Sherrod Brown takes case for digital accounts to resistant bankers

WASHINGTON — Senate Banking Committee Chairman Sherrod Brown, D-Ohio, told an audience of bankers that his proposal to offer free, government-backed digital wallets to all consumers would increase the number of banks’ customers.

Brown’s comments at an American Bankers Association virtual conference on Wednesday come at a time when industry trade groups have largely opposed his plan to widely offer FedAccounts digital wallets. Bankers have been pushing for the government to leave consumer banking to the private sector.

“One way we can get people in the doors of your banks, one way we can rebuild people's trust, is through my plan on FedAccounts,” Brown said.

“These will be no-fee bank accounts available to every American at a post office or a small bank or credit union backed by the Federal Reserve," he added. "These would be basic accounts. You already have the infrastructure in place to support them.”

Brown said, if signed into law, the government would reimburse small banks as they implement FedAccounts.

“For small banks, the Fed would reimburse you for the operating costs,” Brown said. “You would be building new customers.”

For months, Brown has touted his proposal to offer all consumers FedAccounts digital wallets, made available through the U.S. Postal Service and community bank branches. The proposal is intended to bring unbanked and underbanked groups into the banking system and make it easier for consumers to access government stimulus payments.

Industry trade groups have largely opposed the proposal, arguing that the U.S. Postal Service is not equipped to offer banking services and that banks already have the ability to offer affordable accounts to underbanked consumers.

Sen. Pat Toomey, R-Pa., the ranking Republican on the Senate Banking Committee, said he strongly opposes Brown’s FedAccounts proposal.

“I would have to work very hard for a long time to come up with a worse idea than having the government become a national bank executed through the post office,” Toomey told conference attendees.

“I’m pretty sure I got a Christmas card last week," Toomey added. "It was postmarked for December. So we're going to have these folks managing our money? … It’s ridiculous. It’s a very bad idea. If this gets any kind of traction at all, I will be fighting this very, very aggressively.”

Brown, meanwhile, had some criticism of the banking industry in his remarks.

“People don’t trust banks. They especially don’t trust the biggest banks,” he said.

While banks have helped facilitate small-business access to Paycheck Protection Program loans amid the coronavirus pandemic, Brown said that taxpayers and the federal government made the program possible.

“Of course, the banks did a really an extraordinary job," he said. "But the backstop was the people of this country and taxpayers and the role of government."