Supplying Cash

As Hurricane Harvey churned off the Texas coast, the cash team in the Dallas Fed’s Houston Branch prepared for the storm’s impact. In the week prior to landfall, essential staff reserved hotel rooms two blocks from the branch to ensure they would be on-site to communicate with financial institutions and support currency needs throughout the region.

Financial institutions’ demand for cash rose sharply as the region’s residents prepared for the storm’s onslaught and aftermath. Leading up to the storm, banks along the Gulf Coast ordered $453 million worth of currency from the Houston Branch, and banks in South Texas ordered $243 million—a combined 43 percent increase compared with the same week in 2016.

Quick and thorough communication was crucial to meet the demand for currency. Multiple conference calls took place daily among the Eleventh District’s cash management team, Federal Reserve System cash officials, financial institutions and armored carriers.

The hurricane made landfall on Friday, Aug. 25, and the city of Houston began to experience the effects of the storm by Saturday night. The rain continued full force through Sunday.

As the rain increased more rapidly than forecasters expected, cash orders from Central and South Texas banks that were normally handled by the Houston Branch were rerouted to the Dallas office for processing.

On Monday, the first business day after Harvey struck, the Houston cash team prepared all of its cash orders for banks in the immediate Gulf Coast area. However, widespread flooding prevented armored carriers from making it to the branch on both Monday and Tuesday.

On Wednesday, as the heaviest rain shifted to the east of Houston and floodwaters began to subside, an armored carrier successfully picked up several cash orders for banks. Houston cash employees who were not significantly impacted by the flooding also began returning to work. By Thursday, even the armored carriers servicing the Beaumont area, 85 miles up the coast, were able to operate despite the rain and flooding.

In the months following the storm, a new issue emerged: Banks in the Gulf Coast region began depositing unusually large quantities of currency soaked by floodwaters.

Federal Reserve Banks are charged with ensuring the integrity of the nation’s currency by removing unfit bills from circulation. Accordingly, the Houston cash team spent countless hours handling these deposits following a scripted process to fully account for the value of the deposit and keep themselves from being exposed to potential hazards from the currency. About $20.4 million in contaminated currency was destroyed and replaced with bills fit for circulation to the public.

Annual Report 2017