WASHINGTON — Federal efforts to provide stimulus checks to Americans hit by the coronavirus’ economic fallout have revived calls for better government-backed financial delivery systems.
Millions of households haven’t received their $1,200 payments nearly a month and a half after Congress authorized them. That has led some progressives and other observers to demand reforms to improve underbanked consumers’ access to the financial system, such as authorizing the U.S. Postal Service to provide financial services or creating a Federal Reserve-backed digital wallet. Some have even lamented the slow pace of the Fed’s implementation of a real-time payments network.
“It’s a real shame that even when Congress kind of basically agrees about the money that we need to deploy, our systems are so broken that we can’t even get it to the people for whom it’s intended in an expedient way,” said Amanda Fischer, policy director at the Washington Center for Equitable Growth and a former Democratic congressional staffer.
Over the weekend, Sen. Kirsten Gillibrand, D-N.Y., tweeted, “Let’s put a bank in every post office,” resurrecting a proposal long criticized by community bankers. Earlier, Gillibrand, who has sponsored postal banking legislation, released a statement criticizing the Trump administration’s refusal to provide emergency funds to the Postal Service. “The Postal Service is in desperate need of reinforcement, and providing postal banking for the nearly 10 million American households who lack access to basic banking services is the first step,” she said.
Bloomberg News
Observers said the pandemic crisis may continue to fuel such proposals, especially as many American struggle to access their stimulus checks. The postal banking idea — supported for years by other members such as Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y. — has been seen as a way to give the underserved another banking option.
Defects in government delivery systems have also highlighted the pace of the Fed’s implementation of FedNow, a real-time system expected to compete with the private sector’s RTP network. FedNow isn’t expected to be completed until 2023 or 2024.
“It’s a debacle that it takes longer in 2020 to give everybody pandemic cash than it took in the 1960s to send a man to the moon and back,” said Aaron Klein, policy director at the Brookings Institution’s Center on Regulation and Markets. “Why is it that we are unable to get people money? It’s a combination of three things. One is how fast can you move money from Account A to Account B. Two, does the U.S. Treasury Department know people’s accounts? And three, what share of the people don’t have accounts?”
Karen Petrou, managing partner at Federal…
Read More: Coronavirus prompts renewed calls for postal banking, faster payments
