ABA Banking Journal - August 2008 - (Page 9) Fair-Value Accounting: Not fit for banks I n a m u s t - re a d o n l i n e i n d e p e n d - said in its rulemaking document that mailers using the full service option will receive address correction services, if requested, and mail induction information at no additional charge. Conti says that ACS is effectively free for 95 days while the Confirm data is free for the “first scan”—meaning when mail is inducted into the Postal System. Conti adds that this data could be useful. Tracking certain pieces under the Confirm service, for example, could indicate when a critical document was received at a local post office (though not by the actual recipient). It can also be used to track incoming payments in conjunction with business reply mail. Tracking information could help call center operators fielding customer calls— e.g. “the letter arrived at your local Post Office yesterday”—and could help a bank deal with inaccurate or fraudulent claims— e.g. “I didn’t get any notification.” Automated address correction service can provide data to a bank electronically within hours if an item was forwarded or returned, says Conti. Typically, returned mail takes much longer to come back than outgoing mail, he says. Nevertheless, Conti says that it’s not possible to make broad statements about the cost to adopt IMB because it depends on a mailer’s current level of barcoding; how much of it they do in-house versus with third-parties; what type of equipment and software they are using; at what point they apply a barcode; and more. Pitney Bowes’ white paper makes the point that the impact of conversion to IMB “may be felt well outside the walls of your mail production environment, affecting legacy systems, …document creation, paper stocks, database management,…” and more. On the other hand, the adoption of IMB is an opportunity to streamline workflows. The primary complaint mailers have with the Postal Service about IMB right now is over the inability to make a business case to management, according to a banker at a large institution who requested to speak without attribution. “‘Additional information at no cost’ is the USPS view of IMB,” this person said, “but what mailers don’t like are the huge costs” involved in implementing the program. “There is lots of nitty-gritty data to provide, and the program may not end up being free.” Specifically, a bank’s computSubscribe at www.ababj.com ers may not be capable of e n t c o m m e n ta r y n ow o n l i n e receiving address correction at www.ababj.com, noted , W ebsite changes. a n a l y s t G e o rg e D a r l i n g of Mailers can’t develop a P r ev i e w D a r l i n g C o n s u l t i n g G ro u p business case for Post Office w a r n s a g a i n s t t h e d a n g e r s of approval,” says this banker, t h e F i n a n c i a l Ac c o u n t i n g because the Postal Service won’t S ta n d a rd s B o a rd ’ s o n g o i n g p u s h fo r release price differential rates associated f a i r - va l u e a c c o u n t i n g . D a r l i n g b e g i n s : with the offering. “Be afraid. Be very afraid of the FinanIn comments filed in response to the cial Accounting Standards Board and its USPS proposal, a group of seven mailer relentless and, in my view, reckless push organizations stated that it supports the for fair-value accounting for financial concepts underlying the implementation institutions. of Intelligent Mail barcodes, but said that “FASB’s passion for fair-value account“Customers lack service, pricing, and ing not only conflicts directly with its technical information that is needed in stated objectives and purpose, but also order to make the business decisions necthreatens to introduce substantial unwaressary to make the capital investments and ranted risk to banking industry earnings develop the technical infrastructure needand capital levels. ed for IMB implementation.” “The methodology will also result in As spokesperson for the USPS says that alarmingly confusing, misleading, and at the Aug. 6-7 Mailers Technical Advisononcomparable reporting of bank finanry Council (MTAC) meeting in Washingcial results. The Law of Unintended Conton, D.C., Tom Day, senior vice-president sequences should be of grave concern to of Intelligent Mail and Address Quality, everyone involved: bankers, regulators, was to address the group at length about creditors, investors, accountants, attorIntelligent Mail barcode details. neys, et al.” The ABA has been working with large Y o u c a n re a d m o re of t h i s c o m m e n mailers and other mailer groups to help t a r y a t www.ababj.com right now. address these issues, including meeting (Opinion articles posted on with the USPS. The contacts on this issue www.ababj.com do not necessarily are Greg Taylor, gtaylor@aba.com and r e f l e c t o f f i c i a l a s s o c i a t i o n p o s i t i o n s .) Joe Pigg, jpigg@aba.com. BJ Former ABA Chairman Duke confirmed for Fed seat After having her nomination kept on hold for more than a year, Elizabeth A. Duke, chief operating officer of TowneBank, Suffolk, Va., and 2004-5 chairman of the ABA, was confirmed by the Senate June 27 to fill out one of several vacant seats on the Federal Reserve Board. As of mid-July, she was expected to report for work in Washington as soon as her affairs could be put in order. The remainder of the term she fills out runs till 2012. She will be the only banker on the Board of Governors. Larry Klane, from Capital One Financial, was also nominated about the same time as Duke. No action was taken on his nomiTowneBank’s Betsy D u k e nation, nor on the renomination of Randall Kroszner. Duke was the first woman to be ABA Chairman. She was an executive vice-president of SouthTrust Corp. at the time she was elected. SouthTrust was soon after acquired by Wachovia. Later, she joined TowneBank. For 11 years Duke was CEO of Bank of Tidewater, Virginia Beach, before it was acquired by SouthTrust, so she has experience at community banks, large banks, and midsize banks. She understands that compliance weighs heavily on all of them, although in different ways. As a bank CEO in Virginia’s largest city, she was very familiar with what can help and hinder economic growth, particularly in the small business and construction sectors. Duke is also familiar with the workings of the Fed, having served on the board of the Richmond Federal Reserve Bank. —Bill Streeter ABA BANKING JOURNAL/AUGUST 2008 9 http://www.ababj.com//content/view/407/121/ http://www.ababj.com//content/view/407/121/ http://www.ababj.com//content/view/407/121/ http://www.ababj.com//content/view/407/121/ http://www.ababj.com http://www.ababj.com
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