Trash from the NYTimes

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Here are two articles on the New York Times Website:

The first article titled:

Banks Prepared for Year 2000

Filed at 4:18 p.m. EST

By The Associated Press

WASHINGTON (AP) -- The nation's bankers are telling people not to panic over the Year 2000 date change, trying to counteract doomsday scenarios of millions of Americans draining their bank accounts in December 1999.

ATM machines, credit cards, checks and banking services will be functioning normally, industry officials promised Friday.

``We don't think there is going to be much to worry about,'' Michael ter Maat, member relations director of the American Bankers Association, told reporters.

Brian Smith, director of policy and economic research at America's Community Bankers, said ample cash will be available ``to meet any demand.''

As for the last weekend of the millennium, their advice was: have the same amount of cash on hand as you would for any holiday weekend. ``Take out a few extra bucks,'' ter Maat suggested.

Withdrawing massive amounts of cash could make consumers vulnerable to being robbed, the officials warned.

The Federal Reserve has ordered an additional $50 billion of new currency to put into circulation in the event people make a run on banks and automated teller machines late next year.

Fed governors have assured Congress there will be sufficient cash available to the system to cover a wave of withdrawals.

By the end of next year, $200 billion in currency will be stored in government vaults, up from the $150 billion normally held in reserve. That's in addition to the $460 billion in notes circulating in the United States and abroad.

The U.S. banking industry is spending more than $8 billion to retool its computer systems, which will be put through testing next year.

Some experts have expressed concern about the financial industry's vulnerability to the Year 2000 computer problem and are worried that consumers could lose faith in the security of their banks.

Under one scenario, millions of people around the country start worrying that ATMs will become useless on Jan. 1, 2000, and close out their bank accounts in a consumer stampede the month before.

The industry officials insisted such fears were unfounded. At the most, there could be ``limited'' outages of ATMs in some areas, suggested Michael Zucchini, vice chairman and chief technology officer of Boston-based Fleet Financial Group.

``We'll tell customers not to do dumb things,'' said Smith. If people insist on closing their accounts, they should at least put the money in a safe deposit box, he suggested.

Direct deposit into bank accounts of paychecks and government benefit checks is the safest way to handle them ``no matter what year it is,'' said William Nelson, executive vice president of the National Automated Clearing House Association.

When the forerunners of today's massive computer programs were first designed, storage space was at a premium. To save memory space on the old-fashioned mainframes, code writers simply omitted the first two numbers of a date. That means 1998, for example, would read as 98, 1999 as 99, and so on. The year 2000 would be read as 00.

Since the systems are coded to assume that all years begin with 19, computers will interpret 00 to mean 1900, if changes are not made.

The second article, titled:

"Advice for Year 2000 Problems"

Filed at 4:15 p.m. EST By The Associated Press

Advice from the American Bankers Association for dealing with a potential Year 2000 computer problem: --Stay informed. Read the Year 2000 information your bank sends you. If you have any questions, ask your banker. --If you don't already do so, keep your monthly bank statements and paper records of your transactions, especially for the months preceding January 2000. --If you bank on-line, make sure your computer is Year 2000 compliant. Most computer and software makers have Web sites detailing their products' readiness for the date change. Make records of your bank accounts on a back-up disk. --Avoid scam artists who offer to ``hold'' your money for you through Jan. 1, 2000. The safest place for it is in the bank. --For New Year's weekend of 1999-2000, take out only as much cash as you would for any holiday weekend. If you should feel you need more, your bank will be ready.

The first one is just typical manipulative non-journalism. The second one is just about the dumbest thing I've ever read in my life. Since these are AP stories, I guess lots of people will have the pleasure of reading this junk in their local papers also. I used to expect more from the New York Times. My father worked there for thirty years. I guess they really are making a concerted effort to compete with the lowest common denominator...

-- pshannon (pshannon@inch.com), November 20, 1998

Answers

Interesting. About 6 weeks ago a shill for the banks, Joseph McIssac, of Market Partners, on the comp.software.year-2000 newgroup had stated that the banks were ready to launch a massive publicity campaign. In essence, "the banks are ready, it's unsafe to take your money out of the bank."

The obvious purpose is -- of course -- to head off the anticipated runs.

Don't blame the newpaper. I'll bet that they didn't even write this piece.....that the banking industry wrote it.

If you're honest, you have to admit that you can't blame them. They'd like to stay in business, the CEOs like their incomes. Every person they can persuade to leave money in the bank is more money they don't have to worry about.

When you get down to it, if no one took their money out of the bank, the banking industry would have few problems. If they don't get Y2K right, they simply shut down a bank for a while and fix it. And, if no one withdraws their money then losses might be so small that the FDIC can cover them. On the other hand, if there is panic and major losses, people will simply get pennies on the dollar.

