Mr. Greenspan talked at senate hearings today about Y2K issues.greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I have just been listening to some financial senate hearings on a Washington D.C. public information channel "28". I caught the following from a senator (Chuck)- sorry I didn't catch his last name. The TV coverage got cut off promptly at noon for a U.N. briefing. This same senator had mentioned earlier in the hearings about some questions he had in regards to Y2K and that he knew that Senator Bennett would also be asking some Y2K questions too. Bennett was there so I hung on waiting to hear what the questions were going to be and the responses. However, this is all that was covered. Needless to say I was really dissappointed when the coverage stopped before they got to Senator Bennett's questions.
The jist of the questions asked by the senator (named Chuck) and then the follow-up answers by Greenspan follows. I have left out all the umming, and erring:
Senator: Worried about American public taking their money out of financial institutions this year. He asked how they came up with the extra $50 billion that has been set aside to deal with it? What is being done to increase the public's confidence in how we are dealing with the Y2K or how our financial institutions are dealing with Y2K? Do other countries other industrialised countries face the same problem and are they making the same preparations?
Greenspan: Senator what we did is to try to make a judgement which is very difficult because we have no history of what type of conversion of bank and other type deposits into currency might be made for those who are fearful that their ability to draw currency over the year end will somehow be somehow inhibited. And we know we've got enough currency to meet any conceivable demand. Strangely the concern that I have is I'm worried that people are going to draw too much out and walking around with a lot of $100 bills is not the safest way is not the safest means to keep your money...
Greenspan: .... and I'm a little concerned that they may worry about Y2K and things that may break up no somehow....
Greenspan: ....something is going to break down...
Greenspan: ...One thing we are sure of as an update they will not loose any money because our computer systems are not going to crash in that regard. The major danger is I'm getting increasingly concerned with er.. to draw out money and there is going to be an awful lot of people who gonna be interested in that.
Senator: I won't ask you to name names. Take too long I guess. But I do think it might be a good idea to let people know of the federal reserves I think very prudent policy of keeping aside a certain amount of reserves in case something happens that would bolster peoples confidence.
Greenspan: We are on a two fronged policy. One.. do as much as we and we've done an awful lot and will continue to do to prevent anything of significance happening where we have the capability of double testing and checking as we can. And secondly, to have a whole series of potential actions that we would take in the event that something does happen. And we will continue doing that obviously on increasing manner through the rest of the year. Things are I must say are going better than I was concerned about six months ago. People are getting serious. We are inter-relating with all of our banks and the testing systems are going well. So that the worst possibilities I think are behind us and most of those are really interfaced with the rest of the world...
Greenspan: ...where we don't really know how well they are managing.
Senator: One final question.
Interruption by another senator: I'm gonna have to stop you because we've gotta a luncheon for this side of the aisle at 12 o'clock and so we're gonna run over. So I'd be very happy to have you submit it in writing Chuck and we'll...
Senator (Chuck): Thank you.
Interruption by other senator: ..we'll do it.
Coverage was ceased at this point.
-- Anon (firstname.lastname@example.org), February 23, 1999
Thanks for taking the time to record the comments and type them here. Tantalizingly brief, great pity they had to break away. Maybe the whole thing will be carried later on C-SPAN.
-- Old Git (email@example.com), February 23, 1999.
"And secondly, to have a whole series of potential actions that we would take in the event that something does happen. And we will continue doing that obviously on increasing manner through the rest of the year..."
Which would be?
xxxxxxx xxxxxxx xxxxxx
-- Leska (firstname.lastname@example.org), February 23, 1999.
Often there is a transcript but trying to "find" it is a real pain in the ASCII.
Sometimes it takes them a week to post it.
Love this from Greenie ... "to have a whole series of potential actions that we would take in the event that something does happen."
I'm QUITE sure they have "plans."
-- Diane J. Squire (email@example.com), February 23, 1999.
Yep, Diane. Fed's P.L.A.N.? Prevent Loot Access Now.
Why am I not comforted that Alan Greenspan talks about concern for my physical safety. I do not look to an old short academic economist with real thick hornrim glasses to lecture me on the safety concerns of holding a $100 bill. I want him to worry about interest rate policy and bank safety so that I have instant access to every $100 bill I can possibly lay claim to at all times between 9:00 am and 5:00 pm Mon-Fri.
For personal safety there's a guy named Horace on the other side of town who can keep my trigger pull on my Colt .45 at a steady 4 pounds and who keeps the feed ramp polished to a mirror finish that'll feed ACP hardball all day without jamming. If that ain't enough, there's a couple of guys around here the size of Stone Cold Steve Austin that I'll consult for personal safety issues. I don't recall one of them being named "Greenspan." Thanks anyway Alan. Be sure to keep those hornrims clean.
-- Puddintame (firstname.lastname@example.org), February 23, 1999.
"And we know we've got enough currency to meet any conceivable demand. Strangely the concern that I have is I'm worried that people are going to draw too much out and walking around with a lot of $100 bills is not the safest way is not the safest means to keep your money..."
Dear Mr. Greenspan, thank you for putting my mind at ease on this. Now that I know that me cashing out my accounts will not put the banking system in jeopardy, my guilt feelings are greatly apeased. And please Mr. Greenspan, don't go around worrying about my cash, I am very well capable of keeping it secure. I have a lot of practice in this, I have kept my all of my posessions and my kids secure for many years. I appreciate your concern all the same, and I'm grateful that you care about us.
-- Chris (email@example.com), February 23, 1999.
