Gillibrand Reintroduces Postal Banking Act, Hopes to Close Gap for Underbanked | Government
WASHINGTON — Nearly one in five American adults don’t have a bank account or don’t have the type of account they should have access to, and Senator Kirsten E. Gillibrand is working to bring banking services back to the Postal Service American.
On Wednesday, Sen. Gillibrand, DN.Y., announced the reintroduction of her Postal Banking Act, which would restore postbanking, in which post offices offer checking and savings accounts, small loans, access ATMs and debit cards to customers for a small or no charge.
Postal banking started in 1911 but was phased out in the 1960s.
“The Postal Service has nearly 31,000 locations across the country, in every community from rural towns to downtowns, and each of those locations can serve as a public nonprofit bank,” she said during of a press conference on Wednesday.
According to an analysis conducted by the senator’s office based on information from the U.S. Postal Service’s Inspector General, a postal bank could generate nearly $19 billion in revenue for the service and would fill a hole in the modern banking system that leaves many rural, low-income people and minority groups without easy access to their money.
“Nearly one in five Americans are underbanked, including 40% black adults and 30% Hispanic adults,” says Se. said Gillibrand.
Senator Gillibrand said that 90% of ZIP codes in the United States that do not have a bank on their borders are in rural America.
The results can be costly. When people don’t have access to a bank account to deposit funds or receive loans, they often have to rely on high-cost alternatives.
“This leaves families in these communities with no recourse but predatory lenders who can charge them interest rates that can be 20 times higher than the average credit card interest rate,” said Senator Gillibrand.
She said data shows that underbanked families spend a total of $190 billion a year on payday lending and check cashing services.
The senator’s legislation would allow customers to open interest-bearing savings accounts of up to $20,000 and apply for loans of up to $500 at a time, up to $1,000 over a year after the loan initial. All monetary limits would be increased automatically to counter the effects of inflation.
“These accounts can be used in combination with other federal, state and local programs for alternative savings and supplemental income,” Senator Gillibrand said.
The senator said the program would cost nothing, but rather provide another source of revenue to support and rebuild the US Postal Service, which has been financially unstable and has suffered from staffing issues for many years, compounded by the COVID-19 pandemic. 19.
Senator Gillibrand blamed former President Donald J. Trump and Postmaster General Louis DeJoy, who was appointed by Mr. Trump, for many service issues in 2020, and said it was their policies and decisions financing which led to the drop in service at the Post Office.
“I think to the extent that you would need more staff (for postal banking), that can be funded by the $19 billion in revenue you would create by establishing this program,” she said. .
A pilot program to test postal banking services was launched in September, allowing customers to use checks made out to them in their name by a business to purchase prepaid Visa gift cards, with a $5.95 fee for the service . Only six people used the pilot program in the four offices where it was offered.
Senator Gillibrand blamed Mr. DeJoy for this, saying it was his decision to add the $5.95 fee.
“You don’t even pay CitiBank that much,” she said. “Obviously he was trying to make it not work.”
Mr DeJoy remains postmaster general, but Senator Gillibrand said she hopes that as the Biden administration appoints more officials to the US Postal Regulatory Commission, which oversees the Postal Service, they will get the votes to remove them. Mr. DeJoy as Postmaster General.
“He’s terrible – I don’t support him and I hope we can have a new postmaster general as soon as possible,” she said.
The legislation has three Democratic co-sponsors so far, who are working to enlist the support of Republican senators.
“I’m going to find the Republicans in the next few weeks and when I do that, it increases our chances of getting a vote in Congress and getting it through by the end of the year,” Sen. Gillibrand said.