Burroughs check scanner

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Burroughs check scanner - At Cincinnati's Fed, &00 Million Is A Normal It...
At Cincinnati's Fed, &00 Million Is A Normal It is 3 a.m. on a hot August night. Inside the walls of the Federal Reserve Bank ot Cleveland's Cincinnati branch, B4700 Is finishing the last of its evening work. From the private quarters of Its windowed control room, the computer directs the work of Its five drones-14-foot monsters each with 16 "stomachs" and a galvanized rain gutter for a lower lip. The drones' function in life is to sort checks-paychecks, personal checks, your checks and mine 230 million checks a year, all either accepted by or payable at banks in Southern Ohio and Eastern Kentucky. TONIGHT, the drones will sort checks worth a total of approximately $200 million -enough to build at least four Riverfront stadiums at today's prices. As the attendants load the check bundles into the "mouths" ot the drones, B4700 whirrs away and prepares for another round of "Who's on First?" with each of its servants. Each drone sorts checks at mind-boggling speed: 65,000 an hour. When all five machines are active, B4700 is processing checks at the rate of 90a. second. Each check, moreover, involves a separate conversation between B4700and a drone. When a drone is fed a check, it "reads" it, sends the information to B4700 and receives an order back from the computer directing it to route the check to a specific slot, or "stomach. " THAT "COSYERSATIOS" takes place at speeds measured In millionths of a second, for 18 checks are traveling through each drone every second. Tonight, four of the drones are active. They will sort about 500,000 checks In five hours. It is an average night at the Cincinnati Fed. By TOM PETRI NO Business Reporter Every night but Saturday and holidays, the above scenario transpires on the check processing floor of the Cincinnati Fed, the "marble palace" at Fourth and Main Sts. Fach working night, B4700, its drones, 37 human Fed employees and three or four Burroughs Co. engineers face rigid deadlines as they work to digest a share of the nation's dally checking account transactions. The Cincinnati Fed Is strictly service. "Policy is made In Cleveland, or in Washington DC," says senior vice president Robert E. Showalter. "We are a service branch of the Cleveland Bank." THE NATION'S 12 Federal Reserve Banks and their 25 branches are owned by the member banks In their respective districts. All national banks must belong to the Federal Reserve; state banks may Join if they wish. About 40 of the nation's commercial banks have joined the system; that accounts for more than 75 (In dollars) of all demand deposits, according to Showalter. The benefits of membership Include access to currency when needed, use of the informational facilities provided by the System, the ability to borrow from the Fed when temporarily In need of additional funds, and use of Fed facilities for collecting checks and settling clearing balances. A clearing balance Is what Bank A owes Bank B after all the checks drawn against Bank A and deposited in Bank B are added up and subtracted from those drawn on Bank B and deposited in Bank A. IN ADDITION, the member banks elect six of the nine directors of their Federal Reserve Bank. The other three directors are appointed by the Federal Reserve Board of Governors in Washington D.C. Foremost of the costs of mem Night bership is adherence to reserve requirements set by the Fed. Current-ly, a bank with $400 million in demand deposits (checking accounts) must hold at least $40.2 million of that In nonloanable cash reserves either In deposits at the Fed or In cash in the banks' vaults. Banks with less than $400 million in demand deposits have progressively lower reserve requirements. The reserve requirement percentage Is on a stepped-schedule-7 on the first $2 million, 9.5 on the next $8 million, and so on. The banks also must comply with regulations covering adequacy of capital, mergers with other banks, branching and other areas. For the Cincinnati Fed branch and its 24 counterparts, the most Important ongoing function is check processing. About one-third of the local Fed's employees are involved directly in the work. NATIONALLY, the Fed is the single largest processor of checks, but it handles only 40 of the total. The rest are sorted by the nation's banks among themselves. In Cincinnati, the five largest banks exchange between themselves checks drawn on or credited to one another. The Fed's dollar-share of check processing is tremendous. The Cincinnati Fed alone will process more than $100 billion in checks this year, according to Showalter. The bulk of that is checks