Senate Comittees list & links ...
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Legislative Activities Index
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The ability to search the entire site will be coming in the future.
Go on over to my favorite USIA Washingtons files web-site and voila! Under the last 48 hours is Greenspuns testimony ...
Just the summary ...
23 February 1999
TEXT: GREENSPAN'S TESTIMONY ON U.S. ECONOMY, MONETARY POLICY
(Federal Reserve chairman sees growth slowing in 1999) (5732)
Washington -- Federal Reserve Board Chairman Alan Greenspan says the U.S. economy should continue to grow this year, but at a slower pace and with a slightly higher rate of inflation.
Clouding this positive outlook are concerns about further economic and financial instability in global markets and about the effect of slower growth on U.S. stock prices, Greenspan added.
Most of the governors and bank presidents of the U.S. Federal Reserve System -- the U.S. central bank -- see the U.S. economic expansion slowing to the 2.5-3 percent range this year, Greenspan told the Senate Banking Committee February 23 in presenting the Federal Reserve's semiannual report on monetary policy.
In both 1997 and 1998 the U.S. economy expanded by 3.9 percent.
The 2.5-3 percent growth rate would keep the unemployment rate -- currently hovering below 4.5 percent -- unchanged, said Greenspan. The governors and bank presidents' also see a consumer price index inflation rate of 2-2.5 percent, slightly above last year, Greenspan said. Among the reasons for the low inflation in recent years have been one-time and temporary factors, most prominently declines in oil, commodity and other import prices "that are unlikely to be repeated," he said.
Threatening the growth outlook is the continued possibility of economic and financial instability around the world, highlighted by the events in Brazil in January, Greenspan said.
"Although financial contagion elsewhere has been limited to date, more significant knock-on effects in financial markets and in the economies of Brazil's important trading partners, including the United States, are still possible," Greenspan said. He added that "several of our key industrial trading partners have shown evidence of weakness, which if it deepens could further depress demand for our exports."
Greenspan again raised concerns about rising U.S. stock prices. "Equity prices are high enough to raise questions about whether shares are overvalued," he said. "As the economy slows to a more sustainable pace as expected, profit forecasts could be pared back, which together with a greater sense of vulnerability in business prospects could damp appetites for equities," he said.
The Federal Reserve chairman said a decline in stock prices could affect capital spending, particularly among manufacturers, which is already likely to slow if profit margins narrow and capacity utilization drops further.
"A downward correction to stock prices, and an associated increase in the cost of equity capital, could compound a slowdown in the growth of capital spending," Greenspan said. "In addition, a stock market decline would tend to restrain consumption spending through its effect on household net worth."
Greenspan noted that on the "upside" the U.S. economy has "proven surprisingly robust in recent years."
"More rapid increases in capital spending, productivity, real wages, and asset prices have combined to boost economic growth far more and far longer than many of us would have anticipated," he said.
Following is the text of Greenspan's testimony as prepared for delivery:
(Note: In the following text "billion" equals 1,000 million.)
TESTIMONY OF CHAIRMAN ALAN GREENSPAN
THE FEDERAL RESERVE'S SEMIANNUAL REPORT ON MONETARY POLICY
BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,
FEBRUARY 23, 1999
Again, for the rest of the story link to...
-- Diane J. Squire (firstname.lastname@example.org), February 23, 1999.
The full transcript is an interesting read. Talk about economic dominoes!
Investor confidence has always been the key to keeping the money game afloat.
... Year 2000 Issues: Before closing, I'd like to address an issue that has been receiving increasing attention -- the century date change. While no one can say that the rollover to the year 2000 will be trouble free, I am impressed by the efforts to date to address the problem in the banking and financial system. For our part, the Federal Reserve System has now completed remediation and testing of 101 of its 103 mission-critical applications, with the remaining two to be replaced by the end of March. We opened a test facility in June at which more than 6000 depository institutions to date have conducted tests of their Y2K compliant systems, and we are well along in our risk mitigation and contingency planning activities. As a precautionary measure, the Federal Reserve has acted to increase the currency in inventory by about one-third to approximately $200 billion in late 1999 and has other contingency arrangements available if needed. While we do not expect currency demand to increase, dramatically, the Federal Reserve believes it is important for the public to have confidence in the availability of cash in advance of the rollover. As a result of these kinds of activities, I can say with assurance that the Federal Reserve will be ready in both its operations and planning activities for the millennium rollover. ...
... The banking industry is also working hard, and with evident success, to prepare for the event. By the end of the first quarter, every institution in the industry will have been subject to two rounds of on-site Y2K examinations. The Federal Reserve, like the other regulators, has found that only a small minority of institutions has fallen behind in their preparations, and those institutions have been targeted for additional follow-up and, as necessary, formal enforcement actions. The overwhelming majority of the industry has made impressive progress in their remediation, testing, and contingency planning efforts. ...
While part of this is good news, the banking and financial industries DO NOT operate in a void. Why do I not feel reassured here?
-- Diane J. Squire (email@example.com), February 23, 1999.
Doesn't it just friggin piss you off when the government thinks it knows what's best for you? Aren't you friggin pissed off everytime they tell you you aren't smart enough to take care of yourself, your finances? I hope TSHTF! I hope it comes crashing down! We need to start all over again and maybe, just maybe get it right the next time around! What is wrong with us? Why do we tolerate such arrogance from them? We deserve exactly what we get!
-- fuming (firstname.lastname@example.org), February 23, 1999.