I like where her head is:
Sen. Kirsten Gillibrand (D-N.Y.) will offer a bill to establish retail banking services at every U.S. post office, her office announced Wednesday.
Gillibrand will introduce a bill that would make the U.S. Postal Service (USPS) offer checking and savings accounts, small-dollar loans, debit cards, cash withdrawals and money transfer services in each of its roughly 30,000 offices.
The proposal has been popular among liberals for several years, but has earned recent mainstream support from prominent progressive politicians. Supporters of postal banking say it could give millions of Americans in areas without banks access to essential financial tools.
U.S. post offices offered banking services in the early 20th century, and supporters of bringing back the practice say it would help undercut predatory lenders and short-term, high-interest “payday” loans.
Here’s some more info:
Under Gillibrand’s proposal, Americans could cash paychecks and deposit money in accounts free of charge at each post office location. Deposits would be capped at the larger of two amounts ― $20,000, or the median balance in all American bank accounts.
The postal banks would be able to distribute loans to borrowers of up to $1,000 at an interest rate slightly higher than the yield on one-month Treasury bonds, currently about 2 percent.
A postal banking system would be an alternative to the for-profit payday lending system, in which people routinely pay triple-digit fees to borrow money for bills that come due before their next paycheck. The average payday loan of $375 typically costs a borrower an additional $520 in interest and fees, according to Pew Charitable Trusts.
These costs are disproportionately shouldered by the most vulnerable people in the economy: Lower-earning workers who can’t afford fees that commercial banks levy if an account balance falls too low, or simply live in an area that lacks a traditional banking option. The lack of resources typically precludes these Americans from qualifying for a credit card with a reasonable interest rate.
More than one-quarter of Americans households (34 million homes) are either “unbanked” ― meaning they lack someone with a bank account altogether ― or “underbanked” ― relying on payday loans or other so-called alternative lenders to supplement the services of a traditional bank.
Their predicament shows how expensive it is to be poor in America. The average underbanked household has an annual income of $25,500, and spends nearly 10 percent on alternative financial products and associated fees, according to a 2011 KPMG study.
Due in no small part to racial wealth and income gaps, black and Latino households are more likely to be both unbanked and underbanked. The unbanked rate among black households is 18.2 percent, compared with 7 percent for the population as a whole.
“There is a huge racial justice issue,” Gillibrand said. “The average person who gets a payday loan is a 44-year-old African American single mom. It overwhelmingly affects communities of color.”
For more information, click here to contact Gillibrand’s about her bill.
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