NEW YORK - The Federal Reserve said on Monday it will close more check-processing sites and cut 270 jobs as paper checks give way to electronic payment.
In the second round of a restructuring program that began in 2003, the Fed said it will almost halve the number of check-processing offices by early 2006.
The 12 regional Federal Reserve Banks said in a statement that the volume of checks handled by the Fed fell by 7 percent in 2003, and at a faster pace so far this year. Check usage is expected to keep falling.
The Fed, the U.S. central bank, will close another nine check-processing offices around the nation in addition to 13 already slated to close.
"Not only are fewer checks being written, but paper checks are increasingly giving way to electronic alternatives," said Gary Stern, President of the Minneapolis Fed and chairman of the Fed's financial services policy committee.
The Fed banks will review their check-processing businesses each year and "undertake further restructuring as necessary," he said in the Fed statement.
"By decreasing the number of check-processing locations and increasing capacity at other sites, the Reserve Banks will reduce their check-service operating costs," as consumers and businesses shift toward electronic payments, Stern said.
As a result, a net 270 jobs will be cut, or about 6 percent of employees in the Fed's check-processing operations.
This figure takes into account 640 job cuts at offices that will be closed, and about 370 new positions at offices that will be expanded. Stern said some job cuts may occur through attrition and some jobs may be reassigned.
"These changes are intended to improve the efficiency of our check operations while maintaining high-quality check services to depository institutions nationwide," Stern said.
This is the second round of a restructuring that began in 2003. In the first round, the number of check-processing sites is being cut to 32 from 45, affecting hundreds of staff. Those closures are due to be completed by the end of this year.
Under the cuts announced on Monday, the number of sites will be reduced to 23 by early 2006. Offices that will close include Boston, Detroit and Houston.
The Fed foreshadowed Monday's announcement with a review of its checking strategy in June this year.
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