A Public Bank At The Post Office?

What’s the story?

• Did you know that the U.S. Postal Service provided savings and deposit services for Americans from 1911 to 1967? Sen. Kirsten Gillibrand is introducing legislation Wednesday to return basic savings and deposit services to the nation’s post offices, and expand those service to include lending as well.

According to a press release on Gillibrand’s website, the bill would mandate that the Postal Service 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.

• HuffPo reports, “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.”
• Payday lenders, and the billions they make lending to low-income Americans at exorbitant interest rates, are a target of the legislation. The Pew Charitable Trust released a study that shows the average payday loan of $375 accrues the borrower interest and fees of $520. Most payday lenders are located in communities of color, and the costs of payday lending are disproportionately born by people of color, Gillibrand pointed out.
• Gillibrand called out lawmakers for accepting money from the payday lending industry at the expense of Americans, “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.”
• The plan, which would require start-up costs via either a loan from the Treasury or Congressional appropriations, would more than pay for itself and could save the postal service. A 2014 study by the Postal Service Inspector General estimated that if even 10 percent of the money Americans currently spend on interest and fees for risky financial products went toward postal banking loans that cost 90 percent less, the Postal Service would gain almost $9 billion in annual revenue.

What do you think?

Do you support the idea of the post office offering basic banking services? What do you see as the risks or benefits?

Tell us in the comments what you think, then use the Take Action button to tell your reps!

— Asha Sanaker

(Photo Credit: Wikimedia / Creative Commons)