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Trump Gillibrand

Sen. Kirsten Gillibrand, D-N.Y., attends a news conference, Tuesday, Dec. 12, 2017, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

Jacquelyn Martin

U.S. Sen. Kirsten Gillibrand is proposing an alternative to payday loans: The creation of retail banks at each of the U.S. Postal Service's 30,000 branches, including more than 1,500 locations in New York. 

Gillibrand, D-N.Y., introduced legislation to create a postal bank that would offer low-cost checking accounts, small-dollar savings accounts, micro loans, wire transfers and other general banking services. The bill seeks to end predatory payday lending practices that affect millions of mainly low-income Americans. 

Payday lending is illegal in New York, but it is still available in other states. The industry has come under fire because of high fees and interest that are added to the initial loan amounts. 

Gillibrand believes having retail banks at post offices will help those who live in rural and urban areas where there are few banking options. Her proposal would allow any American to open an account at the postal bank. 

"Millions of Americans are being forced into payday lending schemes that only exacerbate their money problems, and Congress has the ability to wipe out these predatory practices right now by creating a postal bank that would be accessible to everyone, everywhere," Gillibrand said. 

The precursor to the U.S. Postal Service, the U.S. Post Office Department, once had a postal savings system that allowed individuals to maintain savings accounts. The system was in place from 1911 until 1967. The Postal Service was formed four years later. 

There is support for a postal bank from several key organizations, including the Alliance for Retired Americans, American Postal Workers Union, the National Association of Letter Carriers, the National Postal Mail Handlers Union, the National Rural Letter Carriers Association and United for a Fair Economy.

The groups are part of the Campaign for Postal Banking, which believes a postal bank could help low-income Americans and boost the U.S. Postal Service, which has faced financial struggles over the years. 

Gillibrand's bill also received support from Mehrsa Baradaran, a postal banking expert and professor at the University of Georgia School of Law. 

The creation of a postal bank would "make it less expensive to be poor," Baradaran said. 

"Postal banking can provide safe, accessible and much-needed financial services to the most struggling communities in our country," she added.