Authority of the Secretary of the Treasury Regarding Postal Service Bond Offering: Memorandum for the General Counsel, Department of the Treasury [January 19, 1993]   [open pdf - 38KB]

"You have requested our opinion concerning the authority of the Secretary of the Treasury under 39 U.S.C. §§ 2003(d) and 2006(a) to purchase bond issues of the Postal Service and to control the disposition of the proceeds thereof. Specifically, we were asked to address the legal issues arising from the proposed bond issue described in Postmaster General Runyon's October 7, 1992, letter to Secretary Brady. Although we understand that Treasury and the Postal Service have reached an agreement, in consequence of which the Postal Service has withdrawn this particular bond issue, we are memorializing our legal conclusions in this memorandum because of the recurring importance of these issues. The Postal Service's plan was to issue bonds in the amount of $3 billion. The Postal Service proposed to transfer the proceeds of the bond issue to a trustee who would then purchase an equivalent amount of government securities, the interest and principal of which would be dedicated to repayment of approximately $2.6 billion of Postal Service debt held by the Federal Financing Bank ('FFB'). Under a ruling of the Financial Accounting Standards Board, this transaction would have allowed the Postal Service to remove the original FFB debt from its books, producing, the Postal Service asserted, cost savings and financial flexibility."

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