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The Y2K homestretch CUs ready to battle the media in war of words over the reality of Y2K By PAUL GENTILE CU Times Associate Editor

BRAINERD, Minn.-Marty Kelly, marketing manager for Mid-Minnesota FCU, considers himself a pacifist, but after seeing so many "damn irresponsible" news reports regarding Y2K, he said it's time to stop being nice, take off the gloves and declare war on the media. It's a feeling shared by credit unions throughout the country.

"I saw a four minute news report on a Minneapolis television station that spent three and a half minutes showing college professors who were saying that people should have at least three months salary in cash to be ready for Y2K. Three months salary in cash? Come on," said Kelly.

These are exactly the kinds of reports credit unions are attempting to diffuse, said Kelly. If members panic and decide to withdraw large amounts of cash, it could lead to a cash shortage at the credit union-forcing the credit union to shut its doors.

Another report that Kelly saw suggested that all of the country's financial institutions would fail six months into 1999 because financials operate on fiscal calendars. This has since been proven wrong to Kelly's delight. "It's August. I guess we proved those reports wrong."

It's not just "irresponsible" reports about financial institutions that bother Kelly. He remembers one report that suggested people won't be able to leave their state or county on Jan.1, 2000 because the police won't be able to monitor them since their monitoring equipment won't be working due to Y2K. "That's something isn't it? I didn't even know the police were monitoring people."

Kelly admits that the kind of news reports he wants to see aren't very sexy and probably won't do anything for the journalists' careers, but that's tough. "Sure, reporting that everybody is ready for Y2K isn't going to sell, but they're supposed to strive for accuracy, not sensationalism," said Kelly.

He wonders if the mass media would like it if the shoe were on the other foot. "I equate what they're doing to us about Y2K, to us spreading the word that newspapers are going to become toxic in the year 2000 and nobody should buy them. It sounds crazy, but we think their reports are crazy," said Kelly.

So Kelly decided to do something a little "edgy" in the CU's Summer 1999 newsletter. It was so edgy, Kelly admits, that it made his CEO a little nervous.

Using the Y2K alarmist theme, Kelly designed a cover that is geared to grab member attention by showing just how ridiculous Y2K media hype can be. The cover (shown on this page) is of a man and his "Y2K Survival Shack." The man is toting bottled water, canned goods, a rifle, and stacks of $50 bills into his cabin-everything he will need to wait out the aftermath of Y2K.

"The guy looks a little nuts with his rifle and canned goods. But this is a battle with the media. We identified at the end of 1998 that this was now a PR issue, not a tech issue anymore," said Kelly.

"We can't be polite with our readiness message anymore. Bad news is always more interesting than good, and sensationalistic journalism will routinely draw a larger audience. From a public relations standpoint, that's some hefty competition," said Kelly.

Kelly said that despite all the irresponsible media reports, he doesn't see much member interest in Y2K as of now. Included in the CU's Summer 1999 newsletter was a postage paid Y2K survey that members are asked to mail back to the CU. It asks questions such as "Do you plan on taking any extraordinary actions to prepare for January 1, 2000?" and "How concerned are you about the effects of Year 2000 on your credit union funds?"

The response has been weak so far, said Kelly. "We're just starting to get them back, but the response rate looks pretty poor. And the ones we have received were quite funny. One woman wrote in the 'comments' section that she didn't plan on living until the Year 2000, so why bother worrying about it."

The Y2K issue has forced credit unions to find creative, innovative ways to assure members that their credit union is ready for Y2K. At Bethlehem Employees' FCU, Chester, Ind., CEO Alex Knaver recently used his "President's Corner" column in the CU's monthly newsletter to encourage members to come into the credit union during the last week of 1999 to get a printout showing the balances of all their credit union relationships.

"If they have any fears, they should come in and get a statement printout during the last week or two. We can show them loan balances, share account balances-everything," said Knaver. "It seems simple, but I think it can help them feel like they've taken some action to protect themselves," said Knaver. "I'd rather have them swarm the branch for statement printouts, than for cash."

Like Kelly, Knaver also thinks credit unions' biggest challenge now is diffusing exaggerated media reports. "It all depends on what the media is going to do. Unfortunately, they're somewhat in control. We're going to have to react to their reports. That's just the way it is," said Knaver.

It's not just the media that credit unions have to worry about. The entertainment industry and the business world also factor into Y2K hype.

A new movie, entitled "Y2K", starring Chris O'Donnell, will be released this fall. Kelly said he is already doing damage control for the movie. He wrote a piece in the newsletter telling members that "naturally, the film will show Y2K as the disaster to end all disasters...Before making rash decisions, consult the experts-those who manufactured your computer, those who operate your utility services, and those who provide access to your funds."

Also, in a recent ad for Polaroid's new PopShot camera, a man, who is obviously panicking, rushes to an ATM machine on New Year's Eve 1999. He uses Polaroid's new PopShot camera to take a picture of his balance to prove how much money he had-it shows him having sixty dollars and change. Then Y2K arrives, the screen blinks, and the man suddenly has a balance of $42 million. The man smiles and uses his PopShot camera to take a picture of his new balance.

The American Bankers Association protested the ad and Polaroid subsequently pulled the ad off the air. Credit unions everywhere are using different strategies to let their members know that the scenarios portrayed in commercials like the PopShot are not reality.

