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Kirsten Gillibrand proposes Postal Banking

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  • Center Left Democrat
    Democrat
    California
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    Senator Kirsten Gillibrand (D-NY) is proposing Post Office banking as an alternative to Payday Loans.

    theweek.com/articles/769888/why-democra...

    Post Office banking can offer services to low-income Americans such as debit cards, checking and savings accounts, even small loans.

  • Independent
    Washington
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    Got my attention. I hope it gets some traction.

    I have never used a payday loan service, but I have read a lot about them. They target the poor with the objective to take as much of their money as possible. Make small, short terms, loans easy and addictive. Why pay off the loan in full, when you can make weekly interest payments of $10-$25. Its legalized loan sharking, and its a billion dollar industry. I suspect a large percentage of that comes from government welfare programs.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    "Response to 79.9% offer 'phenomenal'
    Has First Premier gotten any takers on the 79.9 percent cards? Beacom called the response "phenomenal," adding 2 percent of people receiving the offers have applied for the cards. Their normal response rates is 1 percent to 1.2 percent, he says. "It's double what our normal product was."

    creditcards.com/credit-card-news/first-...

    Certainly and about time somebody recognizes the abuse of poor broke people like Gillibrand.

  • Strongly Liberal
    Independent
    Ohio
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    The post office is a great American institution. It was a savings and loan and it helped get us out of the great depression. We are going to need help very soon. The Republicans are intent upon destroying our economy again. And they will succeed. Kirsten is laying some groundwork . It may take several years to get this passed , but it will be in committee and be ready to help when we get there . I think Kirsten is doing great work here.
  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Post office was the very first place I started saving . I bought saving stamps when I was in grade school.
  • Independent
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    I support her idea completely.

    That being said until and unless the Democratic Party takes control of both houses it is likely doomed to failure. The Republican Party wishes to destroy the post office because it is unionized and one of their goals in defunding the Left is destruction of unions.

  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Well yes, the idea sounds good in principle. But I doubt that any of the postal clerks have the financial aptitude to decide who gets a loan and who doesn't. So to make it work like a small bank, you have to hire people with that background. Otherwise, there would be no accountability and people could get loans without a credit check or collateral. Would the taxpayers have to cover the cost of the bad loans?

    There are some 200,000 post offices in the United States and if each would be expected to act as a mini bank, making loans, keeping savings accounts, and such, it sets up a whole new bureaucracy. Would there be enough qualified people to hire for the post offices to take on the new financial responsibilities? Is there even space? Make each post office even bigger.

    This is an idea that needs further thought in how it would be implemented and work in practice. I am not ready to hop on the bandwagon.

  • Independent
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    Schmidt Wrote:

    Well yes, the idea sounds good in principle. But I doubt that any of the postal clerks have the financial aptitude to decide who gets a loan and who doesn't. So to make it work like a small bank, you have to hire people with that background. Otherwise, there would be no accountability and people could get loans without a credit check or collateral. Would the taxpayers have to cover the cost of the bad loans?

    There are some 200,000 post offices in the United States and if each would be expected to act as a mini bank, making loans, keeping savings accounts, and such, it sets up a whole new bureaucracy. Would there be enough qualified people to hire for the post offices to take on the new financial responsibilities? Is there even space? Make each post office even bigger.

    This is an idea that needs further thought in how it would be implemented and work in practice. I am not ready to hop on the bandwagon.

    I’ll take that bureaucracy as opposed to bureaucracy that screws people with fees, NINJA loans, dangerous financial instruments and the like. I see it as useful in underserved areas in inner cities or some rural communities.

    Yes, it’ll cost money and require hiring people. But what doesn’t cost money? And what the big bank criminals did an$ are still doing underscores the need for change.

  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Would the postal service banking system service be expected to make a profit? Low interest or interest free loans? Or do people like this idea because they hate the current banks/financial institutions and hate that they make money off people. I'm just wondering how much is knee jerk reaction to banks making huge profits.

    The Consumer Financial Protection Bureau was set up to protect consumers from shady lenders. Of course, with Mulvaney running the show, that organization has been largely neutralized.

    Anyway, I cannot see a single Republican supporting the Post office becoming a "small bank" making "payday" loans and such.

    My opinion...

  • Independent
    Washington
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    Schmidt Wrote:

    Would the postal service banking system service be expected to make a profit? Low interest or interest free loans? Or do people like this idea because they hate the current banks/financial institutions and hate that they make money off people. I'm just wondering how much is knee jerk reaction to banks making huge profits.

