WASHINGTON-It's probably not an exaggeration to say that the financial services industry relies on the post office more than any other sector of the U.S. economy.

More than half of all statements and bills sent through the mail come from financial institutions, savings and loans, and credit unions, according to the U.S. Postal Service. And those four-billion or so mailings per year are matched by roughly the same number of advertising offers from credit-card issuers.

That leaves financial institutions with a big stake in the debate on Capitol Hill over how to reform the Postal Service, which has suffered a sharp drop in revenue as a result of the recession and rapid changes in technology. Congress faces pressure to act by May 15, when a moratorium on post office closings ends.

While financial services trade groups have steered clear of a public stance on a particular piece of legislation-three different bills are shaping the debate-they are hoping to avoid cuts in service and rate hikes. Facility closures and the potential that the Postal Service will be allowed to offer certain financial products are also on their list of concerns.


Cost Is Debated

Brian Tate, vice president of banking and securities at the Financial Services Roundtable, said, "the changes that happen are going to impact us, they're going to impact regular people in the middle of the country."

It's hard to say just how much money financial institutions would lose if Congress makes it easier to raise postage rates above the rate of inflation, as a bill sponsored by Sen. Joseph Lieberman would allow. But it would be a considerable sum.

According to the Postal Service, financial institutions mailed more than 19 billion pieces of advertising between October 2009 and September 2010, the most recent period for which data is available. (More than three-quarters of that mail was sent at standard postage rates, which are below first-class rates, and the data does not show how much of the total was sent by financial institutions versus other financial institutions.)

In 2011, both Citigroup and JP Morgan Chase sent out more than 1 billion credit-card solicitations, according to data collected by the research firm Ipsos.

As reliant as financial institutions remain on the Postal Service, the reverse is also true. In fiscal year 2011, revenue from the financial industry totaled $7.1 billion, or nearly 11% of the Postal Service's total commercial revenue, according to a USPS spokesman.

But the move by financial institutions toward paperless statements, a shift to mailing statements quarterly rather than monthly, and reductions in advertising budgets have all hurt the postal system's bottom line.

The Postal Service's fiscal condition deteriorated sharply during the financial crisis, with advertising by the financial industry falling by 5% in fiscal year 2008, 28% the next year, and 10% in fiscal year 2010, according to Postal Service data.

Financial institution industry officials warn that rate hikes will only give financial institutions and others more incentive to find other channels of communication, which would further undermine the postal system.

Other ways of plugging the Postal Service's budget gap that have been looked at include workforce reductions, a five-day delivery schedule and closures of postal facilities. But cost cutting isn't the only thing on the table. Additional revenue streams, such as allowing USPS to offer certain financial products are also being considered.

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