While multiple postal banking proposals have been floated lately, CUNA Chief Advocacy Officer Ryan Donovan says none of them would help the problems they aim to solve. Writing in American Banker, Donovan says credit unions are the already-in-place solution to combat financial services deserts and reach more underbanked communities.
One proposal would involve a partnership with JPMorgan Chase to place ATMs in post offices, another from Sen Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortex (D-N.Y.) would also use post offices to create additional financial services access.
“[T]his is certainly a ‘let them eat cake’ solution, especially when these ATMs will presumably come with fees for those who don’t have a Chase account,” Donovan writes. “That means that the same megabank that continues to post record profits for investors will be able to siphon even more hard-earned money from rural and low-income consumers to further line the pockets of those same investors.
“To be fair, the negotiations underway do not represent the solution that congressional Democrats proposed earlier this year,” he adds. “But their proposal, for a publicly run national postal bank, still wouldn’t solve the problem. As the recent debates underscore, our postal system is already in dire straits.”
With all the U.S. Postal Service funding issues that currently exist, Donovan says adding additional highly regulated services and products doesn’t seem to be a solution.
“If the goal is to promote thrift and provide access to credit for provident purposes, especially for low-income and rural folks, then the ideal financial service partner should operate under an equitable, not-for-profit model,” he writes. “For over a century, credit unions have been putting the consumer ahead of profit, providing safe, affordable, quality services that are responsive to the specific needs of the communities they serve.
“Credit unions always have members’ financial well-being at heart, and will actually work with folks to find the solutions that meet their needs and to help consumers make their money work for them, not Wall Street,” he adds.
Donovan also appeared on American Banker’s latest episode of Bankshot, its podcast on banking matters, to discuss postal banking and credit unions.