Establishing Postal Banking and Realizing Economic Justice


Since the massive destruction of middle and lower class wealth during the Great Recession, another lingering crisis has become more and more apparent in this country: the enormous number of individuals who are unbanked or underbanked. These people lack access to banks in their neighborhoods and many do not have the minimum amount to open accounts at most traditional banks. As of 2014, 88 million people, or 38% of the population of the United States, fell into this category.

This number has only grown as traditional banking institutions have closed branches in rural and low-income urban communities. Instead of depositing their earnings into bank accounts and saving for the future, they have been forced into the predatory network of payday lenders, who charge exorbitant interest rates and fees to cash paychecks, deliver cash advances, and make bill payments. Unbanked families spend an average of 10% of their annual income, or about $2400, paying fees to these fringe banking entities.

A solution for the unbanked has thankfully already existed in the United States, and similar programs continue to be successful around the world: postal banking. Under this system, eligible individuals would be able to open free checking and savings accounts at their local post office, receive low interest loans to start small businesses, and pay their bills without paying additional fees.

Central Arkansas is the perfect example of a region that would benefit tremendously from postal banking. Little Rock specifically exemplifies the huge disparities in access to banking across socioeconomic and racial lines. In the affluent Heights neighborhood, there are 14 traditional banking institutions within a 2.82 mile radius. This is a stark contrast to East Little Rock (the 12th Street Corridor), which has only one traditional bank in 13 square miles. It should not be surprising that these underbanked communities are also communities of color, a clear sign of the way our banking system has been complicit in a broader system of injustice in America.

Establishing a system of postal banking would be a major step towards righting the unnecessary financial hardships we have placed on the poor, and realizing a more just economic system where every American has the freedom and opportunity to build their wealth and strive for a better life for themselves and their families.