Postal Banking Resolutions Passed at 2014 U.S. Conference of Mayors

The following resolutions were passed at the June 23, 2014 Business Session of the 82nd Annual Meeting of the U.S. Conference of Mayors; pages 185-189 of the “Adopted Policies:”

IN SUPPORT OF “POSTAL BANKING” TO HELP FUND A

NATIONAL INFRASTRUCTURE BANK

WHEREAS, the nation’s roads, bridges and other public structures (collectively,

infrastructure”) currently require $2.75 trillion worth of repair and replacement by 2020,

according to the American Society of Civil Engineers; and

WHEREAS, the cost of privately financing such infrastructure projects can add

anywhere from 50% to more than 200% to such projects’ actual cost; and

WHEREAS, such financing costs place increasingly unacceptable burdens on municipal

capital budgets and taxpayers; and

WHEREAS, Sen. Mark Warner (D-Va.), Sen. Roy Blunt (R-Mo.) and other leaders have

proposed creation of a National Infrastructure Bank to help fund public infrastructure

projects at minimum financing cost; and

WHEREAS, such an Infrastructure Bank has not yet been enacted and implemented

in part because sources of capitalization must be determined; and

WHEREAS, the Office of Inspector General (OIG) of the United States Postal

Service (USPS) proposed on January 27, 2014 that the USPS provide certain basic

financial services, including savings accounts, primarily to low-wage workers and

low-income retirees; and

WHEREAS, market forces have prompted banks to shutter more than 2,200 branches

in 2012 alone, mostly in low-income neighborhoods (thereby creating “bank deserts”)

while opening new branches in higher-income neighborhoods; and

WHEREAS, nearly 60% of America’s 30,000+ US Post Offices are located in “bank

deserts,” i.e., zip codes having zero or only one bank branch; and

WHEREAS, the US Postal Service previously offered savings accounts to the

American People for more than half a century, from 1911 to 1966; and

WHEREAS, the citizens of nearly every other developed nation enjoy the benefits of

postal savings, but Americans are currently denied this “public option”; and

WHEREAS, postal savings deposits could significantly contribute to the formation

of a capital base for a National Infrastructure Bank,

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of

Mayors does hereby support the aims and goals of the USPS OIG’s proposal to establish

postal banking including, and specifically, postal savings accounts; and

BE IT FURTHER RESOLVED, that The United States Conference of Mayors

strongly advises that postal savings deposits be applied to the formation of a capital

base for a National Infrastructure Bank, with the aim of substantially reducing

financing costs for municipal public works projects.

Projected Cost: Unknown

 

IN SUPPORT OF “POSTAL BANKING” TO PROVIDE A LOWCOST

NATIONWIDE ALTERNATIVE TO PAYDAY LENDERS

WHEREAS, 76% of American families live “paycheck to paycheck” with little or no

savings for emergencies, as found by a BankRate.com study (2014); and

WHEREAS, nearly 25 million US workers earn less than $10.10 an houritself below

poverty level for a single mother working 35 hours per week to support two children; and

WHEREAS, approximately 12 million people turn to small-dollar, short-term “payday

loans” to make ends meet or cover emergency expenses, according to the Pew Charitable

Trusts (2012); and

WHEREAS, payday borrowers typically have no cash cushion, no savings, poor or

no credit, and nowhere else to turn but payday lenders and other such financial

predators; and

WHEREAS, these predators charge exorbitant fees and usurious interest that result in

effective annual percentage rates (APRs) averaging nearly 400%, also according to

Pew; and

WHEREAS, such predatory fees and interest total, on average, $520 on a typical $375

loan; and

WHEREAS, such predators impose rules designed to entrap desperate borrowers,

such as loan terms averaging 14-17 days, according to a Milken Institute report

(2014); and

WHEREAS, the typical payday borrower is trapped for at least seven debt cycles on

a given loan, staying indebted at high cost for more than half the year, according to

Consumer Financial Protection Bureau (CFPB) data (2013); and

WHEREAS, the excessive portion of predatory charges totals nearly $2,190 per

payday borrower per year, based on data cited by the Office of the Inspector General

(OIG) of the United States Postal Service (USPS), an amount that is:

equal to more than a full month’s hard-earned wages for the working poor, or

nearly equal to a poverty-level family’s average annual food budget, or

more than 93% of the average Earned Income Tax Credit (EITC), designed by

Congress to assist lower-income working families and not to be taken by

financial predators; and

WHEREAS, excessive costs of “alternative financial services”—including, and

especially, costs of payday loans and reloadable money cards on which unbanked and

under-banked people commonly relytotaled approximately $80 billion in 2012 and

was anticipated to rise by approximately 10.5% in 2013, according to data cited by

the USPS Office of Inspector General; and

WHEREAS, returning said $80 billion per year to the control of people from whom it

is taken, would enable said individuals and families to better care for their own needs;

and

WHEREAS, returning to said people essentially a full month of their own wages,

would result in substantial positive impacts, such as:

easing demand on services provided by local nonprofits and on tax-supported

public services; and

substantially reducing the need to rely on payday borrowing, and

potentially generating more than $3 billion in additional sales tax revenues

with no rate increase; and

WHEREAS, payday lenders and other such financial predators are therefore

effectively ‘stealing’ tax revenue from municipalities; and

WHEREAS, most municipalities and states have neither prohibited nor tightly

constrained payday lending and related practices because such actions would hurt the

working poor and low-income retirees by leaving them with virtually no access to

small but urgent loans; and

WHEREAS, no effective nationwide solution is currently in place to consistently

provide such loans and related financial services at low cost; and

WHEREAS, the conventional banking industry has experimented with affordable

financial products and services geared to poverty-level customers, but has generally

failed to provide effective nationwide solutions; and

WHEREAS, market forces have prompted banks to generally abandon the poor, for

example by shuttering more than 2,200 branches in 2012 alone, mostly in low-income

neighborhoods (thereby creating “bank deserts”) while opening new branches in

higher-income neighborhoods; and

WHEREAS, the USPS Office of Inspector General proposed on January 27, 2014

that the USPS could sustainably provide low-income workers and retirees with

payday loans at less than one-tenth the cost imposed by predatorse.g., a $48 cost

instead of $520 on a $375 loanas well as low-cost reloadable money cards and

related low-cost financial services (collectively and generally referred to as “postal

banking”); and

WHEREAS, nearly 60% of America’s 30,000+ US Post Offices are located in “bank

deserts,” i.e., zip codes having zero or only one bank branch,

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of

Mayors (USCM) does hereby support the aims and goals of the USPS OIG’s proposal to

establish postal banking, thereby enabling the only consistent nationwide alternative to

payday predators; and

BE IT FURTHER RESOLVED, that with said alternative in place, municipalities

and states can then prohibit or severely restrict payday lending and other such

predatory practices without hurting low-income people; and

BE IT FURTHER RESOLVED, that said action would reduce demands on both

charitable and tax-supported services to the poor while increasing municipal tax

revenues with no rate increases.

Projected Cost: Unknown

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