Indeed; check settlement used to be small planes flying the checks to the nearest Federal Reserve every night where all the checks from all member banks would b

Indeed; check settlement used to be small planes flying the checks to the nearest Federal Reserve every night where all the checks from all member banks would be reconciled and money transferred from the bank where the check was drawn to the bank where it was deposited. Then the checks themselves, having been stamped, would be flown to the originating bank and kept on file. A "bad" check would get stamped and returned to the depositing bank. The bank where you deposited a check would in fact be lending you the amount of the check until the settlement was complete - hence the daily deposit limits and such to limit the bank's exposure.