Bill introduced in Senate to create Post Office Banks

Sen. Kirsten Gillibrand

Sen. Kirsten Gillibrand. Photo courtesy HuffPost.

 

Postal retail banks would be immediately dramatically helpful to 34 million families in the country. Yesterday Sen Kirsten Gillibrand introduced legislation that would require every US post office to provide basic banking services. This is a service the Post Office offered until the 1950's. 

Having the ability to cash checks and obtain low-cost short term loans at the local post office would free millions of people from the clutches of the unscrupulous, predatory payday lenders to which people routinely pay triple digit fees to borrow money for bills that come due before their next paycheck. If you need a typical payday loan of $375, expect to pay an extra $520 in interest and fees, according to Pew Charitable Trusts. These outrageous charges throw working people into a never-ending quagmire of debt just to keep the lights on.

Nearly a quarter of American households — one in four — are either unbanked or underbanked and rely on payday loans or “alternative” lenders, and the situation overwhelmingly impacts people of color.

In an interview with Daniel Marans in HuffPost, Gillibrand said:

“This is a solution to take on payday lenders, to take on the problems that the unbanked have all across the country. It’s a solution whose time has come. … Literally the only person who is going to be against this is somebody who wants to protect payday lender profits.”

Daniel Marans’ article continues:

“To hear Gillibrand and other postal banking proponents tell it, the Postal Service and underbanked Americans are the perfect complements.

"The postal system’s 30,000 locations touch every community. A majority ― 59 percent ― are in so-called banking deserts, or zip codes that have either no bank branches or just one. …

"Under Gillibrand’s proposal, Americans could cash paychecks and deposit money in accounts free of charge at each post office location. Deposits would be capped at the larger of two amounts ― $20,000, or the median balance in all American bank accounts.

"The postal banks would be able to distribute loans to borrowers of up to $1,000 at an interest rate slightly higher than the yield on one-month Treasury bonds, currently about 2 percent.

[Read the full article]


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