U.S. Senator Kirsten Gillibrand recently announced major new legislation to create a Postal Bank, which would establish a retail bank in all of the U.S. Postal Service’s 30,000 locations.
 
The Postal Bank would effectively end predatory payday lending industry practices overnight by giving low-income Americans, particularly communities of color and rural communities, access to basic banking services that they currently don’t have.
 
University of Georgia law professor Mehrsa Baradaran helped draft the legislation. She is the author of “How the Other Half Banks: Exclusion, Exploitation and the Threat to Democracy,” and an expert on postal banking.
 
“Today, there are many communities across the country that are banking deserts,” said Baradaran, the J. Alton Hosch Associate Professor of Law at UGA. “The only financial service providers are fringe lenders and check cashers whose business model relies on the poor paying more for banking services than anyone else. This is a threat to our democracy.”
 
The lack of access to traditional banking services makes it nearly impossible for low-income Americans to escape the cycle of poverty because they are often forced to spend large percentages of their income to cash their paychecks or pay back high-interest predatory payday loans.
 
“Post offices serve all of these communities regardless of cost and without exploitation,” Baradaran said.“Postal banking can provide safe, accessible and much-needed financial services to the most struggling communities in our country. It will make it less expensive to be poor.”