FEDERAL RESERVE BANKS ANNOUNCE CHECK RESTRUCTURING

            The Federal Reserve Bank of Kansas City, in conjunction with the other Reserve Banks throughout the nation, today announced a further streamlining of its check-processing services that will result in the shifting of the check-processing operation at its Oklahoma City branch office to Dallas. The change, which will be implemented in 2005 and early 2006, will affect up to 65 employees at the branch.

            The announcement comes as part of a plan to restructure check-processing operations nationwide to provide greater efficiencies.  In recent years, the number of checks written has declined, as more people have shifted to electronic payment methods. Because the number of checks being processed and revenue from this business has decreased, it is more difficult for the Reserve Banks to meet the financial requirements of the Monetary Control Act of 1980.  That act requires the Reserve Banks to set prices to recover, over the long run, their total costs of providing payments services to depository institutions. 

            As previously announced in early 2003, the Reserve Banks are also currently undergoing a restructuring of their check operations from 45 to 32 sites by the end of 2004. Today's announcement further reduces that number to 23 sites by early 2006. The implementation schedule for this new round of restructuring changes will be determined within the next several months.  As a result of the restructuring, the Reserve Banks will reduce their overall check staff by slightly more than 270 positions.  In the offices where check processing will be eliminated, a total of 640 positions will be affected.   Also, as previously announced the Reserve Banks will continue to review their check processing operations each year and undertake further restructurings as necessary.

       The new round of restructurings will mean the transfer of check operations as shown in the following table:

           “The Federal Reserve System faces the difficult task of controlling costs in its check operations as volumes decline,” said Thomas M. Hoenig, president, Federal Reserve Bank of Kansas City. “We have outstanding employees, and I want to be clear that the decision to close the Oklahoma City check operation was one that was necessitated by the national situation.” 

            To assist affected employees, the Federal Reserve Banks will offer separation packages, enhanced pension benefits for some longer-service employees nearing retirement, extended medical coverage, and career transition assistance. 

            “The Oklahoma City Branch and its employees have been asked to play a different role in the Federal Reserve System, and we will do so to meet the needs of the System and the depository institutions it serves,” said Dwayne Boggs, vice president and branch manager, Federal Reserve Bank of Kansas City Oklahoma City Branch. “But it is with great sadness that we will move into this next phase without our entire team.  I am proud of the dedicated, hardworking staff in our check operations here, and we will do all we can as an organization to help employees through this transition."

            In addition to its check processing operation, the Oklahoma City Branch provides cash services, bank supervision, community affairs, regional input to monetary policy decisions, and support staff related to these functions.

            The Federal Reserve Bank of Kansas City has approximately 1,500 employees at its main office in Kansas City, Mo. and its branch offices in Omaha, Denver, and Oklahoma City, with responsibility for a seven-state area that includes Nebraska, Kansas, Oklahoma, Wyoming, Colorado, northern New Mexico, and western Missouri.

# # #

Return to www.kansascityfed.org