17. Dead Post Office

If you had asked New Orleans residents or business people the year after Katrina to utter the words “U.S. Postal Service,” you likely would have heard, instead, gnashing teeth.  Loss of mail – and failure for many months to restore it – was more than an inconvenience.  It caused big disruptions and missed opportunities for businesses and untold frustration for residents.

NO MAIL: Empty USPS bins at Hibernia Center mailroom / Photo: Russ Hoadley

NO MAIL: Empty USPS bins at Hibernia Center mailroom / Photo: Russ Hoadley

Only a trickle

The bank’s normal volume of loan payments and deposits — as well as treasury management lockbox services for businesses — was badly hampered by the sidelined Postal Service.

Bankers even believed that delinquency ratios – a measure of how timely customers make loan payments – went up partly because of poor Post Office performance.  Outgoing monthly account statements suffered as well.

Before the storm, Hibernia’s payment systems managers had a long and satisfactory relationship with postal authorities.  The company was a big client.  The bank mailed and received many millions of pieces each month on its own behalf and for the accounts of large- and small-business customers.  It spent big bucks on postage.

What especially galled Hibernia’s mail operations managers was how postal officials at all levels including Washington, insisted they had everything under control.  Hibernia’s mail specialists – people “in the know” – realized it was not true.  Katrina apparently crippled the New Orleans Main Post Office at 701 Loyola Ave., a few blocks from Hibernia’s own Main Office.  Postal authorities, like business leaders, appealed for patience while it was restored.  But weeks dissolved into months, with the mail coming at a trickle or sometimes drying up altogether.

Major meltdown

Donald Barry’s item processing services area was responsible for mail handling.  A senior vice president with 28 years at Hibernia, Barry and the people in this area had dealt with the Post Office a long time.

Apparently, one problem was that the USPS used Baton Rouge for a while as a temporary hub for New Orleans mail.  But that facility lacked automated forwarding equipment, making it a bottleneck.  Then, the Postal Service diverted New Orleans mail to Houston, and Rita forced it to shut that facility temporarily, adding to the backlog.  “They suffered a major meltdown,” he said, “and many people started raising the red flag.”  Despite the fact that he had moved the lockboxes to Houston, Barry said Hibernia suffered a 70% reduction in volume for a time.

What made the situation worse was that “the USPS wouldn’t come clean,” Barry said.  Only “when their backs were against the wall” would they admit the issue they faced, “and they had no real plan to deal with it,” he said.

DONALD BARRY: He had to deal with the postal headache / Photo: Russ Hoadley

DONALD BARRY: He had to deal with the postal headache / Photo: Russ Hoadley

The bank’s mail

Hibernia normally received dozens of trays containing hundreds, even thousands, of envelopes each day.  After the storm, that volume dropped to a trickle.

As weeks ebbed away, the Post Office said all the “old mail” had been processed and delivered or returned to senders.  The bank and its business clients knew otherwise.

They knew of thousands of payments and other transactions that had never been delivered or returned.  They knew this because they were the senders and receivers of items that had disappeared in the Post Office.

Return to sender

When evacuees tried to provide forwarding instructions to the Post Office, their efforts often seemed in vain.  Weeks went by and their temporary postboxes stayed empty.  The Postal Service eventually conceded it had a backlog of forwarding requests.  Residents had similar experiences at temporary mail outlets that had been set up.  When they went for their mail, they might be told there was none because it had been delivered to their homes – which were vacant or destroyed.

MAIL FRUSTRATION: Letters forwarded several times / Photo: Russ Hoadley

MAIL FRUSTRATION: Letters forwarded several times / Photo: Russ Hoadley

Then it added insult to injury.  When some evacuees eventually did return to their homes, they found they could not cancel the forwarding orders.  Even after the April reopening of the New Orleans Main Post Office, some letters continued to arrive weeks late, covered with numerous yellow forwarding labels, all obsolete.

Getting an answer

Hibernia and other firms tried to appeal to the Post Office.  Two Hibernians, Michael Liuzza and Marsha Montgomery, met in mid-October with regional authorities.  They learned the Post Office was also receiving complaints from other banks and utilities about missing mail and delivery delays.  Postal supervisors claimed to have sent more than 125 test mailings to Hibernia from locations around the U.S., and these pieces of mail had arrived in Houston in a timely manner.  They admitted however that they had not tested delivery times in Louisiana.

The USPS claimed to have “several mechanisms in place” to check whether incoming and outgoing mail was getting backlogged, Liuzza was told.  Postal inspectors supposedly were checking facilities in Louisiana, Houston and Dallas “to make sure everything is functioning properly and to make sure that line-level managers at the facilities are providing accurate information.”  Liuzza then told the officials Hibernia’s story:

  • Several Hibernia commercial clients had sent payments to their lockbox addresses from as far back as Sept. 6, and the bank still had not received them.
  • Incoming mail, compared to the average prior to Katrina, was 70% lower.
  • Hibernia was consistently getting mail with postmarks several weeks old, some back as early as September. Liuzza provided examples to support this claim.
  • Mail volume varied considerably from one delivery to the next.
  • Loan administrators were concerned that missing mail and delays might open either the bank or the USPSto possible legal action.
  • Hibernia was seeking help from all levels of government regarding mail issues.

Seeking a higher authority

On the last point, the company tried hard to get anyone’s attention about the problem – even Congress and the White House.  Patrick Bell, Hibernia’s government relations manager, with other Hibernia and Capital One colleagues, traveled to Washington to speak to congressmen, senators and USPS officials, trying to get them to acknowledge the problem and find a solution.  They appealed to Louisiana senators Mary Landrieu and David Vitter; also to Gov. Kathleen Blanco in Baton Rouge.

Bell made five trips to D.C. between September and December.  Larry Stein and Scott Silverthorne of Capital One’s government affairs unit, also worked on the issue, as did Ken Goldberg, a Capital One special projects manager.  Capital One was among the largest customers of the mail service in the U.S.  Goldberg had a meeting with White House staffers devoted almost entirely to postal issues.  Other managers at Hibernia, such as David Frady, an executive vice president in charge of treasury management, also helped.  “I started raising hell with the politicians,” he recalled.

DAVID FRADY: 'Raising hell' with the politicians about postal issues / Photo: Russ Hoadley

DAVID FRADY: ‘Raising hell’ with the politicians about postal issues / Photo: Russ Hoadley

Lockbox issues

Frady had good reason to be upset.  Large clients – including national firms – who used Hibernia’s highly acclaimed treasury management service “were screaming at us.”  His lockbox clients included utility and cable companies.  Hibernia accepted and processed monthly payments to them from thousands of customers.  Timely processing represented important cash flow to these companies.

Frady told anyone who would listen that the Post Office problem was a serious one for all of Southeast Louisiana, not just Hibernia.In addition, his unit provided a wholesale lockbox service for large volume payments from one business to another.

Sen. Landrieu responded best, he thought.  She got the attention of the Postmaster General and, in turn, the regional postmaster in Dallas.

Time wounds all heels?

Eventually, of course, many of the mail problems were sorted out (no pun intended).  More than seven months after Katrina, the Post Office hung out an “open” sign again in New Orleans — on April 3, 2006 — and a spokesman offered this:  “We know the service has not been up to usual standards, but we are working on it.”

In the Times-Picayune, a Harahan resident aptly summed up what many customers, including Hibernia, felt:

“Their response to this storm has been less than breathtaking.  This is not a mom-and-pop po-boy shop; this is a national organization.  A huge organization like the Postal Service should have done better.”

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