U.S. Bank Regulators Repeat Industry Ready For Y2K

Updated 4:27 PM ET September 21, 1999

NEW YORK (Reuters) - U.S. regulators said Tuesday the banking industry is ready for the year 2000, in yet another attempt to avert widespread panic among consumers and stem any rush on the banks to withdraw funds.

Among the country's federally insured banks, thrifts and other financial institutions, 99.7 percent of them are prepared for next year, the regulators said, and the handful of unprepared ones are under close scrutiny.

Computer systems that read the last two digits of a year are being upgraded so they do not confuse next year with the year 1900. But many people plan to pull large chunks of cash from accounts just in case, thinking banking and accounting systems will fail, according to a recent Gallup poll.

"The biggest concern we all have is an irrational public reaction," Comptroller of the Currency John Hawke Jr., a top banking regulator, told a press briefing about the status of banks' Y2K preparations.

Regulators have conducted on-site checks at the banks to make ensure computer systems will not falter at the new year next year and have examined the banks frequently to check preparations are up to speed, said Elizabeth McColl, acting superintendent of the New York State Banking Department.

Of the 10,273 banks and thrifts insured by the Federal Deposit Insurance Corp. (FDIC), only 27 of them had made "less than satisfactory" preparations for year 2000, said Donna Tanoue, chairman of the FDIC. This was down from the 774 such institutions that got less than satisfactory marks 15 months ago, she added.

Small banks are as well prepared as large banks, after being subject to similar regulatory oversight, the regulators said.

U.S. banks faced a strict series of deadlines in getting computer systems ready for next year. By June 30, insured institutions were required to have finished all testing of their critical computer systems and to be using only computer programs fixed and tested to work properly in the year 2000.

Hawke said "99.7 percent of all federally supervised financial institutions have finished their renovations and tests of their systems -- not just the systems that house their personal records and run their elevators, but the systems that bank customers rely upon for access to funds."

The bank regulators, who expressed similar confidence last month, Tuesday acted to counter an August Gallup poll appearing in the USA Today newspaper that showed 48 percent of respondents thought banking and accounting systems would fail as the year changed, possibly causing errors in employee paychecks, government payments and automated transactions.

Nine out of 10 respondents said they would not pull all their money from banks, but 25 percent said they would withdraw and set aside a large amount of cash, the poll showed.

"No one has ever lost a cent in a federally insured account," Tanoue said, after referring to the poll. "And no one will."

Still, people should hold onto financial records and balance their checkbooks, while also remaining wary of scams designed to prey on Y2K fears, Ellen Seidman, director of the Office of Thrift Supervision, said.

"Be skeptical and tell friends and relatives to be skeptical if someone asks for account information, credit card numbers, social security card numbers or your mother's maiden name," Siedman said. "Be wary if promised that your money will be put into a Y2K safe account or told that your personal information is needed to make Y2K adjustments. Simply put, it isn't."

Federal Reserve Bank of New York President William McDonough also said at the briefing he did not expect that the U.S. central bank would have to adjust interest rates because of Y2K-related effects on the economy in the next two quarters.

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Ray

-- Ray (ray@totacc.com), September 21, 1999

Answers

>Hawke said "99.7 percent of all federally supervised financial >institutions have finished their renovations and >tests of their systems

Why do they continue to say 99.xx% of the banks are DONE with their projects when the the FDIC clearly states on their website that 99.xx% of banks are making excellent/satisfactory progress towards meeting the deadline?

Making "excellent progress" is no where near the same as done, but the herd won't see the difference and are therefore misled into thinking there money is safe in the event the rollover occured tomorrow.

Does anyone else see this discrepancy?

Enormous

-- Enormous (enor@mo.us), September 21, 1999.