WASHINGTON—The Defense Credit Union Council (DCUC) is calling for a “no-nonsense credit union solution” for serving the unbanked and underbanked via the U.S. Postal Service. The DCUC is proposing that credit unions be the financial services solution behind a postal banking effort, not a large bank, should the concept ever become reality, as some in Congress have called for.
“According to federal financial regulators, there are still over 24 million adults in the United States who are unbanked and underbanked throughout the United States,” said DCUC President and CEO Anthony Hernandez. “Heavy reliance on money orders, check cashing services, pawn shop loans, auto title loans, payday loans, and paycheck advances as their only means to manage their finances rapidly diminishes household income via excessive fees and interest rates. DCUC believes this is simply legal loan-sharking in plain sight.”
Hernandez reminded that low-income and minority households suffer the most as banks have “relocated in search of better profit margins.”
‘Especially Egregious’
“This is especially egregious as our nation re-emerges from the financial effects of the pandemic,” said Hernandez. “It is equally alarming to read about a large Wall Street mega-bank in discussions with the U.S. Postal Service to test ATMs and other banking services at post offices as a solution.”
Hernandez, in a letter sent this week to the House Appropriations Subcommittee on Financial Services and General Government, said the bank partnership should be returned to sender.
“Allowing Wall Street mega-banks free rein to solicit customers from community post offices would amount to nothing more than a power grab aimed at bolstering profits,” wrote Hernandez. “Plus, the process in selecting this mega bank has not been transparent. There are many unanswered questions. Particularly when there is a better alternative for these underserved communities that is ready, willing, and able to serve.”
A ‘Great Example’
Hernandez said defense credit unions offer a great example of how DCUC’s proposed concept could work.
“In fact, the Federal Credit Union Act and Department of Defense regulations already allow credit unions to operate on military installations. The same concept could govern credit union operations in post office lobbies,” he said. “This alternative solution is both workable and necessary—credit unions that do not want to participate do not have to, while those that do can meet whatever legal requirements necessary for a credit union to work with the U.S. Postal Service and start serving consumers.”
Hernandez asserted a similar process could be established by NCUA that allows credit unions to bid for the right to provide financial services to unbanked and underbanked citizens at a post office.
A ‘Legal Mandate’
“This would be very similar in the way the Department of Defense selects a defense credit union,” he said. “DCUC believes this alternative post office solution comes along at a time when credit unions are looking for ways to fulfill our legal mandate to serve.
“Credit unions were created in order to better serve people,” he said. “The Defense Credit Union Council stands ready to assist in exploring this alternative.”