USPS SEEKS TO EXTEND NEGOTIATED PRICING TO FOURTH MAILER

USPS SEEKS TO EXTEND NEGOTIATED PRICING TO FOURTH MAILER

WASHINGTON, D.C. -- The U.S. Postal Service has filed for a recommended decision on a fourth negotiated service agreement (NSA) from the Postal Rate Commission that extends the innovative product to the financial services company HSBC North America Holdings Inc.

The agreement with HSBC would be similar to three previous NSAs with other mailers, and is functionally equivalent to the Postal Service's landmark first such agreement with Capital One.

"Providing price incentives for mailers to encourage more mail volume and best practices can help make it possible for us to keep rates affordable for everyone," said Anita Bizzotto, Senior Vice President and Chief Marketing Officer.

HSBC is one of the largest banking and financial services organizations in the world, and one of the ten largest originators of First-Class Mail in the United States.

The agreement has three main features: it provides incentives for HSBC to send additional First-Class Mail, ensures that the customer will maintain superior mail- quality practices, and produces cost savings for the Postal Service from the customer agreeing to receive electronic information about undeliverable mail instead of having pieces physically returned.

A negotiated service agreement is a pricing instrument that gives the Postal Service a mechanism for customizing rates and services to accommodate the unique mailing needs of specialized business customers and to encourage cost-efficient mail preparation for accurate sorting and distribution.

The Postal Service broke new ground when it negotiated the first NSA with Capital One. "Clearly with the results of the Capital One NSA, which produced $21.7 million of contribution to the cost of overhead in just one year, we have demonstrated the value of NSAs to encourage incremental First-Class Mail volume" said Stephen Kearney, Vice President of Pricing and Classification.

The Postal Service anticipates an expeditious review of this NSA under the Commission's rules governing "functionally equivalent NSAs." Once the Postal Service receives a recommended decision, the Governors must still vote to implement the NSA.

"Since 1775, the Postal Service has connected friends, families, neighbors and businesses by mail. It is an independent federal agency that visits 142 million homes and businesses every day and is the only service provider delivering to every address in the nation. The Postal Service receives no taxpayer dollars for routine operations, but derives its operating revenues solely from the sale of postage, products and services. With annual revenues of more than $69 billion, it is the world's leading provider of mailing and delivery services, offering some of the most affordable postage rates in the world. The Postal Service delivers more than 46 percent of the world's mail volume-some 206 billion letters, advertisements, periodicals and packages a year-and serves seven million customers each day at its 37,000 retail locations nationwide."

# # # FOR IMMEDIATE RELEASE Contact: Media Relations 202-268-2155 February 25, 2005 News Release No. 05-014 www.usps.com

Federal Reserve Board Community Reinvestment Act (CRA)

The Federal Reserve Board on Friday invited public comment on proposed revisions to its regulations implementing the Community Reinvestment Act (CRA) that are intended to reduce regulatory burden on community banks while making CRA evaluations more effective in encouraging banks to meet community development needs.

The Board's notice of proposed rulemaking is identical to proposals approved by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) on February 22, 2005. The proposal would:

Exempt banks with assets between $250 million and $1 billion, referred to as "intermediate small banks," from the data reporting obligations the current CRA regulations imposed on banks with assets larger than $250 million.

Subject intermediate small banks to a two-part test (retail lending and community development) instead of the current three-part test (lending, investment, and service). For intermediate small banks, a satisfactory community development rating, as well as a satisfactory retail lending rating, would be necessary for an overall rating of "Satisfactory."

Revise the definition of "community development" for all banks of any size to make it more responsive to the community development needs of rural areas.

Clarify when illegal lending practices--for example, by a bank's affiliate--might reduce the bank's CRA rating.

The proposal addresses concerns expressed by the Board in July 2004 when it withdrew a February 2004 proposal to raise the small-bank threshold to $500 million. The Board expressed concern in July that the proposal was not certain to yield significant cost savings for banks, but might reduce community development capital in some rural communities. The current proposal would deliver greater cost savings while maintaining scrutiny of banks' community development records, though on a more flexible basis. It would also refine the definition of "community development" in rural areas in an effort to make the regulations more effective in encouraging rural development.

Comments are due within 60 days from the date of publication in the Federal Register, which is expected shortly. 2005 Banking and consumer regulatory policy Release Date: February 25, 2005 For immediate release