap that can be nearly impossible to extract himself from. We have outlined in previous posts the many types of predatory lending tactics employed against America’s most vulnerable and underserved communities, and how it perpetuates not only poverty, but even crushing debt.
Luckily, social justice activists have come up with a clever and realistic solution to address the issue of “banking deserts” in our communities of color: Postal Banking. According to Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, co-sponsors of a proposal to address banking deserts with postal banking services, the types of services unavailable to communities without banks can be addressed by utilizing post offices to provide services to customers, “including ATMs, paycheck cashing, bill payment and electronic money transfers.”
Over a lifetime of paying for these services that are usually included for free with most standard checking accounts, impoverished Americans often pay 2 – 3 years of earnings in fees. Furthermore, payday lenders who prey on unbanked and poor Americans charge interest rates as high as 400%, which leaves borrowers in a perpetual cycle of unsustainable debt.
In a hearing to compel the Biden Administration and Postmaster General DeJoy to fill the vacancies on the Postal Board of Governors so that the Post Office might get back to the work of serving all Americans efficiently, the ACLU released a statement explaining the necessity of postal banking to provide services to communities deemed to be banking deserts. The logic, according to Rakim Brooks of the ACLU, is that virtually every zip code has a post office, so they are already present in every community in the entire country, and it makes sense to expand the basic financial services provided by the post office to include the services outlined by Sanders and Ocasio-Cortez.
If our nation’s racial wealth gap is a social justice issue, then it is imperative that we address the breakneck speed with which banks are shuttering their doors in poor and minority communities. Experts predict that as many as 20,000 additional banks will pack up shop in underserved communities in response to the economic fallout of COVID-19. Luckily, with over 31,000 post offices spread throughout the country, the infrastructure is in place for the U.S. Postal Service to rollout the financial services advocated by Sanders, Ocasio-Cortez, and so many other progressive politicians.
In an extensive survey performed by the Pew Research Institute in 2014, researchers found that potential postal banking customers were overwhelmingly in favor of financial services being offered by the USPS. The findings:
- 81% of respondents said they would likely use the post office for check-cashing services
- 79% said they would use the post office for bill-paying services
- 71% said they would use the post office for payday loans
- 59% said they would use the post office for pre-paid debit/credit cards
In short, the need in our underserved communities for affordable and non-predatory financial services is overwhelmingly high, and the many banking and credit services being denied to Black communities in particular, and poor and minority communities in general, is resulting in an ever-growing wealth gap between White Americans and people of color.
Luckily, many of the services provided by our ally companies at AHP 75, such as DebtCleanse, can help Americans who have fallen victim to predatory lending to remediate their credit and begin down the path of financial freedom and independence. Our goal, as a social justice company, is to raise the numbers of homeowners among all Americans to 75%. But, in order to do that, we first must address the predatory nature of “banking services” provided in communities deemed to be banking deserts, and help alleviate the crushing debt so many poor and minority Americans face simply by living in the “wrong” place.
If you or someone you know believes in the ACLU’s mission to compel the United States Postal Service to extend the basic financial services to all Americans through their network of 31,000 offices nationwide, you can sign the petition here to ask your Senator to support postal banking now and help end the injustice of banking deserts.
Are you ready to take charge of your financial future? Visit AHP75.com to learn about our debt remediation programs, as well as our homebuyer programs designed specifically to help you join the ranks of homeowners and get onto the path of financial stability and wealth generation.
Aaron Morales is the Social Justice Writer for AHP 75, based out of Chicago, IL.