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USPS Agrees to Treasury Loans with Stunning Strings Attached

USPS
USPS Agrees to Treasury Loans with Stunning Strings Attached

Congress authorized the USPS to borrow $10 billion from the US Treasury Department as part of the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act).

But in negotiating the terms, the Treasury Department attached some significant strings, including the following:

“Subject to confidentiality protections, USPS shall provide to Treasury copies of USPS’s top 10 market dominant Negotiated Service Agreements (NSAs) and top 10 competitive products NSAs.”

Another provision: the USPS would have to disclose to the Treasury any new or amended NSAs that would constitute USPS’s top 10 market dominant NSAs and top 10 competitive product NSAs.

Companies who enter into such agreements expect them to be kept confidential; it isn’t clear why the Treasury Department wants the information.

Louis DeJoy, who recently took over from Megan Brennan as Postmaster General, had made no mention of the specifics of terms in the press release the USPS released on Wednesday when he said:

“Access to an additional $10 billion in borrowing authority will delay the approaching liquidity crisis,” DeJoy said. “The Postal Service, however, remains on an unsustainable path and we will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability.”

The Washington Post reported on the terms (note that the newspaper is owned by Jeff Bezos, CEO of Amazon, which has NSAs with the USPS). It pointed out that the USPS already hired outside consultants to evaluate the NSAs to make sure they are profitable and fairly priced.

The questions some are asking is why the Treasury wants the information, since Congress already authorized the loans, and what the Treasury will do with the information.

Four Congresswomen and men took issue with the terms including limits on how the USPS could use the funds (the term sheet states under Use of Funds: “Operating expenses; proceeds may not be used for debt service or capital expenses.” They published a press release on Wednesday that stated in part:

“Secretary Mnuchin and the leadership of the U.S. Postal Service appear to be exploiting this public health pandemic to hold the Postal Service to unreasonable loan terms without even consulting Congress. The term sheet we have been provided would inappropriately insert the Treasury into the internal operations of the Postal Service using onerous loan conditions.

“These terms would severely limit the Postal Service’s access to capital and could accelerate the demise of the Postal Service that all Americans, especially seniors, small businesses, veterans and those living in rural communities, rely upon every day, especially during the pandemic.”

Details of the terms are available on the House Oversight Committee website.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

7 thoughts on “USPS Agrees to Treasury Loans with Stunning Strings Attached”

  1. Because the USPS is losing tons of money on the Amazon deal and probably most others. When the previous PMG negotiated the special rates, expanded Sunday deliveries, and special designation for Amazon packages to be delivered before regular mail, they did so not in the best interest of the USPS, the US taxpayers, or the government, they did so only to keep union employees working. They saw the loss of regular mail to the internet as an affront to union benefits, and as long as people were still working, it did not matter how much money they lost, they could just keep increasing rates for regular mail users.

  2. It doesn’t matter how much the USPS borrows or steals. In six months they will be asking for more. The retirement bennies for the upper ivory tower bunch costs money. They rest of the peons get nothing but the bill. Enjoy paying for it.

  3. Oh no! Dear members of Congress! Don’t jeopardize the delivery of all of your political junk in my mail box everyday!

    Self-serving bas***ds.

    It should never be disclosed how much of a BURDEN Bezo’s business is placing on our postal system, or that foreign entities pay pennies on the dollar to deliver their products to Americans, while only Americans pay hefty prices.

  4. The Post Office itself has said the losses come from 1st class mail and from the debt service to pay the pension funding that was decreed. PACKAGE DELIVERY SERVICE duing this pandemic has increased and given them additonal viabilty to longer.

    So it’s not the discounts they give ebay, amazon, etsy, pirate ship or any other large mailer. It’s your cheap first class mail that is killing them – oh and that Parcel deal they made with ebay and the chinese sellers.

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