• Cloakroom Confidential: Post Office Loans? The Latest Terrible Idea From The Left

    The left can’t help but to find ways to attack free market capitalism and grow government. The latest harebrained idea from the left is to convert post offices into a local distributor of loans. Nobody on Capitol Hill should take this idea seriously.

    Socialist Senator Bernie Sanders of Vermont (I-Vt.) and lefty populist Elizabeth Warred (D-MA) have pushed the idea as a way to push consumers of small dollar lending out in the cold and reliant on the Post Office. Here is how Bernie Sanders described the idea to Fusion on October 20, 2015, “I just spoke to a postal union this morning. I want to see our post office be reinvigorated. And one of the ways that I think we can help not only the U.S. Postal Service, but help a lot of low-income people—if you are a low-income person, it is, depending upon where you live, very difficult to find normal banking. Banks don’t want you. And what people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off. And, yes, I think that the postal service, in fact, can play an important role in providing modest types of banking service to folks who need it.” But he is wrong.

    The high interest rates are low in dollar figures, because they are very short-term loans. Much like you pay more for a last minute flight or car rental, the last minute loan does translate into a higher interest rate, but it is not much money because these are small dollar loans. Also, makes more sense to take out a small dollar loan than to get hammered with a late fee to pay off another bill or a bounced check fee. When put in perspective, the small dollar loan industry provides a very important service to individuals who are in need of quick cash.

    Taylor Millard at Hotair hit the idea of the U.S. Postal Service serving as a back a while back and argued that it is a bad idea to entrust these financial services to an entity that has lost so much money over the past few years. Millard argues “The fact is USPS isn’t making any money at all. It lost $5.5B in 2015 and lost almost $16B in 2012. Turning it into a bank probably won’t save it, despite the hopes and dreams of people like Sanders and Warren. There’s also the question as to whether the entire thing should just be shut down, even if it’s in the Constitution (although it doesn’t say Congress has to keep the Post Office operational). It’s just another example of government not wanting to relinquish power, even when the facts and numbers don’t add up.” If they can’t make money off mail delivery services, then why expand the scope of the responsibility of the inefficient and notoriously slow U.S. Postal Service.

    Insiders believe that this populist idea is merely a way to demonize the small dollar loan financial sector and a way to drum up populist rage against anything resembling a bank.

    Cloakroom Confidential

    Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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