Some check-process centers to close

The Federal Reserve plans to close half its regional check-processing centers by next year, earlier than projected, as the volume of paper checks declines and electronic transactions climb. About 750 jobs may be reassigned.

The Fed cleared 30 million checks in 2006, a 29 percent drop from 2001, the central bank’s Financial Services Policy Committee said Thursday. By the end of 2009, the Cleveland Fed will clear paper checks, Atlanta will handle electronic processing, and Dallas and Philadelphia centers will scale back.

Check processing by the Fed was reduced to four regional centers from 22 sites this year, and the bank was curtailing other operations in a process slated to continue at least into 2011. A drop in check volumes no longer supports the four regional centers, the Fed said.

“This more rapid transition effort, while difficult on our staff, is a clear measure of success in terms of the industry’s efforts to move to a more efficient electronic solution for clearing checks,” Minneapolis Fed President Gary Stern, chairman of the bank’s financial policy committee, said in the statement.

Some jobs will be eliminated by attrition, other employees may be reassigned and severance packages may be offered, the Fed said. Earlier reductions targeted 1,740 jobs on the check-clearing staff, the bank said at the time.