Gillibrand reintroduced Postal Banking Act, hopes to close gap for underbanked | Featured Story
WASHINGTON — Nearly one in five American adults either don’t have a bank account or don’t have the type of account they should have access to, and U.S. Senator Kirsten E. Gillibrand is working to bring banking back to the service US postal.
On Wednesday, Sen. Gillibrand, DN.Y., announced the reintroduction of his Postal Banking Act, which would restore postal banking, where post offices offer checking and savings accounts, small loans, a access to ATMs and debit cards to customers for little or no charge.
“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.
According to an analysis conducted by the senators’ office, based on information from the inspector general of the U.S. Postal Service, 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 and minority groups without easy access to their money.
“Nearly one in five Americans are underbanked, including 40% black adults and 30% Hispanic adults,” she said.
The problem is worse in rural areas of the country. 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 expensive. When people do not have access to a bank account to deposit funds or receive loans from, they often have to resort to 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 nearly $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 to create alternative savings and supplemental income,” Senator Gillibrand said.
And, the senator said the program would cost nothing, but instead provide another source of revenue to sustain and rebuild the U.S. Postal Service, which has been financially unstable and has suffered from staffing issues for many years, compounded by the COVID-19 pandemic. .
Senator Gillibrand blamed former President Donald J. Trump and Postmaster Louis DeJoy, who was appointed by Mr. Trump, for many service issues seen in 2020, and said it’s their policies and practices. funding decisions that led to the decline in service. at the USPS.
“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 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 United States Postmaster General, but Senator Gillibrand said she hopes the Biden administration appoints more officials to the U.S. Postal Commission, which governs the USPS, that they get the votes for. remove 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, introduced Wednesday, has three Democratic co-sponsors so far and is also working to win support from Republican senators.
“I’m going to find the Republicans in the next few weeks and when I do, it increases our chances of getting a vote in Congress and getting it through by the end of the year,” Sen. Gillibrand said.