Should the Postal Service go into banking?

Consider this: Post offices sell money orders and conduct international transfers. Would it be such a big step to expand into the banking world via debit or prepaid cards?

Postal Service Inspector General David Williams revived the debate during a discussion Wednesday at the Brookings Institution. As local bank branches close, post offices could step in, he said.

“The Postal Service could provide a financial-services platform and front-office services where there are no banks. Today 59 percent of our post offices, 17,000 locations, are located where there are no banks or a single bank within the zip code.”

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The Postal Service declined an invitation to join the panel, according to Brookings. The agency isn’t wild about the idea, though.

“This really needs to be looked at from a business perspective. Banking is not a core competency of the organization,” said Postal Service Spokesperson Toni DeLancey. “The Postal Service simply isn’t in the financial position, nor does the Postal Service have the statutory authority, to offer this service.”

Former Postmaster General Pat Donahoe put it more simply earlier this year in his last media briefing before retiring.

“We don’t know about banking,” he said. “Paying bills online is smart and free.”

The Postal Service cannot go too far outside of its comfort zone of delivering the mail without a law from Congress. Despite bipartisan support, lawmakers repeatedly have tried but failed to pass reform legislation that doesn’t even touch the controversial topic. Yet the idea won’t go away.

Williams’s office last year published a widely read white paper that said the Postal Service could make up to $8.9 billion per year by offering financial services. Since then, Sen. Elizabeth Warren (D-Mass) has advocated it as a way to help people with poor credit, little means or in underserved communities. The American Postal Workers Union has also raised the issue in ongoing contract negotiations with the Postal Service.

The Postal Service is $15 billion in debt. It lost more than $5 billion during fiscal 2014—more money than it has in the bank. People are not going to give up social media or email to send letters in the mail. Under the circumstances, the agency can ill afford to pass up $8.9 billion.

But would it succeed where banks have not?

Economist Robert Shapiro of the firm Sonecon doubts the agency has the expertise.

“In the 1970s, the oil companies had lots of money because oil prices skyrocketed and they all said they would become conglomerates. And they started buying businesses that had nothing to do with oil businesses,” he said. “Ten years later, they had sold off virtually all of them at a loss. All those managers from Harvard Business School, engineers and scientists who ran Exxon Mobil, Shell and Chevron had no experience in the refrigerator business or financial services, which they also got into.”

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