The Federal Reserve Bank of Boston will cut nearly 15 percent of its workforce in the next three to four years — the largest layoff at the institution in more than a decade.
Last week bank officials informed 160 employees — an entire division — that their jobs would be eliminated because a key customer, the US Treasury Department, was cutting costs.
In an attempt to save taxpayers $117 million over the next decade, the Treasury is consolidating certain banking services that it currently spreads among 10 regional Federal Reserve banks, including Boston. In the coming years, those services will be provided by just four regional banks: Kansas City, St. Louis, Cleveland, and New York, said Thomas Lavelle, a spokesman for the Boston Fed. There are 12 regional banks in the Federal Reserve system.
The job cuts were first reported by the Boston Business Journal.
“It’s obviously a tough decision for us and the folks who are here,” Lavelle said. “It’s really about cost and efficiency.”
The last time the Boston Fed shrunk in such a significant way was at the start of this century, when the central bank cut the number of offices that handled paper checks from 54 to one nationwide, Lavelle said.
The Boston Fed employs 1,075 people. While its work regulating banks and guiding policy on issues such as foreclosures, distressed communities, and unemployment, garners the spotlight, it also provides traditional bank services to the Treasury.
Those services, including cash management, invoice processing, and stored value cards, a type of debit card used by the military and on bases, will be phased out in Boston, Lavelle said. The cuts are the result of a study completed by the Treasury on how to save money.
“The work done by the Federal Reserve on behalf of the US Treasury is critical to our nation’s economy, and we will work together to ensure a smooth transition,” a Treasury spokesman said.
Boston Fed President Eric S. Rosengren was out of town last week at a Federal Reserve policy meeting when the job cuts were announced and has been traveling since, Lavelle said. He will speak to employees after he returns to Boston.
Lavelle said the Boston Fed will try to find affected employees other positions at the Boston bank or other regional banks. “We’re going to treat our employees as humanely as possible,” he said.