I know we had a thread on how check/EFT/paypal clearing works but this is about the Fed’s role.
I got an direct deposit early Friday morning. I had to wire some money to England so I go to my bank. I can’t wire money because the tranaction had not cleared the Fed yet (like 12 hours after the deposit). So I have to wire the money Saturday morning. OK, not a big deal (it had to be in the London branch by the 10th). I know it is not 100% automated but close. I was then informed the wire would not go out until Tuesday morning with Monday being Labor Day. My thought was someone at my bank corporate office had to approve it. Maybe they have to approve all wires or because it was international? It was 500 GBP so I don’t think it was the amont but maybe. None of the above. It was because the Fed was closed over Labor Day weekend and ALL transactions are on hold (pending).
WTF? I mean is it dependent on people running the processes for absolutely every banking transaction in the US? How automated is the system and if it is not, then why not? This is 2012 after all. Maybe time to update all those PDP-10 and invest in some 386 machines?
So how does the Fed clearing system work and why is it tied into business hours?