When the clock strikes midnight,Your money will be safe

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

When the clock strikes midnight,Your money will be safe, say local bankers

Susan Mcdonald

John Taylor doesn't have firm plans for New Year's Eve yet, but he's sure of one thing. He doesn't plan to be at his Firstar bank office, waiting to see if efforts to head off a Year 2000 computer snafu were successful.

"If we're hanging out down at the bank at midnight, we've got a problem," said Taylor, executive vice president and regional chairman for Firstar, formerly Star Bank. "It will be a non-event by that point in time."

Taylor's confidence is echoed by several other area bank executives. All say that, although the process has been time-consuming and, in most cases, expensive, their banks will pass the stroke of midnight without any significant problems.

For several years, computer experts have expressed concern about the anticipated "millennium bug," or as it is also commonly called, Y2K.

Most older computers were programmed to assume that all dates are in this century, so experts fear that when 2000 arrives, computers will recognize only the 00 and assume that the year is 1900.

Banks have been a major focus of concern because of the potential for chaos in everything from personal checking accounts to world financial issues.

Area bankers say they have the problem well in hand. Most began addressing the issue at least two years ago and say their systems will be ready.

For example, Bank One Corp. is now in its fourth year of preparation.

"We started in 1995 sizing up the issue, figuring out what we needed to do, laying out battle plans, and then going to work on it," said Tom Kelly, vice president for media relations. "Almost all of our systems are now in compliance, and we're spending 1999 testing."

Like several other banks, Bank One hired outside contractors to help with much of the work, rather than bringing on new staff for the project. No matter who does the work, the price tag is usually high.

"The corporation, by the time we're done with it, expects to spend about $350 million nationwide," Kelly said. "By the end of 1998, we had already spent about $235 million."

National City Corp., parent company of National City Bank of Kentucky, has funded $65 million for its Y2K preparations, said Mark Pogachar, assistant vice president and year 2000 coordinator, based in Cleveland.

"When we started the project, the analysts were saying that the rule of thumb was a million for a billion," Pogachar said. "Since we're an $83 billion bank, we would have been looking at $83 million. If anything, we're just approaching that number."

Taylor declined to disclose Firstar's Y2K costs, but said the figure would be deceiving because the bank used the opportunity to upgrade many of its systems.

"Maybe we could have spent a dollar on something, but we spent $2 to add some things that otherwise we might not have done," Taylor said. "Since we were working on them anyway, we just completely replaced some systems.

"I think this will benefit customers in a pretty significant way," he added. "It really accelerated our opportunities to upgrade our technology."

The cost of Y2K compliance has been less for some smaller banks with nearly new technology. Charlie Mays, executive vice president and chief financial officer at Commonwealth Bank & Trust Co., said his organization has spent more time than money on the project. "Since our bank wasn't formed until 1991, we've had later computer technology from the beginning," Mays said. "Other than time, the cost for us has been less than $20,000."

New Albany's Hometown National Bank may have been even more fortunate. While chief executive officer Ron Clark would not divulge the bank's Y2K compliance budget, the bank's size and age were a distinct advantage, he said. Hometown is only 2 years old, so it has been preparing for Y2K from the beginning.

"We grew up with Y2K, so for us it was just part of our start-up," Clark said. "A lot of our systems were manufactured after the Y2K issue became common knowledge, so most of the equipment we bought was compliant before we installed it. We're so small that it's probably less complex for us, but we also have less people and less resources."

Work on Hometown's internal systems has been completed, and Clark is waiting for what he believes will be the final examination by federal regulators, he said.

One of the most complicated issues, and one that still causes concern, has been identifying and handling electronic information exchanges between the bank and other entities, he said.

"Every time you think you have everything figured out, you find another interface," Clark said. "It's been complex determining what it is we depend on, because we take so many things for granted."

For example, Clark remains concerned about whether the bank will have electrical power, so Hometown's contingency plan includes alternate sources of power.

"If there's no power here on Jan. 3, we will still operate," Clark said. "We'll have lights, computers and machines. We can manually operate the bank for up to a month without power from an outside source."

Mays also said he is confident about Commonwealth's own systems, but has more concerns about ancillary systems beyond his control.

"There are so many things where you're dependent on other people, so we have to check out things like ATM cards, credit cards, the Federal Reserve wire transfer system, and so forth," he said. "I'm pleased with where we are, but I don't want to get too smug."

While bankers express confidence in their systems' Y2K compliance, many remain concerned about public panic as the New Year draws closer.

