President Joe Biden and Democratic lawmakers including Representative Maxine Waters and Senator Bernie Sanders have been advocating for the U.S. Postal Service to begin offering banking and for the Fed to provide checking accounts to consumers. They say those solutions would create a widely available, lower-cost way for Americans to access financial services.
In Tuesday’s paper, banking trade groups argued such proposals don’t account for the costs that would be tied to the government operating “what would be the largest retail-banking operation in the United States.” They also said a consumer’s proximity to a bank branch or post office location has historically been unrelated to their banking status.
“The importance of physical access to financial-inclusion status may be a less important factor than is often portrayed, or may be important for certain alternative financial products and services, such as check cashing, but not for banking status and credit,” the groups said in the paper.
Instead, they argued, many consumers find it costly to obtain a driver’s license or passport -- documentation often needed to open a bank account. The trade groups urged policy makers to study some of the underlying households that remain unbanked.
“The best way to determine how to make further progress is really to look at the reasons why individuals are underbanked or unbanked to examine what actually has been working to drive down those rates,” Rob Hunter, deputy general counsel of the Clearing House, said in an interview. That analysis should also examine “what further work needs to be done that the private sector can’t do.”
This article was provided by Bloomberg News.