[Congressional Record Volume 143, Number 141 (Monday, October 20, 1997)]
[Senate]
[Pages S10860-S10861]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COCHRAN:
  S. 1296. A bill to reform the laws relating to Postal Service 
finances, and for other purposes; to the Committee on Governmental 
Affairs.


                the postal financing reform act of 1997

  Mr. COCHRAN. Mr. President, today I am introducing the Postal 
Financing Reform Act of 1997. This bill gives the Postal Service the 
authority to deposit funds in private sector institutions, invest in 
the open market, and borrow from private credit markets.
  The statutory restrictions of current law on postal finances, 
borrowing, and purchasing were designed for a Postal Service that 
required regular infusions of appropriated funds to maintain public 
service levels. For almost two decades now, the Postal Service has been 
a self-supporting system.
  The maintenance of U.S. Treasury control over Postal Service banking, 
investing, and borrowing is no longer necessary or justified. Current 
law prevents the Service from obtaining the most favorable combination 
of prices and services and results in added operating costs of over 
$100,000,000 annually. Under this new approach, the Treasury Department 
would retain much of its current oversight, but it would no longer be 
the sole provider of certain financial services to the Postal Service. 
This bill makes the relationship between the Treasury and the Postal 
Service similar to the relationship other government sponsored 
enterprises such as Fannie Mae and Freddie Mac have with the Treasury.
  The bill I am introducing includes four main sections--those being 
sections 2 through 5. Section 2 amends title 39 of the United States 
Code to authorize the Postal Service to deposit its revenues in the 
Postal Service Fund within the U.S. Treasury or any Federal Reserve 
banks or depositories for public funds. The requirement to obtain the 
Secretary of the Treasury's approval before any funds deposited 
elsewhere would be eliminated.
  The third section terminates Treasury control of Postal Service 
investments. This will permit the Postal Service to invest any excess 
funds either in obligations of, or guaranteed by, the Government of the 
United States, or in such other obligations or securities as it deems 
advisable, provided that such investment is determined to be closely 
related to Postal Service operations by the Postal Board of Governors. 
By providing the Postal Service with an opportunity to invest in U.S. 
Government obligations or other obligations on its own accord without 
unnecessary constraints, this section of the bill would permit the 
Postal Service to take advantage of favorable market conditions, and 
give it the ability to make equity investments which fit its business 
strategies.
  Section 4 removes the control of the Secretary of the Treasury over 
the Postal Service's financial borrowing decisions. The Postal Service 
would still be required to consult with the Secretary of the Treasury 
regarding the terms and conditions of the sale of any obligations 
issued by the Postal Service under section 2006(a) of title 39, and the 
Secretary would still exercise a power of approval over the timing of a 
sale of obligations, in much the same manner as the Treasury acts as a 
traffic cop with regard to the timing of obligations issued by other 
government-sponsored enterprises.
  Finally, this bill removes the requirement of the Secretary of the 
Treasury to purchase up to $2 billion in obligations of the Postal 
Service. This section would still permit the Secretary of the Treasury 
to purchase Postal Service obligations, but only upon mutual agreement 
between the Secretary and the Postal Service. Removing this put on the 
Treasury would be consistent with the purpose of directing the Postal 
Service borrowing to the private sector where it would be able to take 
advantage of a broader market. This section would also make Treasury 
purchases of Postal Service obligations exempt from the various 
borrowing limits in title 39 of the United States Code thus enabling 
the Postal Service and the Treasury by mutual agreement to address an 
unforeseen emergency situation. Such exempt purchases would themselves 
be capped at $2.5 billion of outstanding obligations at any one time.
  I invite Senators to consider this proposal for reform and support 
this effort to ensure a more efficient and financially sound U.S. 
Postal Service.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record. 
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1296

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Postal Financing Reform Act 
     of 1997''.

     SEC. 2. END OF TREASURY CONTROL OF POSTAL SERVICE BANKING.

