Chicago Fed Cutting Ops Jobs

Posted by Mark Brousseau

This article from the Chicago Tribune is a sign of things to come:

Chicago Fed to cut jobs at check-processing center; first 26 set for next month

By James P. Miller
Tribune reporter

February 9, 2009

A total of 26 employees of the Federal Reserve Bank of Chicago will lose their jobs next month, as the nation's central bank continues to respond to the dramatic falloff in the use of paper checks by cutting back its once extensive network of check-processing faciliities.

In the latest State of Illinois 'WARN" list of employers who have notified workers of impending large-scale layoffs, all of the 97 jobs at the Federal Reserve's Chicago check-processing center in southwest suburban Bedford Park are listed for elimination beginning in March.

But a spokesman for the Chicago Fed said only 26 jobs will be cut next month; the remaining 71 will remain active until at least the fourth quarter.

As recently as 2003, the Federal Reserve banking system had 45 full-service check-processing centers around the country. But credit cards continue to displace the use of paper checks, and at the same time regulatory changes have made it easier to present checks for payment as an electronic image rather than in physical form.

So, the U.S. Fed had halved processing centers by mid-2007, and late last year the central bank announced a plan to operate just one full-service paper-check processing center, in Cleveland, and one electronic-check processing center in Atlanta.

The other processing centers, including the Chicago-area site, will wind down under what the Fed has referred to as "a flexible restructuring schedule," which will lead to their closure "when paper check volumes no longer justify the existing operation."

The Chicago Fed's spokesman said it's not clear when the Chicago center will cease operations. In fact, he said, it is possible that the Chicago center will remain operative, with just a "handful" of employees printing substitute checks from images for the modest number of banks that require a physical check.

The Fed has said it will seek to reassign at least a portion of the workers, if other jobs are available.

The number of paper checks totaled 42 billion in 2001, but by 2006 (the last year for which Fed numbers are available) that number had dropped 29 percent to 30 billion.