The Obama administration’s attack on the U.S. financial system
By J.E. Dyer on February 2, 2014 at 11:01 pm
You might frown a little if you heard that the Inspector General of the U.S. Postal Service is worried about how much Americans are paying for check-cashing and payday-lending services. What dog does he have in this fight?
Well, catch up, because the Obama administration and the leftosphere have the ball rolling on this. They want Uncle Sam to take over the short-term financial services industry. (Emphasis probably not needed, but added anyway.)
As luck would have it, yesterday a new government report detailed an innovation that would preserve one of the largest job creators in the country, save billions of dollars specifically for the poor, and develop the very ladders of opportunity that Obama has championed as of late. What’s more, this could apparently be accomplished without Congressional action, but merely through existing executive prerogatives.
What’s the policy? Letting the U.S. Postal Service (USPS) offer basic banking services to customers, like savings accounts, debit cards and even simple loans. The idea has been kicked around policy circles for years, but now it has a crucial new adherent: the USPS Inspector General, who endorsed the initiative in a comprehensive white paper.
“As luck would have it.” Right. The Obama administration has been preparing the groundwork for this for some time now. How? By knee-capping the private short-term financial services industry. More on that below.
A maligned industry anyway; who cares?
Those who have been fortunate or disciplined or well-taught enough to do all their financial business, throughout their adult years, with solid, reputable banking institutions probably take a dim view of payday lenders. I know I do. I’ve never had occasion to borrow from one. Once, nearly 30 years ago, I had to cash a check on an emergency basis at a retail check-cashing place. This was back when one’s bank or credit union wasn’t networked with everyone else on the planet, and my credit union’s ATM system was down hard, on a Saturday afternoon. It was horrible: I had to write a check for $50 to walk out with $40. Never again, I swore.
But not all short-term financial services are about offering high-priced options to people with bad credit or sob stories. For a lot of people, there is little point in maintaining a bank account, on which they would have to pay maintenance and check-writing fees anyway, because they wouldn’t keep the minimum balances that eliminate those fees. There are multiple reasons why people sometimes make use of short-term financial services, whether they are cashing checks, loading up Visa check-cards, buying money orders, paying utility bills, or borrowing for short periods of time.
In her op-ed on this matter (see link above), Senator Elizabeth Warren (D-MA) of course describes such people as “underserved” by banks. That is a misleading characterization; most of the people who use short-term financial services could use banks, if it made sense to them to handle their money the way people who use banks do. Quite a few of them are young people, who in ten years will have bank accounts and credit histories.
But Warren’s narrative is how the case will be made that the U.S. federal government should become their banker.
ZitatWhat’s clear is that this is a coordinated campaign to curtail short-term financial services – make them less available from private industry, thus putting hurt on younger, poorer people – and then arrange for Uncle Sam to step into the “breach” artificially created.