Just one month into the new administration, Wall Street speculators are already excited at the prospect of extracting massive profits from a sell-off of our public Postal Service and raising shipping costs for the public.
President Trump has expressed support for privatization and is reported to be actively planning a direct takeover of the Post Office by Commerce Secretary Howard Lutnik, former chairman and CEO of Wall Street bank, Cantor Fitzgerald.
In a document circulated within the banking industry, Wells Fargo equity analysts argue that postal privatization could be a huge money-maker for investors. They advise the administration to sell off the most profitable parts of the service – primarily packages and parcels, while putting taxpayers on the hook for the rest.
Calling the USPS “an obvious source of value”, they suggest that mail and parcel operations be split and that “Parcel could be carved out and sold or IPOed.” This new private company would, they argue, raise costs, which would also benefit private shipping corporations FedEx and UPS.
“…we believe raising prices would be likely, which would be positive for FedEx & UPS. In order to stand alone and earn a reasonable return we estimate USPS would need to raise price by ~30-140% across its product lines…,” states the report.
“Unlocking ~$85b of Real Estate Can Underpin the [privatization] Process,” exclaims the report, outlining a postal real estate portfolio that includes around 7,200 “smaller post office facilities” and 20,700 acres of land.
This would include selling-off, leasing or otherwise “monetizing” Main Street Post Offices in towns and cities across the country, which often occupy prime real estate locations.
“We believe value can be harvested to help underpin the financial burden of separation,” write the authors.
While the package section of the business can turn a profit for private investors, the bankers argue that taxpayers must take on the cost of funding workers’ hard-earned pensions and health care.
“Our sense is these liabilities would likely be moved to another entity (likely to the US taxpayer…),” they argue. “…since potential buyers and/or investors would be reluctant to assume such a large legacy liability.”
Another aspect of the service that would be “be a challenge for a third-party operator”, is the universal service obligation (USO) – the commitment to deliver mail, six days a week, to every address in the country for a flat rate, whether that address is on Wall Street, Washington D.C, rural Ohio, or Alaska.
On this, the Wells Fargo authors argue that “Separating mail and parcel effectively answers the USO question and losses could be underwritten through some form of real estate portfolio monetization.”
This means that your six-day delivery would be shifted to a loss-making mail-only service that is either taxpayer-subsidized or paid for by cashing in on your local Post Office. If that were to happen, the pressure to downgrade or scrap universal six-day delivery would be huge.
As well as revealing Wall Street’s intentions, the report also shows how they fear our power to stop them.
“Public, private, labor, and federal support of the USPS remains high,” the authors admit before recognizing that rural communities “have a particularly strong affinity for the USPS” and that many critical services are delivered through the mail including: election ballots, medicine, taxes, government distributions and notices.
Our ability to protect our public Postal Service is as strong as the coalition of rural, urban and suburban residents everywhere in America. That is why we are building the strongest coalition ever to say that the U.S. Mail is Not for Sale.
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