for transactions within the 19 Ohio and 55 Kentucky counties under the Cincinnati Fed's jurisdiction. Six nights a week, 400,000 to 700,-000 checks arrive at the local Fed. Most are handled by the high-speed sorters of B4700. The remainder the torn, spindled or otherwise mutilated "rejects" must be sorted by hand. Under the tightest security, the checks are unloaded, the processing done and the sorted bundles mailed out to 372 banks-260 within the local district, the rest from Miami to San Francisco. J I Fed Worker Tends A Drone . . .a Fed official thought up the idea of attaching a rain gutter to hold rubber THOMAS J. PETRUNO PAY TO THE ORDER OF 9y. PThe Provident Bonk cincinnnTi. ohio FOR :oi, 2o'OOii u Al the bottom led oi the check, the information in numbers 4.5.6 and 2 above is encoded in magnetic ink this allows the Fed to run the check through its high-speed computerized reader-sorters. In the bottom center is the check owner's account number, also in magnetic ink. ALL OF IT in by 12:01 a.m. and out by 4 a.m. For if the Fed falls behind, so does the rest of the financial world. At 10:20 p.m., we ride the bedroom-sized elevator from the check processing area to the street-level delivery docks. Our guide, who for security reasons we will simply call "Mike," Is explaining that commercial banks "close off" at 2 p.m. each day. At that time, they begin processing the work they will send to the Fed that night. The checks are brought in by special courier, bundled and packed into plain cardboard boxes or bags. They are unloaded under the watchful eyes of Fed security guards. All Fed employees, including senior vice president Showalter, wear prominent ID cards with their photos on them. LIKEWISE, ALL visitors must wear special security badges. The guards are very strict about this rule. Federal Reserve Chairman Arthur Burns is the only person ever to go without a badge in the Cincinnati Fed. From the docks we ride back to the check-processing floor. In the mail room, two employees are opening boxes of checks. The bundles are time-stamped here so the Fed can keep track of banks that violate deadlines. "Most of the banks are pretty good about deadlines," says Mike. Checks to be distributed in the Cincinnati Fed's region must be in my 12:01 a.m. if they are to be delivered that morning. When the work first comes in, Mike explains, it is sorted by bundle into three main groups: High-speed work, for B4700; low-speed work, checks rejected by the banks' highspeed machines and expected to be rejected by B4700 (but run through anyway); and government work, Treasury checks run through other machinery. RETURNED ("BOUNCED") checks have a group of their own. They must be returned by the Fed to the bank that cashed them, and the credit given that bank on the check's first run through the clearing process must be withdrawn. Mike estimates that approximately 1 of all checks are returned. "The Fed wishes that was zero," he adds. Also returned are the Fed's mistakes, such as bundle for the Miami Fed branch accidentally marked for Los Angeles. "That doesn't happen too often," says Mike. From the mail room, the highspeed bundles are taken into the processing area and loaded onto carts to be wheeled to the drones' room. THE AUTOMATIC doors to the drones' room are operated by a computerized lock. Mike keys in the combination and the doors slide open. We enter the room with a cart of checks. The drones work loudly. Mike is shouting as he explains v n yy 1 I I- I ACC0UN1 NUMBER 6. Identities how soon the Fed give the depositing bank credit lor the check (0 immediately, a higher number indicates deterred credit.) how checks are "fed" to a drone. First, the bundle edges are evened by a vibrating drawer that shakes them into place. Attendants then load the bundles into the "mouth" of the drone, and B4700 takes over from there. EACH CHECK IS drawn through the drone and is "read" by the computer for routing to one of the creature's 16 drawers, or "stomachs." The key to the system is the numbers encoded in magnetic ink at the bottom left of each check. (See diagram.) These numbers tell the computer which bank the check is from, which Federal Reserve district it is in, and which office of the Fed the check should go to. Also encoded at the bottom are the check-owner's account number and the amount of the check. When a check is read by B4700, the computer is simply looking at the encoded Fed number and the number of the bank and deciding "on this run, it should go to drawer seven." THE CHECKS ARE sorted in the drones until they are grouped by bank or some other category, such as Fed branch. A check from a small Northern Kentucky bank, for instance, might first be deposited