WASHINGTON—Sen. Kirsten Gillibrand (D-NY) has proposed new legislation to create a Postal Bankthat would establish a retail bank in all of the U.S. Postal Service’s 30,000 locations.
“The Postal Bank would effectively end predatory payday lending industry practices overnight by giving low-income Americans, particularly communities of color and rural communities, access to basic banking services that they currently don’t have,” said Gillibrand in a released statement. “The lack of access to traditional banking services makes it nearly impossible for low-income Americans to escape the cycle of poverty because they are often forced to spend large percentages of their income to cash their paychecks or pay back high-interest predatory payday loans.”
The concept of providing financial services through the Post Office has been around for some time and been viewed as both a means of generating revenue to the United States Postal Service and providing services that are lacking in many communities. The postal services of a number of other countries already provide various types of financial services.
Gillibrand continued in the statement, “Millions of Americans are being forced into payday lending schemes that only exacerbate their money problems, and Congress has the ability to wipe out these predatory practices right now by creating a Postal Bank that would be accessible to everyone, everywhere. For millions of families who have no access or limited access to a traditional bank, the simple act of cashing a paycheck or taking out a small loan to fix a car or pay the gas bill can end up costing thousands of dollars in interest and fees that are nearly impossible to pay off. The Postal Bank would solve this problem by putting a retail bank branch in all of the U.S. Postal Service’s 30,000 locations, providing low-cost, basic financial services to all Americans, and effectively ending predatory lending nationwide. Politicians in Washington have taken millions of dollars from payday lenders to help protect this industry’s predatory behavior on hardworking families, and it has to stop.”
What Bill Would Do
Gillibrand’s legislation would establish a retail bank in all of the U.S. Postal Service’s 30,000 locations, including the 1,506 locations in New York State. Gillibrand noted that post offices are located in nearly every community, including many rural and urban low-income communities that have seen many recent bank closures. The Postal Bank would be accessible to Americans of all income levels and would specifically benefit low-income households that have limited or no access to traditional banks, according to Gillibrand’s proposal.
Specifically, under the legislation the Postal Bank would offer the following services:
- Small-dollar checking accounts: low-cost checking accounts for direct deposits, check cashing, and bill paying
- Small-dollar savings accounts: interest-bearing savings accounts that build wealth and could be used in combination with other federal, state, and local savings programs
- Small-dollar loans: low-fee and low-interest rate micro-loans for customers
- Transactional services: debit cards, low-fee cash machines, online services, and bill payments
- Remittance services: domestic and international wire transfers