With the goal of providing a robust public banking alternative to abusive Wall Street institutions, Sens. Kirsten Gillibrand and Bernie Sanders unveiled legislation Thursday that would make "low-cost basic financial services" available at tens of thousands of U.S. Postal Service locations across the country.
During a virtual event introducing the Postal Banking Act (pdf) Thursday afternoon, Gillibrand said the bill would "bring banking to the one in four Americans who are currently unbanked or underbanked" because they lack either sufficient funds or access to a bank in their communities, leaving them vulnerable to "predatory practices" by payday lenders and other institutions.
"We want to basically put the predatory lenders out of business," said Gillibrand, who emphasized that the legislation would make postal banking services available to everyone in the U.S., regardless of income.
Watch Gillibrand and Sanders answer questions about their bill:
According to a summary of the legislation provided by Sanders' office, the Postal Banking Act would help "families generate savings, wealth, and credit, while bringing millions of American workers into a more fair banking system. It will also provide the United States Postal Service with a sustainable and significant revenue source."
The bill would allow the post offices nationwide to provide a number of key banking services, including:
- Small Dollar Checking Accounts: Checking accounts for direct deposits, check cashing, and bill paying, not to exceed $20,000 per account.
- Small Dollar Savings Accounts: Provides the same interest rate as FDIC insured accounts, and could partner with savings programs and benefits like SNAP or the EITC. Not to exceed $20,000 per account.
- Small Dollar Loans: "All-In" interest rates that match the 1 month Treasury Bill, about 2%. All servicing done by USPS.
- Transactional Services: Debit cards, low-fee cash machines, online services, and bill payments.
- Remittance Services: Domestic and international wire transfers.
The measure also includes a provision requiring the services to be provided by the USPS, not outsourced to a Wall Street bank like JPMorgan Chase.
"It is absolutely unacceptable that communities all over America lack traditional banking services," Sanders said in a statement. "During the worst economic crisis since the Great Depression, we need to make sure that everyone in America is able to receive the affordable banking services that they desperately need."
"No one in America should have to pay a 400% interest rate on a $375 loan from a payday lender," the Vermont senator continued. "The time has come to put predatory lenders out of business and provide affordable banking options to all Americans through the United States Postal Service. And that is exactly what our legislation will do."
A longstanding goal of progressives, postal banking received an endorsement in July from the joint unity task forces organized by Sanders and Democratic presidential nominee Joe Biden.
"Government should provide easily accessible service locations, especially postal banking, to make it possible for everyone to access physical banking locations," reads a report (pdf) detailing the task forces' policy recommendations.
Susan Harley, managing director of Public Citizen's Congress Watch division, said in a statement Thursday that "instead of wrecking a beloved American institution that is enshrined in our Constitution and is crucial to our democracy, we should be strengthening the Postal Service with postal banking."
"At a time when the Trump administration and his postmaster general are focused on dismantling the Postal Service, privatizing it, and handing it over to greedy corporations," said Harley, "it's fantastic to see Sanders and Gillibrand taking the opposite approach."
This article has been updated with statements from Sen. Bernie Sanders (I-Vt.) and Public Citizen.