Of course, you might have a problem if you need your money, but it solves their problem. And, after all, who do you expect them to look out for, themselves or you?

-- rocky (rknolls@hotmail.com), November 20, 1998.


"Avoid scam artists who offer to ``hold'' your money for you through Jan. 1, 2000."

Watch out Leo! They're on to you! :-)

-- Gayla Dunbar (privacy@please.com), November 21, 1998.


"Avoid scam artists who offer to ``hold'' your money for you through Jan. 1, 2000." Uh, that include the banks, too, d'ya think?

-- JDClark (yankeejdc@aol.com), November 21, 1998.

I repeat again...

If "they" think Y2K is no problem, why print more money??

"The Federal Reserve has ordered an additional $50 billion of new currency to put into circulation in the event people make a run on banks and automated teller machines late next year."

Look at their actions, not just the words.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), November 21, 1998.


I read it was $150 billion Diane, but this is no way enough to bail out the banks if there are bank runs - simple mathematics.

Robert E. McIsaacs is a joke by the way - this unsavoury "gentleman" is continuously putting out pro-banking propaganda at any newsgroup that will listen to him...

He recently posted on the comp-2000 forum (my "VISA is toast" thread) that I was authoring untrue and malicious articles - a downright lie of course.

If anyone is being malicious it's the likes of this scumbag who will be quite happy to see millions lose their life savings so that he can get his pound of flesh.

-- Andy (andy_rowland@msn.com), November 21, 1998.



Andy, you are both right. The Fed usually keeps $150 billion on hand. They are printing an extra $50 billion to go with it, making a total of $200 billion in reserve.

-- Gayla Dunbar (privacy@please.com), November 21, 1998.

Thanks Gayla - here's the scoop:-)or :-( depending on how badly the Bankers have screwed things up...

Customer deposits in bank checking and saving accounts total $3.7 trillion. The Federal Reserve Bank estimates that there is about $488 billion in U.S. dollars circulating around the world and just one- third of that total -- about $118 billion -- is in this country. Individual banks hold about $43 billion in reserve. The Federal Reserve just a few months ago announced plans to print up to an additional $50 billion in currency to add to its normal reserve of $150 billion to $200 billion to help meet the anticipated rush for cash before 2000.

Add it all up and, depending on how you do the math, there is probably just enough cash for an average of $2,500 to $3,000 per U.S. household. . . .

-- Andy (andy_rowland@msn.com), November 22, 1998.


Less than half of one month's income - and skipping all those pesky buisnesses out there who would want cash too.

Think we'll be able to get our paychecks cashed in late Dec 1999?

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), November 22, 1998.


You are forgetting that an enourmous number of the deposits are held by business - which presumably will not try to drawn down their accounts in cash. They are just trying to print enough so banks will not have to close early due to cash shortages. One bank shutting its doors early on 12/15/99 will result in everyone in town taking off the next day and trying to draw out every cent they have from every bank in town! The funny thing would be that the banks are solvent - they just wouldn't have the paper money on hand to give out. Wouldn't want to be the teller that gave out the last $5 bill and had to tell the next guy in line - Sorry, that was it.

-- Paul Davis (davisp1953@yahoo.com), November 23, 1998.

Rocky wrote:

"When you get down to it, if no one took their money out of the bank, the banking industry would have few problems. If they don't get Y2K right, they simply shut down a bank for a while and fix it. And, if no one withdraws their money then losses might be so small that the FDIC can cover them. On the other hand, if there is panic and major losses, people will simply get pennies on the dollar."

Rocky, while I generally agree with you on most things you post, I have to take exception to this particular post. The global economy we are so tied to is powered by the instantaneous flow of funds from country to country through international banks. If these banks shut down, even for a short time, the damage to the world economy would be enormous.

Realistically, it is not feasible for the largest banks in the U.S. (or the world) to simply shut down until they fix their Y2K problems. In the U.S., federal banking regulators have a policy called "too big to fail." The reason for this policy is that a failure by a big bank would cause the entire banking system to crash in upon itself. To avoid that systemic problem, the regulators will (and have) let insolvent large banks continue to operate.

If Chase Manhattan or Citibank (or any other large bank or money center bank) aren't compliant by 1/1/2000, they will not be able to operate. They will crash, taking the entire system with them. The correspondent bank dominos will fall in rapid succession, and there will be no time to simply close down and fix the problems. This is another reason why Greenspan said that 99% compliance among financial institutions isn't good enough.

Bank runs are the most immediate threat to the banking system, but they certainly aren't the only threat.

Nabi

-- Nabi Davidson (nabi7@yahoo.com), November 24, 1998.



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