"My biggest concern is unfounded panic, emphasizing the word `unfounded,' " said National City's Pogachar. "I think often people are sensationalizing. I also think that the media is taking 1997 information and touting it as accurate and current. Frankly, a year and a half has passed since 1997 and many of those concerns have literally been fixed. It's not like we've been sitting idly by."

Consequently, banks already have begun educating and reassuring customers about the Y2K issue.

Firstar's branches carry brochures that describe the bank's preparedness program. The bank also has a 24-hour telephone hotline, information on its Web site, and an ongoing series of statement mailings designed to answer customer questions and ward off anxiety, Taylor said.

Firstar also has conducted training sessions for its tellers and other personnel who have regular public contact.

In addition to instructing employees on what to say to customers, National City also has advised them to be wary of private conversations, Pogachar said.

"We realize that over-the-back-yard-fence conversations are going to happen, too, so we're talking to employees about those kinds of situations," he said.

As the end of the year draws closer, banking customers can look forward to even more information about Y2K, bankers said.

"The most important thing is to keep communication open and not assume that everybody is comfortable," Taylor said. "We've really got to be aggressive in making sure people realize that we are prepared and that their money is safe."

-- Norm (nwo@hotmail.com), March 30, 1999


You can bet your 50# bag of rice that my money will be safe at midnight. It isn't and won't be in the bank!!!! The more the bankers talk the more I think they "protesteth too much".

Got lotsa cash??

-- Taz (Tassie@aol.com), March 30, 1999.

Good post, Norm. It's more evidence that things are progressing in a positive direction. Maybe not as fast as they should have, but progressing none the less.

However, I would caution everyone to check out the situation at their own bank. Remember, you are doing them a favor by keeping your money there and if they don't have the service or answers that suit you, consider moving your money to someone who does. There is one important thing to remember about putting money in a bank: It's a business transaction, and if you don't get what you are paying for you have the choice of finding another supplier who will give you your money's worth.

-- Paul Neuhardt (neuhardt@ultranet.com), March 30, 1999.

Norm, I must admire you for your persistance, but nothing else. Your constant barrage of happy face articles containing half truths about Y2K indicates either a neo-apostolic desire to convert GIs into DGIs or you're just a trouble making troll that has either never clicked on the "About" or have ignored it. I can't tell the difference, hence the qualified compliment.

This latest article is like the others, what is NOT said is vastly more important than what little IS said.

Example, the above article, even if every single bank, S&L, CU, and ATM in the US of A were 100% compliant and tested, you still miss the point completely. Particularily Asia, then Europe, and to a minor degree Africa and C. & S. America can drag the US monetary system down. I would guess that more people are learning about the nature of the US fiat money, fractional reserve banking, and central banking system during 1998 and 1999 than from 1913 to 1997. This is VERY bad news for the banks, the same way that it is bad news to a card dealer for his dealees to find out he is using marked cards.

The first rule of investment is that with greater risks there should be greater rewards, and its mirror image less risk yields less rewards. Right now the rate of return for N.O.W. checking, savings and C.D.s is at historic lows. Therefore, banks should be able to offer exceedingly low risk. This they can not do. If the banks were not tied to a fiat money, using fractional reserve in a central bank system, they would be fine. However, they have hitched their wagon to a failing star(s). Considering just the Asian banking problems, not to mention the BAM countries, banks should be offering higher yields since there is higher risk. Add Y2K problems, particularily in Asia, and the Risk - Reward rate should be even higher.

The point is this, considering the risk of Asia and Y2K, the banks are no longer offering competitive rates of return in the current market place.

While posting inane articles like the above give people like me a great backstop to bounce ideas off of, this forum and the public would be better served by everbody acting in a polite manner and acceding to the wishes of our host, Mr. Yourdon.

-- Ken Seger (kenseger@earthlink.net), March 30, 1999.

Hi Norm - it's nice to see you (and the media) are blindly echoing what Mr. K. wants you to say.

"Be wary of private conversations" - hmmmn - nothing like telling your people to echo (Goebel's) party line.......

Now granted, the banking and financial securities system (as a whole) may be okay - so they're spinning a vast left-wing government web to prevent cash withdrawals - in their panic to prevent withdrawals, how can you withdraw funds or use a credit card or an ATM card if other problems occur?

One satellite killed 3/4 the pagers and many ATM's and gas card machines nationally last summer - wanna bet soemthing similar won't happen?