in the same drawer as the checks from several other banks in that area. Another run through the drone, however, will send the check to a drawer containing only checks for that individual bank. The process continues through the night. As each bundle goes through a drone for the first time, B4700 is recording each check on a printout. LATER, B4700'S bundle printouts will be matched against printouts sent by the banks so that the Fed can balance its books for the evening. In the meantime, there is a minor crisis. One of the drones has "Jammed." A check has lodged somewhere in its guts, and B4700 shut it down immediately. The computer has also listed on a television screen nearby what the last item read was. Mike Is called over, and he and an attendant open the drone and retrieve the mutilated check. The drone is restarted as Mike looks at the clock. "We Just lost 40 seconds of processing time," he says, much chagrined. AT THE FED, every second counts, and nobody moves slowly. The time for handling the checks has to be kept to within two hours if deadlines are to be met. We have just turned our backs on the offending drone when the attendant calls again. Another jam. Now one of the omnipresent Burroughs Co. engineers is called over for an inspection. Mike shows us a weekly chart on the wall listing the average number of checks processed per machine between Jams (and other stops) at the Cleveland Fed, the Cincinnati and Pittsburgh branches and the Columbus regional check-processing center. Enquirer (Dick Swaim) Photo bands used to bundle sorted checks. Identifies the city of Cincinnati. 2. The Fed's identification number lor Provident Bank. 3. The branch of Provident where the account is kept. 4 The Federal Reserve District Provident is within. will 5 The branch of the Fed to which the check should be sent. (1 Cleveland. 2Cincinnati. 3Pitts-burgh and 4 Columbus.) "Friendly competition," he says. But Cincinnati's average is the poorest out of the three 8529 Items per stop. Pittsburgh leads with 15,-914 Items per stop. , , "They have newer equipment," says Mike. LATER ON in the evening; we watch attendants retrieve the sorted checks from the drones' stomachs and repack them into drawers on a cart. : They will be taken out to the mall-room area, rebundled and shelved according to destination: Whether that be a Dayton bank or the Federal Reserve Bank of Dallas. The rejected checks-those which B4700 could not read for some reason-will be processed by Fed employees using manual sorting equipment. Top speed: 186 of B4700's. The net effect of rejects is to drag the system down and extend processing time. That costs the Fed money. "THAT'S WHY people are told not to 'spindle, fold or mutilate checks," says Mike. He explains that even a slight tear at the edge can force the computer to file the check In the reject drawer. ; As the bulk of the evening's work is loaded onto the mailroom shelves, other employees are balancing B4700's bundle listings against those sent by the banks. The computer and the banks' listings will agree on only 40 of the bundles. , . Some bundles will be missing checks; others will have check amounts recorded incorrectly at the bank. Still other checks will have been misread by B4700, by no means an infallible machine. All listing errors among the half-million checks must be found and detailed by the Fed and the banks charged or credited accordingly. For each of the 260 regional end-point banks, B4700 will list two totals: One for the amount drawn on the bank that night, and one for the amount credited to the bank. The balance Is what the Fed will either pay to or deduct from the individual banks' accounts. j BY 4 A.M., most of the work should be completed. If the Fed falls behind, and cannot get checks to a certain bank on time, oa is created. :: Float, in effect, is a short-term loan. If checks aren't presented to a bank for payment, the bank has that much more to lend. A one-day delay in check presentation nationally can mean billions of dollars in float. r If the Fed is trying to tighten credit, float is a dirty word. . ; That is why everything Is by-the-clock at the Fed. . ; ; As the last check bundles are taken away, a handful of employees are balancing the Cincinnati Fed's books for the night . . . $200 million in 500,000 checks, scores of mechanical errors, hundreds of feet of computer printouts, 372 separate bank accounts to settle with. I The books balance to within $1. V .7' M dqlas I

Clipped from
  1. The Cincinnati Enquirer,
  2. 11 Sep 1977, Sun,
  3. Page 56

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  • Burroughs check scanner

    smithern – 01 Sep 2017

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