    The Consumer Financial Protection Bureau was set up to protect consumers from shady lenders. Of course, with Mulvaney running the show, that organization has been largely neutralized.

    Anyway, I cannot see a single Republican supporting the Post office becoming a "small bank" making "payday" loans and such.

    My opinion...

    Schmidt, take a look into how "payday" loans work and their primary demographic.

    They target people who are low income and need a couple hundred until they get their welfare checks. Its the type of business that Donald Trump loves; taking advantage of people who have no other options.

    Example; $500 loan that must be repaid in 14 days.

    Loan amount: $550

    you get $500, they get $50 at the time of the loan.

    Within 14 days, you must pay the full $500 or pay a penalty of $25 - $50. They will rejected payment that is less than the full amount (ie $499.99 would be rejected).

    after another 14 days, you must pay the full $500 or pay a penalty of $25 - $50, and so on....

    People often get into cycle of getting one payday loan to payday off their last payday loan.

    And of many find it just easier to pay the 14 day penalty than pay the full amount

    It is a predatory business that targets low income and others at the bottom of society.

  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Yes I understand all that. But if the post office took on the role of the payday loaner, what happens when the person doesn't pay back the loan? With payday loans now the loaner will make automatic withdrawals from your bank account or wage garnishment through your employer or even turn it over to a collection agency.

    Experian: What If I Can’t Pay Back a Payday Loan?

    "In some cases, either the payday loan company or the collection agency that purchases the debt may decide to file a lawsuit against you to recover the money owed. If a judgment is filed against you, it will become a matter of public record, and may then appear in the public record section of your credit report. Judgments remain on your credit report for seven years from the date they are filed, and have a substantially negative impact on credit scores."

    The people who typically use payday loans are those with bad credit and cannot get a loan from their bank. For the payday loaners, they are a higher risk customer and therefore charge higher rates and penalties.

    Now if the post office got into the business of making payday loans to people with bad credit, charging very low interest rates, minimal or no penalties for non-payment, and the person cannot pay back the loan or decides to not pay back the loan, what then? Will the post office garnish the person's wages or turn it over to a collection agency for harassment of the individual? Ultimately, will the taxpayer be on the hook for all the bad loans?

    The bad credit risk people probably have already accumulated massive credit card debt and are paying excessive rates on those balances. Americans now own over $1 trillion in credit card debt, and those that are maxed out on their credit cards use payday loans to drive them further into debt.

    So I wonder if in opening up a new avenue for cheap loans from the post office, the post office in effect becomes an enabler of bad credit and undisciplined spending by the customer.

    My opinion...

  • Independent
    Washington
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    You make make many valid points. The details would be need to flushed out to handle the various issues you pointed out, and no matter what system designed, it would be flawed. Overall, it may not even make the 10 ten best ideas of how to solve the problem.

    The difference I see is that it would not be designed to be predatory. It would be a small loan system designed with the goal of helping people, not taking advantage of them. That is was I am mainly focused on.

    I don't know if using the Post Office is the right way to go about it, what I like about it is that its thinking out side the box, rather than starting with "Bad idea" therefore continue to do nothing. The reason I basically like it is because payday loan businesses are specifically designed around businesses practices to take advantage of people with very limited income and people that have very poor skills at budgeting money. Its a bit like how Casinos operate, they in the business to take as much of people's money as possible, and they target people who are mostly likely to gamble until they are totally broke. Different business, but same objective.

    Its just a huge pet-peeve of mine because I have work with people who, like Donald Trump, lack certain human qualities, which allow them to take full advantage if people so they have have more cars, more vacation homes, or simply want get high watching their networth grow larger every year, etc.

  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Schmidt,

    this is more about making it easier and cheaper to get and use a bank account. Shouldn’t have to do this with the thousands of public-private enterprises we already have to do this, ie banks.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Schmidt said:

    "So I wonder if in opening up a new avenue for cheap loans from the post office, the post office in effect becomes an enabler of bad credit and undisciplined spending by the customer."

    Cheaper easier to get loans in a country where half the people can't come up with $400 will be used for subsistence. Borrowing money to live. Trump's promise of lots of good paying jobs got him elected. Trump said he loved the veterans and was going to show it. Republicans are set up for a lot of ramifications from his failed promises. Why has nobody called him about his jobs and veteran promises?

  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    "Borrowing money to live" -- but with little or no hope of ever paying it back? Poor people are in need of welfare payments, food stamps, free medical care, education assistance, job retraining assistance and a bunch of other things including a Job Guarantee, but getting loans for day to day subsistence when they have no means of paying it back doesn't seem to me a solution.