Says It Would Reach More Poor People
April 29, 2020
U.S. Sen. Kirsten Gillibrand, D-NY, wants Congress to bring back postal banking. It’s an issue she’s been fighting for over the past 12 years.
Gillibrand argues postal banking would "provide basic banking services to the millions of Americans without a bank account or those forced to use predatory financial products like payday lenders." The senator originally made her comments in a New York Times op-ed.
The New York senator, according to the website Banking Dive, first introduced legislation for renewing postal banking back in 2008. Former presidential candidate U.S. Sen. Bernie Sanders also supports a return to postal banking, which was available in the U.S. from 1911 to 1967.
"Nearly 10 million American households have no bank account, forced to use costly, fringe financial products," Gillibrand wrote in the op-ed. "Even before the pandemic, these households spent a combined $100 billion a year to cash checks, send money to relatives and take out payday loans for their bills. It’s expensive to be poor in America."
Gillibrand’s proposal has not been met with universal support. Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, called the idea "ill-advised” and "fraught with unintended consequences," in a letter to the House of Representatives last year.
Allowing the post office to handle sensitive financial information poses risks to consumer security, Rainey told Newsweek.
Read more about possibly resuming postal banking.
The Bottom Line
Most financial institutions have tremendous excess capacity in their existing branches today.
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