Alan C. Kessler, executive partner and corporate defense lawyer at Wolf, Block, Schorr and Solis-Cohen L.L.P., last month become the second Philadelphian this decade to become chairman of the United States Postal Service board of governors.

Philadelphia attorney S. David Fineman headed the board in 2002-04, succeeded by James Miller, a Virginia Republican and former member of the Reagan administration, until this year.

Kessler, a Democratic Party fund-raiser and financial cochairman of Sen. Hillary Rodham Clinton's presidential campaign, served on transition teams for former President Bill Clinton, Pennsylvania's Gov. Rendell, and former New Jersey Gov. Jim McGreevey. Bill Clinton tapped him for an eight-year term on the postal board in 2000.

According to Fineman, "The biggest challenge for this board is the constant decline of first-class mail, which is the largest profit center for the Postal Service. So you have to find ways to dramatically cut costs in a very political atmosphere. The board has to have the political will to force management to close large facilities, like we did in Philadelphia at 30th Street. Otherwise, rates will continue to escalate, and the competition will take more and more business."

Q:

Publishers complain postal rates are lower for unsolicited junk mail, which people don't want, than for magazines and first-class mail that people do want. Are you going to change that?

A:

We are undertaking a review of rates across the board. After a long debate over postal reform, Congress passed a new Postal Act in 2006. It really completely changes the landscape of postal rates. For postal products that are competitive, where we compete with UPS and FedEx, the Postal Service is given more say to set rates. . . . Also, under the new law we won't necessarily have to break even. We'll be able to run a surplus.

Q:

Will this review significantly change postal rates?

A:

It's likely there will be increases every year. There are rate caps on how much we can increase rates in a given year. That's why the Postal Service has created the Forever stamp. . . .

Q:

On challenges facing the Postal Service:

A:

The Postal Service has this historical pledge of delivering the mail to every American, every day, regardless of where they live. Yet it also has unprecedented competition from the Internet, from FedEx and UPS, that aren't bound to the government restrictions we have to deal with.

Competition from the Internet is real. We have seen a decline in first class mail and revenues. But we have the same escalating costs as everyone. Eighty percent of our cost is employees. Health care is going up, gas prices are going up. We have to find a way to deal with all of these issues.

Then we get the curve balls thrown at us - anthrax in the mail, and the economy. We had a terrible January. We live in the same economy as everyone does. If housing prices are going down, banks are sending out less credit solicitiations, and guess who gets less mail to send out?

We don't get huge appropriations from Congress. We make money selling stamps. When we need help, Congress says, 'Get your house in order. Skinny your workforce. See if you can combine some facilities.' Well, as soon as you do that you have a member of Congress screaming.

The Postal Service is probably a fairly good indicator of the economy in general.

Our mail volumes are going down, but the number of delivery points - new houses - is increasing at the rate of almost two million a year. We're delivering less, to more places. The trick is trying to increase revenue without sacrificing service.

Q:

What did you do when you served on the transition teams for Govs. Rendell and McGreevey?

A:

At the state and local level it's been a focus on boards' conditions and authorities. I have developed a good feel for the kinds of people that might serve well.

Q:

Don't those jobs all go to big political donors and loyal party workers?

A:

People say it's the big donors. But a lot of those big donors give money because they are very successful in their businesses. Most of them are successful for a reason. Why not put them in?

If you have a developer who's been very active developing greenfields, why not put them on an envirnomental board where they could be very helpful?

You also realize it has to be diverse geographically, ethnically. You need labor people. I have done it enough times I am sensitive to those issues.

Contact Joseph N. DiStefano

at 215-854-5194 or jdistefano@phillynews.com