And American banking is not immune from sad tidings of great sadness.
A draft plank of the Democratic platform released July 1 calls not only for the expansion of Dodd-Frank, but also would authorize the United States Postal Service to offer basic banking services.
“At a time when many of the largest banks have shunned communities across America, Democrats believe we need to give Americans affordable banking options, including by empowering the United States Postal Service to facilitate the delivery of basic banking services,” the plank reads, according to the Credit Union Times. Read the complete article HERE.
Allowing the USPS to offer basic banking is not a new idea. The postal service’s Office of the Inspector General said in 2014 that the USPS was “well-positioned” to offer basic banking. The aim of this, according to the USPS, is to give individuals an option, instead of payday loans or check-cashing services.
As for Dodd-Frank, the proposed plank reads, “We will also vigorously implement, enforce and build on the landmark Dodd-Frank financial reform law, and we will stop dead in its tracks every Republican effort to weaken it.”
In the Congress, Republicans have pushed for the repeal of Dodd-Frank and a weakening of the Consumer Financial Protection Bureau (CFPB).
The Democrats will consider the plank at its national convention in Philadelphia in late August. Depending on the outcome of the November election, if the proposed plank is approved, it will no doubt provide a framework for debate in the Congress critical to the future of community banks and credit unions.
The proposed plank is warped for a number of reasons. Consider:
- Concern about the lack of community access to “larger banks” completely ignores community banks and credit unions, which have poured their heart, soul and energy into small communities. In fact, it’s the core of those institutions’ existence. The proposed plank ignores community banks and credit unions.
- There aren’t enough words to describe the wrongheadedness of the Postal Service idea. The USPS struggles to fulfill its basic mission, especially with competition from FedEx, UPS, e-mail and the like, failing to meet its own delivery standards. The Post Office has hemorrhaged cash. For example, in the third quarter of 2015, the USPS had a net loss of $586 million. And now the Democrats propose expanding into services community banks and credit unions can provide? This proposal makes an already-competitive banking market even more so.
- And then there’s Dodd-Frank, legislation that’s overloaded community banks and credit unions with a landslide of bureaucratic requirements and made lending more difficult, hurting community banks, credit unions and their customers, not to mention the overall economy.
It must be repeated that this is simply a proposed plank, a framework for the party’s policies moving forward, and it must be approved at the convention. Even then, there’s no guarantee that these proposals will become law.
Still, the proposal should sound alarm bells for community banks.
And, as troubling as the proposal is, it should also be seen as an opportunity. Community banks and credit unions can use this as an opportunity for local, state and national marketing campaigns to trumpet their positive impact in America’s smallest community on families of every income level.
Remind your customers why community banks and credit unions matter to your town.
As we’ve pointed out before, this also means that it’s a critical time for community banks and credit unions to make their voices heard through their state, regional and national associations. Get involved and speak out.
Last, to be clear, this is about policy, not partisanship. It’s critical, if banking is to survive and thrive on Main Street, we must be diligent to speak against bad policy, regardless of the party of origin. The political and financial risks are too great to remain silent.
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Here’s a better idea out of Washington: