Source: United States House of Representatives – Congresswoman Marcy Kaptur (OH-09)
Expanded pilot programs can extend financial services to urban and rural communities, reinvigorate beleaguered USPS
Washington, D.C. – Today, Representatives Marcy Kaptur (D-OH), Bill Pascrell, Jr. (D-NJ), Alexandria Ocasio-Cortez (D-NY), today led 33 House members seeking an expansion of postal banking pilot programs to extend banking services to millions of underbanked Americans and revitalize the Postal Service.
“We write to strongly encourage you to include the below language supporting postal non-bank financial services pilot programs in the Fiscal Year 2022 (FY22) House Financial Services and General Government Appropriations (FSGG) Bill. These pilot programs would help Americans, particularly people of color, lacking access to mainstream financial services,” the members write the leaders of the House Appropriations Subcommittee on Financial Services and General Government.
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 Federal Deposit Insurance Corporation found in 2017 that some 63 million adults are considered ‘underbanked’. Underbanked Americans are geographically, economically, and demographically diverse. Ninety percent of zip codes lacking a bank or credit union are in rural areas. Bank branches are also sparse in low income urban communities, with approximately 46 percent of Latino and 49 percent of African American households underbanked. The USPS Office of Inspector General found in two reports that the Postal Service is well-suited to bring basic nonbank financial services to underbanked communities.
“The pandemic has underscored once again postal workers’ deep commitment to serving our communities. But we know that millions still lack access to affordable and reliable financial services. Now’s the time to expand postal financial services and the pilots called for in this letter are a critical first step. Postal workers look forward to this important way to better serve the public,” said American Postal Workers Union President Mark Dimondstein.
“Offering expanded financial services through the U.S. Postal Service is a straightforward step that our nation must take toward addressing the problem of unbanked and underbanked Americans who are forced to rely on costly alternatives to meet their basic financial needs,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “By providing funding for pilot projects for expanded financial services, we can get the ball rolling and prove how beneficial these services will be – not just to the financially vulnerable, but also to shore up the funding for the USPS.”
“Postal banking makes sense for the post office, and it makes sense for America. One in four Americans has limited or no access to a bank. The unbanked are disproportionately Black and Brown, and they pay thousands of dollars a year for fees and services simply because they don’t have this access. The last year has reminded us how critical the post office is for our society and democracy. Saving the post office and bolstering it for decades to come will require investing in its future and expanding its offerings. Even expanding basic financial services offered by the post office can bring in over a billion dollars in revenue in the first year, and it will help fill the gap left by banking deserts. This pilot makes sense at every level,” said Rakim Brooks, senior campaign strategist at the ACLU.
“One in four households in the U.S. doesn’t have access to affordable financial services. It’s not unusual for people in rural areas to be forced to spend $7.50 to withdraw twenty dollars at a gas station ATM, because it’s the only one for miles. But everyone has a post office. Piloting non-bank financial services at the post office would save working families in these communities thousands of dollars and would ultimately bring in over a billion dollars in revenue for the postal service every year. That’s why the Save the Post Office Coalition’s over three hundred member organizations are proud to endorse this language directing the USPS to pilot postal non-bank financial services in the Fiscal Year 2022 House Financial Services and General Government Appropriations (FSGG) Bill,” said Porter McConnell of the Save the Post Office Coalition.
The members’ demand for postal banking expansion is endorsed by a host of organizations including the American Postal Workers Union, Save the Post Office Coalition, American Civil Liberties Union (ACLU), AFL-CIO, Public Citizen, Consumer Action, Communications Workers of America, SEIU, Leadership Conference on Civil and Human Rights, Center for Popular Democracy, Patriotic Millionaires, Take on Wall Street, Sierra Club, Common Cause, Americans for Financial Reform, Social Security Works, Alliance for Retired Americans, National Active and Retired Federal Employees Association (NARFE), Sunrise Movement, Indivisible, American Family Voices, Center for Common Ground, Democracy Initiative, Farm Aid, Food and Water Watch, Franciscan Action Network, Institute for Policy Studies, Global Economy Project, Jobs with Justice, Main Street Alliance, Mainers for Accountable Leadership, National Farmers Union, NETWORK Lobby for Catholic Social Justice, People for the American Way, Progress America, Strong Economy for All Coalition, True North Research, UNITE HERE, Working Families Party, Progressive Caucus Action Fund, Beneficial State Foundation, Campaign Legal Center, Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces, End Citizens United, Friends of the Earth, Lake Oconee Community Church, MoveOn, and the NAACP.
The letter is signed by Reps. Kaptur, Pascrell, Ocasio-Cortez, Alma Adans, Andy Kim, Ayanna Pressley, Barbara Lee, Bobby Rush, Darren Soto, Diana DeGette, Dina Titus, Donald Payne, Jr., Earl Blumenauer, Eleanor Holmes Norton, Frank Pallone, Jr., Ilhan Omar, Jackie Speier, Jamaal Bowman, James McGovern, Jan Schakowsky, Jason Crow, Jesus “Chuy” Garcia, Jimmy Panetta, Marie Newman, Mark DeSaulnier, Mike Doyle, Mikie Sherrill, Mondaire Jones, Nikema Williams, Paul Tonko, Peter DeFazio, Raúl M. Grijalva, Ritchie Torres, Ro Khanna, Salud Carbajal, and Sylvia Garcia.