       (a) In General.--Subsection (d) of section 2003 of title 
     39, United States Code, is amended to read as follows:
       ``(d) The Postal Service, in its sole discretion--
       ``(1) may provide that amounts which would otherwise be 
     deposited in the revolving fund referred to in subsection (a) 
     shall instead, to the extent considered appropriated by the 
     Postal Service, be directly deposited in a Federal Reserve 
     bank or a depository for public funds selected by the Postal 
     Service; and
       ``(2) may provide for transfers of amounts under this 
     subsection between or among--
       ``(A) Federal Reserve banks;
       ``(B) depositories for public funds; and
       ``(C) the revolving fund referred to in subsection (a).''.
       (b) Savings Provision.--Until the authority under section 
     2003(d) of title 39, United States Code, as amended by 
     subsection (a), becomes available, the provisions of such 
     section 2003(d), as last in effect before being so amended, 
     shall be treated as if still in effect.
       (c) Status of Moneys Unchanged.--
       (1) Any amounts invested under section 2003(c) of title 39, 
     United States Code, as amended by this Act, shall be 
     considered to be part of the Postal Service Fund, to the same 
     extent as if such amounts had been invested under section 
     2003(c) of such title 39, as last in effect before the date 
     of enactment of this Act.
       (2) Any amounts deposited or transferred under section 
     2003(d) of title 39, United States Code, as amended by this 
     Act, shall be considered to be part of the Postal Service 
     Fund, to the same extent as if such amounts had been 
     transferred under section 2003(d) of such title 39, as last 
     in effect before the date of enactment of this Act.

     SEC. 3. POSTAL SERVICE INVESTMENTS.

       Section 2003(c) of title 39, United States Code, is amended 
     by striking all after ``it may'' and inserting the following: 
     ``invest such amounts as it considers appropriate in--
       ``(1) obligations of, or obligations guaranteed by, the 
     Government of the United States; and
       ``(2) such other obligations or securities as it deems 
     appropriate, if such investment is closely related to Postal 
     Service operations as determined by the Board of 
     Governors.''.

     SEC. 4. ELIMINATION OF TREASURY PREEMPTION OF BORROWING BY 
                   THE POSTAL SERVICE.

       Section 2006(a) of title 39, United States Code, is amended 
     to read as follows:

[[Page S10861]]

       ``(a) Before selling any issue of obligations under section 
     2005 of this title, the Postal Service shall advise the 
     Secretary of the Treasury of the amount, proposed date of 
     sale, maturities, terms and conditions, and expected maximum 
     rates or interest of the proposed issue in appropriate 
     detail. The Postal Service shall consult with the Secretary 
     of the Treasury, or the designee of the Secretary, under this 
     subsection for a reasonable period of time as determined by 
     the Postal Service. The sale and issue of obligations 
     described under this subsection shall not be subject to 
     approval by the Secretary of the Treasury.''.

     SEC. 5. ELIMINATION OF POSTAL SERVICE ``PUT'' ON TREASURY.

       Section 2006(b) of title 39, United States Code, is amended 
     to read as follows:
       ``(b)(1) Upon request of the Postal Service, the Secretary 
     of the Treasury may purchase obligations of the Postal 
     Service in such amount as the Secretary and the Postal 
     Service, in their discretion, may agree.
       ``(2) The obligations purchased by the Secretary pursuant 
     to paragraph (1) shall be exempt from the maximum amount 
     limitations of section 2005(a), if--
       ``(A) the total outstanding amount of obligations exempt 
     from section 2005(a) does not exceed $2,500,000 at any one 
     time; and
       ``(B) the Secretary and the Postal Service jointly 
     determine that such exemption is necessary to carry out the 
     purposes of this chapter.''.

     SEC. 6. EFFECTIVE DATE.

       The Act, and the amendments made by this Act, shall become 
     effective 90 days after the date of enactment of this Act.
                                 ______