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B-114874 1 (1972-12-13)

handle is hein.gao/gaobaaehz0001 and id is 1 raw text is: RESTRCTED - Plot t be easev o.ie E9m Geiwevz ., Acoutin CT51e except cr ebssalspcf cap by th e office of og3esioaa nelalco rn, a eo,07v. is kept by the Distributon Section, Publications aract t 3 COMPTROLLER GENERAL OF THE UNITEO STATES / WASHI N TON, D.C. 20548 S'RELEASED B-114874 DEC i3 191Z C iDear Senator Bible: In response to your request of October 11, 1972, we have reviewed the comments of Mr. John F. Stephenson regarding the authority given.to the Postal_ Service by the Postal Reorganiza- tion Act (39 U.S.C. 2005) to borrow up to $10 billion to make capi improvements and to defray operating expenses. Mr. Stephenson contended that (1) postal revenues and receipts will be insufficient to redeem the bonds that are issued and that this burden will fall on the taxpayers and (2) neither the Securities and Exchange Commission (SEC) nor the General Accounting Office (GAO) has any meaningful super- vision over the manner in which the bond proceeds are obtained and spent. BACKGROUND The Postal Reor anaj qn.Aq tauthorized the Postal Serv- ice to issuae aL d .1ods. Under thiis authority, the rggre- gate amount of any such outstanding obligations cannot exceed $10 billion. Also, in any one fiscal year, the net increase in the amount of outstanding obligations issued to make capi- tal improvements cannot exceed $1.5 billion and the net in- crease in the amount of outstanding obligations issued to defray operating expenses cannot exceed $500 million. The Postal Service utilized its borrowing authority on February 1, 1972, when it issued and sold $250 million of series A bonds, bearing interest at 6-7/8 percent, to help fi- nance the Postal Service's capital expenditure program. The bonds, which are due in 1997, are secured as to payont of principal and interest by a first lien on, and pledge of, the revenues and receipts of the Postal Service. These obliga- tions are not guaranteed by the United States Government.

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