Buffalo, NY – U.S. Senator Kirsten Gillibrand today stood with community leaders and advocates at PUSH Buffalo to announce the Postal Banking Act, her legislation to create a retail bank in all of the U.S. Postal Service’s 30,000 locations. The Postal Bank would give low-income Americans, particularly in communities of color, access to basic banking services that are very often unavailable to them.
New York has some of the strongest anti-predatory lending laws in the country, but almost a quarter of New Yorkers still have limited access to traditional banking services, and eight percent have no access to these services. This problem is particularly pronounced in Buffalo, which a recent report found to be one of the top ten unbanked large cities in the United States. Since low-income households have limited access to traditional banking services such as checking and savings accounts, they are forced to spend their money on predatory services such as prepaid debit cards, rent-to-own stores, and overdraft fees. This makes it nearly impossible for them to escape the cycle of poverty. Gillibrand’s legislation would provide low-income New Yorkers a low-cost, basic, and safe financial alternative to these predatory practices.
“In low-income neighborhoods all over Western New York, many families don’t have any access to even the most basic banking services like checking accounts and debit cards, and they end up getting preyed on by unethical businesses, predatory lenders, high-fee ATMs, and loan sharks that take advantage of people who they know don’t have any other options. This is exactly why it’s expensive to be poor, and it’s a problem that especially hurts our communities of color,” said Senator Gillibrand. “The Postal Bank would give low-income New Yorkers a safe and inexpensive place to hold and use their money or take out small loans, no matter where in the state they live, and it would finally end predatory lending once and for all. This would make a huge difference for families throughout Western New York, and I will keep fighting as hard as I can to get this important legislation passed into law.”
“Commercial banks in our region have redlined poor communities and communities of color for far too long. Our communities cannot build wealth without access to capital, including non-extractive, low-cost financial products and services. PUSH Buffalo has held banks accountable to Community Reinvestment Act regulations and have won some important concessions and community benefits. This work has been necessary but insufficient to correct for decades of discriminatory lending practices. We need real solutions that put our people first. If passed, the Postal Banking Act would provide local residents with a powerful new community wealth building resource that we believe can disrupt dominant banking business models responsible for perpetuating conditions of racialized poverty in neighborhoods across the City of Buffalo,” said John Washington, Organizing Director with PUSH Buffalo. “Postal Banking with community control can make huge steps toward bringing resources to communities struggling to recover from generations of redlining and divestment.”
Gillibrand’s Postal Banking Act would establish a retail bank in all of the U.S. Postal Service’s 30,000 locations, including every post office in New York State. Post Offices are located in nearly every community, including many rural and urban low-income communities that have seen many recent bank closures. The Postal Bank would be accessible to Americans of all income levels, and would specifically benefit low-income households that have limited or no access to traditional banks.
The Postal Bank would effectively wipe out predatory payday lending industry practices because low-income workers would be able to take out low-interest, small-dollar loans from the Postal Bank instead of being forced to rely on predatory payday lenders. High-cost, predatory financial products like payday loans cost the average underserved household 10 percent, or $2,412, of their gross income in fees and interest. This adds up to billions of dollars of lost savings for low-income families across the country, and results in diminished funding for rent, food, and childcare, as well as an inability to build credit. Under Gillibrand’s bill, any American could open an account at the Postal Bank.
Specifically, the Postal Bank would offer the following services:
- Small-Dollar Checking Accounts: Low-cost checking accounts for direct deposits, check cashing, and bill paying.
- Small-Dollar Savings Accounts: Interest-bearing savings accounts that build wealth and could be used in combination with other federal, state, and local savings programs.
- Small-Dollar Loans: Low-fee and low-interest rate micro-loans for customers.
- Transactional Services: Debit cards, low-fee cash machines, online services, and bill payments.
- Remittance Services: Domestic and international wire transfers.