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Internal Records Reveal Treasury Department Attempted ‘Unprecedented’ and Arguably ‘Illegal’ Takeover of USPS


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A trove of internal communications records released Thursday revealed that as the U.S. Postal Service (USPS) struggled amid mounting debt and a surging global pandemic earlier this year the U.S. Department of Treasury attempted to seize operational control of the agency—making a $10 billion loan to the mail delivery service contingent upon the agency surrendering its autonomy.

The nearly 10,000-page cache of documents were obtained through a Freedom of Information Act (FOIA) request by government watchdog group American Oversight and first reported by The Washington Post.

According to The Post’s review, the trove of documents included three email conversations from early April that made direct references to agency officials’ phone conversations with Treasury Secretary Steven Mnuchin. Mnuchin’s department was charged with overseeing and distributing the $2 trillion stimulus approved by Congress in the CARES Act.

Two people familiar with the matter told The Post that during USPS’s negotiations with Treasury, the department “drove a hard line, demanding operating control over the agency (USPS) in exchange for the $10 billion congressionally approved loan,” a demand that postal experts said was “unprecedented.”

Those demands subsided after USPS retained an outside law firm which came to the conclusion that any such takeover would be illegal, at least initially.

“By statute, Congress has given control over postal operations to the [USPS] Governors and the Board of Governors. Under settled principles of constitutional law and statutory interpretations, the Governors may not ‘subdelegate’ that authority to another department of the Executive Branch unless there is affirmative evidence that Congress permitted them to do so,” an April 24 memo from the Mayer Brown law firm stated. “Any agreement by the Postal Service to surrender its authority to the Secretary of the Treasury or to the [Federal Financing Bank] therefore would be illegal.”

But while Treasury appeared to give up on the idea of annexing USPS, that may not have actually been the case.

Notes from an April 9 meeting between Postal Service executives and two high-ranking Treasury officials show Deputy Assistant Secretary of the Treasury for Public Finance Gary Grippo stating that the department was no longer seeking for the agency to cede its authority. However, three people familiar with the negotiations told The Post that “the agency continued to press the idea for weeks, insisting that any loan to USPS should result in the Treasury “assuming operational control of the mail agency.”

Treasury spokeswoman Monica Crowley responded to the report by saying the Trump administration simply sought to “protect” billions of dollars in congressionally approved loans to the agency, calling talk of a hostile takeover “absurd.” Crowley also rejected the idea that the proposal was a law-breaking one.

“As in any arms-length negotiation, some of these proposals were rejected by USPS, while other reforms, such as enhanced monthly and quarterly financial reports, were agreed upon as part of the recent $10 billion loan that Treasury and USPS agreed to terms on last month,” Crowley said. “Treasury’s proposed financing conditions have at all times been commercially reasonable and consistent with law. It is absurd to describe commonsense conditions on continued taxpayer funding as a ‘takeover.’”

[image via Chip Somodevilla/Getty Images]

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Jerry Lambe is a journalist at Law&Crime. He is a graduate of Georgetown University and New York Law School and previously worked in financial securities compliance and Civil Rights employment law.