The U.S. Postal Service was on shaky financial ground before the coronavirus pandemic, but it’s become even worse since. But U.S. Sen. Kirsten Gillibrand has an idea that might make the centuries-old institution solvent again — turn post offices into banks.
It’s not as far-fetched as one might think. Banking at post offices was essential during the Great Depression, Gillibrand said in a weekend opinion piece published in The New York Times. Adding such banking services to post offices could open up such a world to those who might not have access to bank accounts and other financial services otherwise, Gillibrand said.
“Nearly 10 million American households have no bank account, forced to use costly, fringe financial products,” Gillibrand said, like payday lenders. “Even before the pandemic, these households spent a combined $100 billion a year to cash checks, send money to relatives, and take out payday loans for their bills. It’s expensive to be poor in America.”
Gillibrand’s Postal Banking Act would turn 30,000 post offices in the nation into branches of a non-profit bank, offering low-cost checking and savings accounts, as well as services to ATMs, mobile banking, and low-interest loans.
“Not only would this allow families without much income to keep their own money, but a 2014 postal service inspector general’s report found that a similar version of postal banking could create $9 billion in revenue a year,” the senator said.
The postal service has as much as $161 billion in debt from an unusual prepaid retiree benefits program established more than a decade ago requiring the agency to finance health care and pension obligations running through the 2080s now.
Gillibrand has called for the repeal of that law, which she said would otherwise have had the postal service operating in the black just before the pandemic.