Medium - It's Time to Guarantee Every American Access to Basic Banking Services

Op-Ed

By Kirsten Gillibrand and Bernie Sanders

The American people are facing immense challenges from the pandemic, the economic meltdown, and our country's long history of racial inequality. Deeply misguided federal policy from the Trump Administration has only added fuel to the fire, putting so much in jeopardy -- from the finances of hardworking families to the future of the post office.

To help address those challenges, we're reintroducing a new version of the Postal Banking Act.

Postal banking--putting a nonprofit bank in every post office--will generate up to $9 billion of revenue a year for the Post Office, allowing it to remain operational -- and public. That's critical, because millions of Americans rely on the USPS for their prescription medication, their paychecks, and their ballots. The USPS has a constitutional obligation to provide the same service to all of us, whether you live at the end of a dirt road or work on Wall Street. No private, profit-driven company would have that obligation, or even try to meet it.

We know that because we've seen corporations and banks leave rural and low-income communities in droves. Today, one in four Americans are unbanked or underbanked -- either because their community doesn't have a bank at all or because they don't have the funds to access bank services.

If you're wealthy you can easily open a bank account and get low interest loans. If you're not wealthy, you can't. If a bank doesn't see you as a source of profit, they're simply not interested. That leaves far too many people with no options other than costly, predatory products. Every year, hardworking families are forced to spend $100 billion on predatory products like payday loans, check cashing services, and even overdraft fees just to access their own money.

The sad truth is, it is expensive to be poor in America. We have to change that.

Postal banking will help us bring the same equality of service the USPS has for mail delivery to the financial system. Putting a public, nonprofit bank in each of the Postal Service's 30,000 locations will bring low-cost banking services to people of every income level everywhere from rural communities to inner cities.

The Postal Banking Act would give families access to the financial system many of us take for granted. It would offer small dollar checking and savings accounts, debit cards, low-fee ATMs, online banking services, and wire transfers. Most importantly, it would also offer small dollar loans so that if a family's car breaks down or they need to buy their child new shoes or stock up on school supplies, they won't have to go to payday lenders who might charge them 200% interest that they'll be paying back for years.

At postal banks, loans would use the one-month Treasury Rate, the interest rate at which many of the world's largest financial institutions are lent money. It's often as low as 2%. This legislation says that if that rate is good enough for Wall Street, it's good enough for every American.

The difference between 2% interest and 200% interest is an economic justice issue and a racial justice issue. Big banks often overlook or avoid low-income and minority communities. That makes it disproportionately harder for Black and brown Americans to get money to start a business or to access a microloan, pushes them to predatory services and further widens the racial wealth gap. Postal banks would provide an antidote to that institutional racism by making financial services affordable to everyone, allowing families to save all of the money they would've spent on exorbitant interest rates and fees and start accruing wealth. That will also make it easier for families to recover from a financial setback, which is especially important in the face of COVID and the economic crisis.

This bill will help us rework the entire financial system. And the best thing about postal banking is that we already know it works. Today, the USPS does over $20 billion a year in money orders, and from 1911 to 1966 it offered many of the products we are proposing, helping millions of low income families through the Great Depression and two World Wars.

Postal banking was America's most successful experiment in financial inclusion. At this moment, when families are facing growing economic uncertainty and a widening wealth gap, it could not be more needed.

Our bill will also ensure that postal banks, and the postal service at large, would remain public institutions, and stop the slow creep toward privatization. Putting banks in post offices is not about creating opportunity for big banks, it's about creating opportunity for the American people.

Together, we will guarantee basic banking services and financial opportunity for all -- no outrageous fees or interest rates -- all at your local post office.

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