By the way, this is no reference - it is a slick propaganda piece with no facts behind it - echoing the administration's position and condeming those who are trying to prepare for uncertainity. But assuming I take them at face value, what about the millions of companies nationally and internationally that HAVE NOT spent "millions" in fixing the problem - I thought you guys agreed that it wasn't a problem if there were no "hard evidence" of problems?

-- Robert A Cook, PE (Kennesaw, GA) (Cook.R@csaatl.com), March 30, 1999.

Ken and Robert,

Norm knows what he's doing. He's a disruptor, most probably an agent of some PR firm or other. PR is a multi-billion dollar a year industry. Banks, corporations and foundations use PR to manipulate every kind of media to further their aims - and the internet is no exception. For example, they are behind the entire "be afraid of the child-porno-saturated internet!" hysteria. Why? Because there is no "official" filter on information here, no priesthood of paid-off establishment-serving journalists to select what is "news" and hide the rest. But now that they realize the internet genie is out of the bottle, they're working on ways to influence and manipulate the flow of information within it. Enter "Norm." This site is heavily trafficked. We've even seen it referenced and used as a source on Y2k by mainstream media. You don't have to be a conspiracy theorist to figure out that someone who methodically funnels mainstream anti-panic "news" items into this site is part of the larger multi-million-dollar effort to prevent bank runs, stock market crash, etc., by emotionally reinforcing the naive reader's hopes that it will somehow "all be okay." He's a shill. And as I've said before, when people find out how they've been royally hosed on this one, they're going to go to work on "Norm" and his ilk with a blowtorch. And despite protests here for politeness and the formation of "middle ground," I believe we are justified in branding this intellectual prostitute for what he is and expelling him from the forum by any means necessary. Under the name "Y2kPro" he titled a recent post "DGIs: Here's a place to have fun at your GI friends' expense." This is nothing but disruption as far as I'm concerned. Norm/Y2k should be treated with the contempt he has earned.


-- Prepared (Prepared@gravedigging.now), March 30, 1999.

Simple thought for the day.

Say $10k in question. Say 4% p/a interest on the $10k.

Lost interest over a year: $400

Worth having access to my discretionary income for $400.

I think so. But you have to make up your mind on the facts not the spin. No one will know the facts until after Year 2000.

Pascal's wager again. You have the choice, choose the option the outcome of which will affect you least.

-- Bob Barbour (r.barbour@waikato.ac.nz), March 30, 1999.

Say $10,000

say 75% growth in mutual fund

now $17,500

Now, do you still want to take that money out?

-- doomslayer (1@2.3), March 30, 1999.


Your suggestion isn't about saving money for a rainy day...it's about gambling.

-- Kevin (mixesmusic@worldnet.att.net), March 30, 1999.

Bob B., Slight nit to pick. $10k @ 4% = $400 but BEFORE taxes! If your rate at the margin is say 29% federal and 4% state, tax = $133, net = $266 for a post tax return of 2.66%. If sales tax is say 7% that $266 purchases $250 bucks worth of stuff.

Doomslayer, You're funny, I like humor. [insert Curly's nyah nyah nyah here]

-- Ken Seger (kenseger@earthlink.net), March 30, 1999.

I prefer the term speculating, Kevin.

-- doomslayer (1@2.3), March 30, 1999.


Quite correct of course...

I chose to keep it simple. We have GST (12% goods and service tax) and also a withholding tax on interest all of which complicates things. 33% of income is payable to the taxman. So your figure is not too far wrong, and supports the argument.

The detailed example for NZ would have been incomprehensible to most people not interested in NZ. Even those for whom tax law is a professional challenge find the finer points complex.

I expect all this will change for many countries come Year 2000 when tax systems are going to be simplified to flat rates for ease of administration.

Who is going to work on resolving the inequities that result from a flat system?

-- Bob Barbour (r.barbour@waikato.ac.nz), March 31, 1999.

I think you've missed the most obvious reason: safety.

I keep money in a bank because it is safe there than at my home, not because of a minor interest rate. I don't look at savings accounts as investments. The risk of losing cash stored at my home due to fire or theft outweighs any benefits, in my opinion.

I have seen no evidence that my bank will somehow "lose" my money. And loss through some bank collapse also presupposes the collapse of the FDIC, and in essence the Federal Government. In which case, my guess is "cash" would probably be useless as well.

Yes, I plan on keeping bank statements. Always have, and always will. And yes, I've always kept about a two-week supply of "emergency cash" on hand.

-- Hoffmeister (hoff_meister@my-dejanews.com), March 31, 1999.

Moderation questions? read the FAQ