Postal Banking Gaining Steam in Congress

(This article first appeared in the May/June 2021 issue of the American Postal Worker magazine)

Members of Congress are making waves in the fight to win postal banking in the United States. As they did in the last Congress, Representatives Bill Pascrell (D-NJ-09), Marcy Kaptur (D-OH-09) and Alexandria Ocasio-Cortez (D-NY-14) are leading a group of their colleagues in an effort to secure funding for USPS to pilot certain essential non-bank financial services in the next year.

Pascrell, Kaptur and Ocasio-Cortez, some of the biggest champions of postal banking, are urging their colleagues in the House to support an amendment to the annual appropriations bill that would allocate $6 million and instruct the USPS to pilot surcharge-free ATMs, wire transfers, check cashing, and bill payment at post office locations across the country. Their proposals mirror the demands of the Campaign for Postal Banking, which has long sought a pilot program to demonstrate the Postal Service’s ability to serve the many millions of people in the country who lack access to affordable financial services.

Their proposal recognizes that the Postal Service’s unmatched physical network, and the public’s unrivaled trust in postal workers and the post office, are key strengths that would allow expanded postal financial services to succeed.

In a letter to colleagues, they note, “These pilot programs would help Americans, particularly people of color, lacking access to mainstream financial services. These individuals are often ineligible for banking options due to poor credit or are unable to afford the fees associated with bank accounts and maintain bank account minimums. Millions of Americans in urban and rural areas even live in a ‘bank desert’ or region without immediate access to a brick-and-mortar bank.”

The efforts by members in the House are being supported by Senators Kirsten Gillibrand (D-NY) and Bernie Sanders (I-VT) in the Senate. At a press event announcing the plan in April, Senator Gillibrand noted, “Mainstream financial institutions and predatory lenders often take advantage of underbanked Americans with high fees and interest rates that keep them in a cycle of poverty.” Representative Kaptur, who has joined with the APWU and the Campaign for Postal Banking in organizing to have pilot programs in Ohio said at the press event, “The U.S. Postal Service is perfectly positioned to offer more financial services to every zip code: Rural, urban and suburban. It’s clear that we must act now to reestablish postal banking services.”

The proposal is already meeting some stiff resistance, however. The Independent Community Bankers Association has circulated a document to members of Congress stating “ICBA opposes the formation of new public banks or other types of public retail financial service providers, whether they are owned by states, municipalities, the United States Postal Service (USPS), or any other federal or quasi-federal instrumentality.”

The Credit Union National Association also opposes the effort, writing to House appropriators, “Adding another complex layer to the already hampered capacity of the USPS, raises several serious regulatory and consumer protection questions, and could leave consumers less protected than they would be at a regulated financial institution,” the letter reads. “As such, we urge Congress to explore ways to leverage the credit union system to bring about greater and more equitable financial inclusion.” While the independent banks and the credit unions continue to actively oppose efforts to expand financial services at the Postal Service, they seem less invested in doing the work to actually meet the needs of the unbanked and underbanked in the country. Despite their stated desire to “leverage” their own networks, some 63 million adults in the country still remain unbanked and underbanked.

Supporters of postal banking know that the solution to the problem is not to double down on the existing financial system and its failures to meet the needs of the country. Instead, we must redouble our efforts to leverage the country’s most beloved and truly universal network – the postal network – to meet the country’s needs. While the opposition will be fierce, the opportunity continues to grow, and our organizing efforts must continue apace!