WASHINGTON — U.S. senators reintroduced a new version of a retired post office practice to provide an alternative for essential banking services to low-income and rural Americans, and ensure the nation’s postal service remains a public, nonprofit entity.
U.S. Sens. Kirsten Gillibrand, D-N.Y., and Bernie Sanders, I-Vt., reintroduced a new version of the Postal Banking Act in a Facebook livestream event Thursday afternoon to create a sustainable source of funding for the U.S. Postal Service after U.S. Postmaster General Louis DeJoy has been accused of making changes that have slowed mail delivery ahead of the upcoming Nov. 3 election.
“The sad fact is, it’s expensive to be poor in America,” Gillibrand said.
USPS has 30,000 locations nationwide, which the senator said could each provide low-cost banking services to every person in the U.S.
About 25% of Americans are unbanked, or lack a savings or checking account, because they lack the money to access services or their community lacks a bank — especially in rural areas, including significant portions of upstate, Gillibrand said.
“Right now, those families are forced to spend $100 billion on predatory products like payday lenders, check cashing and even overdraft fees, all because they cannot afford to access the financial system many of us take for granted,” Gillibrand said. “We can change that with the new act. ... It would give families access to small-dollar checking and savings accounts, debit cards, low-fee ATMs, online banking services, wire transfers and, most importantly, small-dollar loans so they don’t have to become victims of predatory lenders if their car breaks down or they need to buy a new pair of shoes.”
The postal bank would provide loans to people with a one-month U.S. Treasury interest rate. A bank account would be provided to any person who wanted one, regardless of income.
Large corporations often borrow money at the lowest interest rates, while the same payday lender would charge a 100% or 200% interest rate to low-income Americans, which often include the nation’s Black and brown minority communities.
“The rate banks lend to the world’s financial institutions,” Gillibrand said. “If it’s good enough for them, it’s good enough for the average American. ... It’s a bank account for anyone who wanted it. It’s not meant to be exclusive, it’s meant to be inclusive. This is intended for all people who live in America.”
Gillibrand assured New Yorkers the disparity would improve under the act.
“That would change if there was better access for people who are unbanked and underbanked,” she continued.
Postal banking is nothing new. From 1911 to 1966, the USPS offered several similar banking services, which aided millions of families through World Wars I and II and the Great Depression.
More than 30 other countries have postal savings systems for the poor, or citizens who do not have a safe method to save money, including Canada, the United Kingdom, Italy, India and Israel.
Large banks fail to provide the essential services to the poorest Americans, Sanders said.
“It really is an outrage,” the Vermont senator said, highlighting economic hardship plaguing families in the wake of the COVID-19 pandemic. “If you’re wealthy, you get low-interest loans. If you are poor, you end up paying higher interest rates than anyone else in America. That’s why the rich get richer and the poor get poorer.
“Large banks have largely turned their backs on the needs of lower-income people,” Sanders added. “When I think of ugly aspects of American society today, I can’t think of anything worse than a struggling family having to spend several-hundred percent interest rates on a loan. How disgusting is that that we allow that to go on?”
The act would bolster the USPS with $9 billion in additional revenue and provide financial services throughout rural America, Sanders said.
“We need support for rural America in a big way,” he said, adding the USPS must remain a public, nonprofit entity. “We’ll do everything in the (bill) language to prevent privatizations.”
The Postal Banking Act would ensure the nation’s postal service remains a public institution on the heels of recent private changes to mail processing and delivery.
Gillibrand and U.S. Sen. Charles Schumer, D-N.Y., sent DeJoy a letter Friday calling for the immediate reversal of harmful operational changes as New Yorkers and all Americans heavily depend on the USPS for prescription medications.
“Postmaster DeJoy’s backwards policies and blatant undermining of the post office isn’t just playing politics, it’s playing with New Yorkers’ health and medications in the midst of a pandemic,” Schumer said in a statement. “It is unfathomable that during this pandemic, Mr. DeJoy is creating yet another crisis by refusing to reverse the operational changes that have resulted in days, and in some cases even weeks, of missed doses, threatening the health and potentially the lives of vulnerable New Yorkers. This cannot continue. Mr. DeJoy must immediately fix the changes that impacted the timely delivery of medications.”
DeJoy testified before the House and Senate last month over the removal of mail-sorting machines and mailboxes as part of sweeping operational changes at the U.S. Postal Service. The changes have reportedly slowed down mail delivery amid concerns about the coronavirus pandemic and mail-in ballots for the upcoming election. DeJoy denied attempting to “sabotage” voting by mail.
Schumer and Gillibrand have repeatedly urged DeJoy to reverse operational changes to the USPS, which have severely limited the agency’s ability to deliver mail in a timely manner.
Gillibrand joined local postal union officials Sept. 7 outside a post office in East Syracuse, calling on DeJoy to reverse recent changes that included removing four of 15 high-speed sorting machines from the Syracuse distribution facility, which serves areas from Watertown to Binghamton.
“In the midst of a pandemic and economic crisis, Postmaster General DeJoy has made harmful changes that jeopardize jobs and our ability to vote by mail, and delay critical deliveries for seniors, veterans and small businesses. These disruptions are unacceptable and must be reversed,” Gillibrand said.
Tribune News Service contributed to this report.