At Citizens Equity FCU (CEFCU), Peoria, Ill., a new Y2K Member Center has just opened. It is open from 9 to 5 during the week and from 9 to 2 on Saturdays. It will keep these hours until the Year 2000. The credit union hopes that members will come to the center to ask questions about Y2K and learn how the credit union has prepared.

At this Y2K Member Center, CEFCU has set the clocks ahead to the year 2000. Using a Money Center 24/Fast Track Teller ATM and teller terminal, members can perform mock transactions as if they had taken place after Jan. 1, 2000.

"Since the 1970's CEFCU has been aware of the Year 2000 challenges...The development of the Y2K Member Center gives members the chance to see for themselves how are preparations are working," said Phil Chaddock, CEFCU's chief technology officer.

Orange County Teachers FCU, Santa Ana, Calif., has a Y2K communications plan in place that calls for the CU to take some kind of member communication action each month. Upcoming plans call for all branch employees to where "Y2K Ready" ribbons and for member service representatives to have "Y2K Ready" stickers on their computers.

"Our plan is designed to let members know we're ready. I think financials will be ready, but a lot depends on the overall media. If they scare the public, there could be problems," said Lori Segal, senior vice president of branch and member relations for OCTFCU.

Orange County Teachers FCU has also set its sights on another potential Y2K panic area-direct deposits. The credit union is unveiling a payroll emergency loan to assure members that even if their payroll checks don't get direct deposited because of Y2K, the credit union will provide them with a loan for the amount of the payroll check.

"We're for whatever puts members at ease," said Segal.

It appears that the financial industry is ready to do just about anything to ease peoples' fears about Y2K. The American Bankers Association has written a five-page sermon that it is asking its members to pass along to their priests, rabbis an ministers to use during their services.

-- ariZONEa (credit@unions.arrogant), August 17, 1999

Answers

The credit union guy doesn't understand that the threat to the banks has nothing to do with their computers and everything to do with insufficient cash reserves and bad loans- or loans that will be bad if y2k forces many small buisnesses under.

-- Forrest Covington (theforrest@mindspring.com), August 17, 1999.

Thank God this marketing manager is willing to ally our fears and set the record straight. What would we do without highly technical analysis like "Three months salary in cash? Come on,".

If only we had turned to marketing managers when we needed help for other technical problems. Perhaps the space shuttle Challenger could have been saved. And we certainly would have had a cure for cancer by now. Oh, foolish, short-sighted us.

Keep your...

-- eyes_open (best@wishes.net), August 17, 1999.

What I would like to see are articles asking pointed questions about Mid Minnesota FCU's compliance...like "Mid Minnesota refuses to guarantee depositors'safety. Or Mid Minnesota mum on Compliance work, etc,.etc. Day after day until the BANK FAILS.

-- K. Stevens (kstevens@It's ALL going away in January.com), August 17, 1999.

What I would like to see are articles asking pointed questions about Mid Minesota FCU's compliance...like "Mid Minnesota refuses to guarantee depositors'safety. Or Mid Minnesota mum on Compliance work, etc,.etc. Day after day until the BANK FAILS.

-- K. Stevens (kstevens@ It's ALL going away in January.com), August 17, 1999.

I inquired as to the status of the CU we use here in Virginia this past February. The Y2K Project Coordinator, I'll call her Miss Scapegoat, couldn't tell me anything of note.

"When did you begin the process?" I asked. "Last year." came the response.

I followed up with, "When exactly did the process begin?" "I think it was in the Spring." said Miss Scapegoat.

"Where are you in the process of inventory, assessment, remediation, testing & implementation?" "It's hard to say," stammered the coordinator. "I have a series of reports to read through. I'll have more information for you in about 3-4 weeks."

One month later, mid-March, we repeated the same dance. No information was provided other than "we're working on it".

I inquired again in April. The only info she would provide is that they had upgraded the PCs to the latest version of Windows. "Which version is that," I asked. "I'm not sure," Miss Scapegoat stuttered. "I'd have to check on that & get back to you." "Nevermind," I told her. "It's not important."

This is a true account. Names have been changed to protect the ignorant.

Suffice it to say, if we had any money other than enough to pay the bills, it would have been removed back in May.

-- Bingo1 (howe9@pop.shentel.net), August 17, 1999.

Has anyone heard of the media telling viewers to have three months of cash? I sure haven't. The media very seldom says anything about Y2k in my area.

-- Linda A. (adahi@muhlon.com), August 17, 1999.

Now if I only had three month's salary in cash...

scratchin' at the door...

The Dog

-- Dog (Desert Dog@-sand.com), August 17, 1999.

The poor CU man. He says there are no members of the CU withdrawing their cash, or even showing much interest for that matter. Yet the CU man stomps and rails. He shows all the signs of an unreasonable panic.

Makes a body start to wonder.

-- Spanky (nospam@spamfree.net), August 17, 1999.

Mr. Kelly sounds a bit like Nathan Thurm, that slick and very nervous lawyer played by Martin Short on "Saturday Night Live":

"Who said we're nervous? We're not nervous. We're not. That's just stupid."

-- Mac (sneak@lurk.hid), August 17, 1999.