“to take on the problems that the unbanked have all across the country”
Kirsten Gillibrand is likely going to run for president in 2020 and is already trying to channel her inner Bernie Sanders. The New York senator is introducing legislation which would make branches of the post office offer banking services, including short term loans.
Daniel Marans reports at the Huffington Post:
Kirsten Gillibrand Unveils A Public Option For Banking
Sen. Kirsten Gillibrand (D-N.Y.) is introducing legislation Wednesday that would require every U.S. post office to provide basic banking services, an ambitious step aimed at improving the lives of Americans with limited financial resources.
The bill brings to Congress for the first time a policy idea that has already won the support of liberal economists and anti-poverty activists: Turning the nation’s sprawling network of U.S. Postal Service facilities into places where working-class and low-income Americans who lack adequate access to commercial banking can obtain low-cost, short-term loans.
The central goal of the bill is to replace risky financial products like payday loans, which can trap borrowers in prolonged cycles of debt, with regulated alternatives.
“This is a solution to take on payday lenders, to take on the problems that the unbanked have all across the country. It’s a solution whose time has come,” Gillibrand said in an interview with HuffPost.
When I suggested that Gillibrand is channeling Bernie Sanders, it wasn’t an exaggeration. In 2015, Joe Pinsker wrote at The Atlantic:
Bernie Sanders’s Highly Sensible Plan to Turn Post Offices Into Banks
In an interview with Fusion’s Felix Salmon the day after last week’s Democratic debate and published Tuesday, Senator Bernie Sanders discussed the marquee features of democratic socialism he’s been tirelessly calling for during his presidential campaign: higher taxes for the wealthiest Americans, an increased minimum wage, and breaking up the biggest Wall Street banks.
Salmon also raised a possibility that has not been as prominent in Sanders’s stump speeches, but animates him nonetheless: turning the U.S.’s post offices into banks. Sanders:
If you are a low-income person, it is, depending upon where you live, very difficult to find normal banking. Banks don’t want you. And what people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off. And, yes, I think that the postal service, in fact, can play an important role in providing modest types of banking service to folks who need it.
Can you guess who else loves this idea? Bryce Covert wrote at The Nation in 2016:
Elizabeth Warren’s Fight Against Payday Lenders Comes to the Post Office
Nine years ago, a Harvard law professor dreamed up a new concept: a government agency devoted solely to protecting consumers from unscrupulous financial companies, the way the Consumer Product Safety Commission protects us from faulty microwaves. Today, Elizabeth Warren’s Consumer Financial Protection Bureau (CFPB) is in full effect, and has already netted Americans about $10 billion in remedies from banks since it started its watch…
Elizabeth Warren has a new crusade, though, and it could fill that vast void: postal banking.
At this point, you may be asking yourself, what could possibly go wrong?
Daniel Greenfield of Frontpage Mag has a few thoughts on this:
The Post Office skill set has nothing to do with making loans. And offering loans to low-income people is a high risk business. That’s why it tends to come with high interest rates.
Low-cost, short-term loans is a formula for losing your shirt…
It’s not a solution. It just puts the taxpayers on the hook for a fortune in defaults. And it means that the government will either have to chase defaulting lenders or write off the losses.
With Dems at the wheel, you can guess which one it will be. And then the losses will get so bad, that the rates will shoot way up and collection agents will be hired to aggressively chase that debt. And, one suspects some of them will have Dem connections.
Whether or not this would work, one thing is sure. This is more proof that Democrats will run hard left in 2020. Gillibrand is clearly trying to get in on the ground floor.
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