USPS, Washington Mutual, Temporarily Suspend NSA Proceeding

Washington Mutual Bank and the U.S. Postal Service have temporarily suspended their Negotiated Service Agreement proceedings until May 25, according to a document filed with the Postal Rate Commission yesterday.

The parties said they want to review two recent PRC filings regarding NSAs, as well as to make some revisions.

According to the filing, on May 25 counsel for WMB and USPS will either report on the parties’ progress and renew a request for temporary suspension or submit revisions to the filing to address the issues raised. Any responses to outstanding discovery requests will be due 14 days from the date that revisions are filed, the filing said.

On March 29, the USPS filed a NSA with Washington Mutual Bank based on encouraging the company to increase its use of First Class mail.

The USPS sought a three-year agreement with WMB covering First-Class Mail for the bank’s credit card services.

An NSA is a contract between the postal service and a company, providing customized pricing incentives based on the company’s mail operations. The changes in rates and mail classification needed to implement the NSA require review and recommendation by the PRC and then approval by the USPS Board of Governors

Washington Mutual would get declining block rates for mailing volumes above certain thresholds of First Class Mail relating to the company’s credit card products and credit services, the filing said. The USPS estimated it would benefit by $46.3 million over the life of the NSA.

Since the filing of this request, the PRC has issued two opinions in connection with other NSAs, and the parties would like additional time to review them to determine their impact on the WMB NSA, according to yesterday’s filing.

One opinion, issued May 10, the PRC voted in favor of the USPS’s request for a NSA with Bookspan, but said its decision was made difficult by the agency’s lack of an attempt to comply with applicable regulations requiring mailer-specific cost and revenue data. It also said the agency’s lack of independent analysis of Bookspan’s before- and after-rates volume estimates a serious flaw. The opinion also contained suggestions for developing more mailer-specific cost and revenue estimates. Commissioner Ruth Goldway dissented in the long-awaited ruling.

In another opinion, issued on April 21, the PRC said it favors leaving a “stop-loss cap” in the Bank One Corp. negotiated service agreement, a decision that disappointed the USPS.

The USPS BOG approved such a deal with financial services company Bank One on Feb. 16, 2005, despite returning it to the PRC for reconsideration. The NSA took effect in March 2005.

Yesterday’s PRC filing also said WMB has identified corrections to be made regarding its presentation of historical volumes and revisions are required to incorporate these changes.

Washington Mutual, Seattle, provides financial services for consumers and small businesses. As of Dec. 31, the company and its subsidiaries had assets of $343.1 billion. It operates 2,600 retail banking, mortgage lending, commercial banking and financial services offices nationwide.

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