by: Charles Lane, Opinion writer

With President Obama’s strong support, the Consumer Financial Protection Bureau has launched a regulatory crackdown on payday lending, the short-term, high-cost loans that lower-income people use to cope with cash crunches — at the risk, critics say, of trapping themselves in a cycle of unpayable debt.

The question is, what’s the practical alternative? Payday lending is a $50 billion per year business because there’s a demand for it. People who can’t get quick cash from a storefront operator might turn to loan sharks, and nobody wants that.

To many progressives, including the bane of payday lenders, Sen. Elizabeth Warren (D-Mass.), at least part of the solution is to turn the U.S. Postal Service into a financial institution, with the authority to provide small-dollar loans at reasonable rates — as well as an array of other services, including savings accounts.

Mark Dimondstein, president of the American Postal Workers Union, says the post office could be a “public option” for the quarter of the population that the Federal Deposit Insurance Corp. identifies as being disconnected either totally or partially from the financial system.

continue reading »