Rep. Pascrell has been a leader in Congress seeking to protect the Post Office. On January 25, 2021, Pascrell became the first member of Congress calling on President Biden to fire the entire Postal Board of Governors for their silence and complicity in Postmaster General Louis DeJoy’s ongoing sabotage of postal operations. On March 18, Pascrell and Reps. Gerry Connolly (D-VA-11) and Earl Blumenauer (D-OR-03) led over 50 House Democrats urging Biden to immediately remove the entire sitting USPS Board of Governors.
Pascrell is also a strong supporter of widespread postal banking, and in June 2019 his bipartisan amendment allocating $1 million to begin funding a postal banking system was passed by the House of Representatives. In March 2020, Reps. Pascrell and Ocasio-Cortez wrote to the chairman and ranking member of the House Appropriations Subcommittee on Financial Services requesting the inclusion of report language supporting the creation of a postal banking pilot program in the Fiscal Year 2021 House Financial Services and General Government Appropriations (FSGG) bill. Their request was ratified by the full House in July of last year. On April 15, 2021, Pascrell joined U.S. Sen. Kirsten Gillibrand (D-NY) and Reps. Ocasio Cortez and Kaptur in calling for Congress to implement postal banking pilot programs.
The text of the members’ postal banking letter is provided below.
April 28, 2021
The Honorable Mike Quigley The Honorable Steve Womack
Chairman Ranking Member
Subcommittee on Financial Services Subcommittee on Financial Services
and General Government and General Government
House Appropriations Committee House Appropriations Committee
Washington, D.C. 20515 Washington, D.C. 20515
Dear Chairman Quigley and Ranking Member Womack,
We write to strongly encourage you to include the below language supporting postal non-bank financial services pilot programs in the Fiscal Year 2022 (FY22) House Financial Services and General Government Appropriations (FSGG) Bill. 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. [i]
The Federal Deposit Insurance Corporation found in 2017 that some 63 million adults are considered ‘underbanked’.[ii] Underbanked Americans are geographically, economically, and demographically diverse. Ninety percent of zip codes lacking a bank or credit union are in rural areas. Bank branches are also sparse in low income urban communities, with approximately 46 percent of Latino and 49 percent of African American households underbanked.
Individuals lacking access to a mainstream financial service are often forced to use nontraditional financial providers for regular or emergency financial needs. These predatory lenders routinely charge customers rapacious interest rates sometimes as high as 20 times more than the average credit card and can push borrowers into a cycle of poverty.[iii] Every year, approximately 12 million borrowers spend more than $7 billion on fees associated with payday loans.[iv] Often, it is the most vulnerable Americans that take out these loans, including those without a college degree, home renters, African Americans, those earning below $40,000 annually, and those who are separated or divorced.[v] The COVID-19 pandemic has only underscored the critical need for expanded financial services to receive stimulus checks, unemployment insurance, and other federal relief programs.
In two recent reports, the USPS Office of the Inspector General (OIG) found that USPS is well-suited to help bring financial services products to underbanked communities. In 2014, the USPS OIG determined that USPS “is well-positioned to provide non-bank financial services to those whose needs are not being met by the traditional financial sector”. [vi] The report found there is significant demand for these services from underbanked populations that USPS could fill because of its vast network of 35,000 locations across every zip code. In 2015, the USPS OIG concluded that expanding the current financial services offerings at USPS facilities is permissible under current statutory authority and could generate $1.1 billion in additional revenue for USPS annually after five years.[vii]
Expanding statutorily permitted financial services at local Post Offices would help both USPS and the individuals they serve. The American people thankfully have high trust in USPS. According to Gallup, 74 percent of Americans view USPS as excellent or good, while 61 percent of Americans lack faith in traditional financial institutions.[viii] Additionally, some of our closest allies including Spain, Germany, Japan, and the United Kingdom already deliver forms of financial services to their citizens through their postal services.
We thus request that the Committee include the following report language for non-bank financial services pilot programs in the FY22 House FSGG Appropriations Bill:
Postal Non-Bank Financial Services Pilot Programs – The Committee recognizes that USPS is well-suited to provide affordable non-bank financial services. The Committee recognizes the benefits of non-bank financial services to provide critical assistance to tens of millions of unbanked and underbanked Americans. The Committee notes that the USPS is already the largest single provider of paper money orders in the United States, and additionally already provides electronic funds transfers and U.S. Treasury check cashing. The Committee thus directs USPS, in collaboration with the U.S. Treasury and/or Federal Reserve, to carry out pilot programs (in at least five urban zip codes and at least five rural zip codes) to expand its current non-bank financial services to surcharge-free automated teller machines, wire transfers, check cashing, and bill payment to the fullest extent permitted under current statutory authority as described in the 2015 USPS Office of the Inspector General (OIG) Report entitled ‘The Road Ahead for Postal Financial Services’ (RARC-WP-15-011). The Committee directs USPS, in collaboration with the USPS OIG, to provide a report to the Committee within one year of the enactment of this Act regarding its findings.
Additionally, we request the Committee include bill language appropriating $6,000,000 to USPS in FY22 to carry out these pilot programs to expand non-bank financial services offerings.
Thank you for your attention to and consideration of this request.