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 streamlining of check-processing services that will result in the shifting of the check-processing operation at its Omaha, Neb. branch office to Des Moines and its check-adjustment activity to Detroit. The changes, which will be implemented in the first half of 2004, will affect more than 50 employees at the branch, and make up the majority of expected changes in staffing levels in the District’s four offices.

            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. 

            To make the System's check operations more efficient, part of the restructuring plan calls for reducing check-processing sites from 45 to 32 and check adjustments sites from 43 to 12 locations. (A complete chart is attached. The term "check adjustments" refers to the part of the check-processing operation in which check-processing errors are resolved.) As a result of the restructuring, the Reserve Banks will reduce their overall check staff by slightly more than 400 positions.  In the offices where check processing will be eliminated, almost 1,300 positions will be affected.  

“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 Omaha 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 Omaha 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 Steve Evans, vice president and branch manager, Federal Reserve Bank of Kansas City Omaha 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 Omaha Branch provides cash services, bank supervision, regional input to monetary policy decisions, and support staff related to these functions.

            The Federal Reserve Bank of Kansas City has approximately 1,600 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.

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