Senator Kirsten Gillibrand, D-NY, wants Congress to pass legislation that would bring back postal banking, the senator wrote in a New York Times editorial published on Sunday.
The former presidential candidate said a postal banking system “would provide basic banking services to millions of Americans without bank accounts or those forced to use predatory financial products like payday lenders.”
- The editorial follow comments from President Donald Trump who said on Friday he would not approve a $ 10 billion bailout of the US Postal Service unless he hiked prices.
Gillibrand has advocated for the U.S. Postal Service to offer retail banking services in the past, saying the agency has the ability to provide low-cost financial services to poor and rural communities that lack bank branches.
The senator presented the Postal Banking Act in 2008. Gillibrand said the legislation would take advantage of the more than 30,000 postal service locations to create access to a nonprofit bank in every community across the country.
“Nearly 10 million American households do not have a bank account, forced to use expensive marginal financial products,” Gillibrand wrote on Sunday. “Even before the pandemic, these households were spending a total of $ 100 billion a year to cash checks, send money to relatives and take payday loans for their bills. Being poor in America is expensive.”
Postal banking was available in the United States from 1911 to 1967, according to the Campaign for postal banking.
A return to the system would also help with the delivery of the coronavirus stimulus checks, said Mehrsa Baradaran, a law professor specializing in banking law at the University of California, Irvine.
The Internal Revenue Service (IRS) has so far paid out $ 157.9 billion in 88 million stimulus checks, representing more than half of the money sent, MarketWatch reported Tuesday.
Most of the stimulus checks, which are part of the $ 2.2 trillion CARES law, which Trump enacted last month, have been deposited into individual bank accounts using account information the IRS has. holds for taxpayers.
While many Americans began receiving their first stimulus checks on April 15 via direct deposit, unbanked households are having to wait longer for paper checks.
“If you don’t have a bank account, you can wait five weeks or five months, for some people, and then you have to pay someone to cash it out for you,” Baradaran told Banking Dive.
About 6.5% of U.S. households were unbanked in 2017, according to a study by the Federal Deposit Insurance Corp. (FDIC).
The agency said that proportion represents about 8.4 million households, made up of 14.1 million adults and 6.4 million children.
A postal banking system would be “simple, free and straightforward, and have no identity problems,” Baradaran said.
“This is the innovation of the post office from hundreds of years ago – everyone has an address, everyone has an identity,” she said. “And you can link that to any of the services the government already needs an identity for, like Social Security and Tax ID, and just send it directly. You don’t need a intermediate.”
But calls for the reestablishment of a postal banking system have not received universal support.
America’s Independent Community Bankers President and CEO Rebeca Romero Rainey called the idea “misguided” and “fraught with unintended consequences” in a statement. letter in the House of Representatives last year.
Allowing the Post to process sensitive financial information poses risks to consumer safety, Rainey said News week.
Rainey also asked why the post office, which lost $ 3.9 billion in 2018, should be tasked with providing banking services, saying community banks are a more logical choice to fill gaps left by big banks. .
Equipping all Postal Service sites with the ability to distribute banking products would be costly, said Ben Jackson, senior analyst at Mercator Advisory Group. American banker in 2012. But a financial services partner could help cover some of the start-up costs, he said.