Federal Reserve to cut 400 jobs in restructuring move

The Federal Reserve Banks plan to cut 400 jobs and close five regional check processing facilities by the end of 2004, as part of a move to reduce its check processing services, officials at the Federal Reserve announced Thursday.

"The Federal Reserve Banks are committed to remaining a leader in providing payment services, including check processing. Adjusting our operations to respond to changes in the marketplace will position the banks to continue to fulfill this role," said Cathy Minehan, president and chief executive officer of the Federal Reserve Bank of Boston and Chair of the Federal Reserve Banks' Financial Services Policy Committee.

Bank officials said a decline in the use of checks led to the decision to pare down check-processing services. Over the next few months, check processing will be consolidated at 32 locations, down from 45 locations. The five regional offices scheduled to close focus solely on check processing. The restructuring affects nearly 1,300 of the banks' 5,000-check processing employees, with 400 positions eliminated and 900 employees reassigned to new offices. According to bank officials, the changes should reduce operating costs for check services by about $300 million over the next five years.

"Nationwide, consumers and businesses have made a significant shift in how they make payments, substituting electronic payments for checks," Minehan said. "But declining check volumes are requiring the reserve banks to make changes in their check operations to address the challenges posed by the changing market."

The staffers affected by the changes will be offered separation packages and career transition assistance, bank officials said.

"We regret that this decision will affect a portion of the Fed's check-processing management and staff, but we have a range of programs in place to help ease the transition for affected staff members," Minehan said.