Head of Office of Thrift Supervision Says "Be Cool" the Office of Thrift Supervision the Office of Thrift Supervisiongreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
This is what passes for Y2K reporting in New Orleans, LA. The Money section editor of the Times-Picayune refuses to hear one word about Y2K that isn't along the lines of "everything was fixed a long time ago and for the past year any report that indicates there will be any problems at all is a hoax."
Savings and loan groups criticized Official: Clients need reassurance
By Mary Judice Personal finance writer/The Times-Picayune May 13, 1999
Savings and loan associations are not doing enough to reassure customersabout institutional preparations to avoid Y2K banking glitches, the head of the Office of Thrift Supervision said this week.
Having computer systems ready to roll into the next millennium without a glitch is not enough for savings institutions. They must communicate what they are doing about the year 2000 problem to reassure customers.
Ellen Seidman, director of the office that regulates savings and loan associations and savings banks, was in town this week meeting with savings officials. She said it's not enough for institutions to simply report that they have the situation under control. They must also explain what they have done.
In fact, banks and savings and loans are progressing in their Y2K preparations, she said. About 96 percent of the 1,100 institutions Seidman's office regulates nationwide have satisfactory programs. The other 4 percent need improvement because they are not far enough along in contingency planning or because of problems with their service providers.
Seidman's office has set a deadline of June 30 for all work to be completed and will give those who need time the additional six months. Examiners have made two visits to each savings and loan and bank to assess their readiness.
Seidman wants customers to know about the steps savings and loans are taking to safeguard against Y2K glitches. She believes informed customers will not feel compelled to keep extra cash on hand during the long New Year's weekend.
"Understand that your money is safest in an insured financial institution," Seidman said. Carrying around a large amount of cash is dangerous.
Customers can take other steps to prepare themselves. She suggested keeping financial records, checking financial transactions for accuracy, balancing a checkbook regularly and knowing the options for obtaining cash.
She warned individuals to be on guard against Y2K scams, such as offers to move money into "bonded" accounts or offers to sell products or services that are supposedly "Y2K safe." Also be skeptical of those who seek account information.
If a customer has specific concerns, he or she should ask a bank or savings official and push until a satisfactory answer is provided, she said. Seidman said the changing face of the thrift industry is another key industry trend. While the number of institutions continues to shrink - about 121 closed or were merged last year - 40 formed during the past 18 months.
Some of the newer institutions are being chartered by insurance companies that cross-market banking and insurance products, including car and life insurance policies, annuities and savings products. The role of the Office of Thrift Supervision, Seidman said, is to make sure the customer understands fully which products are insured and which are not.
Seidman urged companies to teach consumers not to take on new loan products they don't understand. Seidman also said smaller institutions are going to have to take more credit risk to build their client base. "They've got to take more risk to earn enough" so they will not be the subject of takeovers, she said.
-- Big Easy (email@example.com), May 13, 1999
You are actually angry that a government agency such as the OTS is scolding banks for not putting out enough information about their Year 2000 program?????? What do you want???? I though this is what you GIs have always wanted: a goverment agency saying "tell the public more about your program. Don't leave anything out or we will write you up for having an incomplete customer communications plan." Wouldn't that be funny: a S&L getting an unsatisfactory rating because of an inadequate customer communications plan. See the FFIEC web page at www.ffiec.gov/y2k to see what banks have had to do and what standards they have to measure up to.
-- newlurker (firstname.lastname@example.org), May 13, 1999.
newlurker--chill out. If anything I'm put off by the "we've got to be careful or the public might panic" reporting by the Times-Picayune. The whole tone of the story is one that would hardly motivate a person to call a bank. The T-P's coverage of Y2K over the last year is a joke in my opinion.
Also, if you still think contacting a banker to ask about Y2K will put you or anybody else on the inside track, check out Pounding Paul Milne's take on the situation:
-- Big Easy (email@example.com), May 13, 1999.
Carrying around a large amount of cash is dangerous.
It is in New Orleans. See? They got one thing right!
-- Doug (firstname.lastname@example.org), May 13, 1999.
Come see Ifns you suck dem heads and pinch dem tails Idt canz sumtines make misperceptions run arampant thru ya head Whatcha needs is mo' red beans and rice dontchaknow?
mr pigs mr not os day r o no day not yes day r cm pn I have alot of Cajun freinds and love 'dem all
-- Johnny (email@example.com), May 13, 1999.
dat be you dere den mistah rehnaldo bitin dem friggin crawdaddy heads an sukin' down dem chilledun's???????????
-- Paul Prudhome (firstname.lastname@example.org), May 13, 1999.
Who do you want to hear it from? Even though most banks started testing LAST SEPTEMBER (see FFIEC guidance), and most are on track to be done by June 30 (97%, to be exact), you people still think there will be serious problems that will "bring down the entire system" The GAO says the FED is on track, and the regulators say the Banks are on track, and the banks want people to know what they have done. There is no inside track, no smoke and mirrors. MOST BANKS (97%) WILL BE COMPLETE WITH TESTING OF MISSION CRITICAL SYSTEMS BY JUNE 30, 1999. And your bank will tell you about it. If they don't, close your account and go to a bank that will.
-- newlurker (email@example.com), May 14, 1999.
Newlurker is simply a troll from Der Boonkah. The site owner over there has asked adherent pollys to refrain from trolling over here. They can't do that because they're on a crusade to save us from memes. What's a meme? It's a mind virus (like a computer virus only different). OutingsR jesteth not. We at Yourdon forum are all infected. Anyway, these memebusters are now causing trouble through different names. This one looks like Cow Patty. Just think of them as missionaries on acid.
-- OutingsR (firstname.lastname@example.org), May 14, 1999.
I am not a troll. I am a banker. I am increasingly frustrated that all the work on Y2K I have done over the last two years, and all the work that my colleagues in other banks, with whom I have talked regularly, shared notes, swapped ideas, is going to be all for naught because of a bank run that should not happen. We have tested nearly all our mission critical systems, and those that remain are the low end of our mission critical: payroll, construction loan (small part of our portfolio). We are on track to meet the June 30, 1999 deadline. We have tested with the FED for our transactions (no problems there), we have participated in the Mortgage Bankers Association Inter-industry test (how many of you actually knew this was happening...do your research), we have tested all our mission critical interfaces, we have tested our security systems, and last, but not least, the PCs in our branches. And you know what, all the banks that I have talked to HAVE ALSO DONE ALL OF THIS. So don't give me that even if one bank is compliant they will be corrupted by "all the other non-compliant banks" NINETY-SEVEN PERCENT, FOLKS. Anyone who has had any exposure to banking federal regulators know they dont F**k around. Banking is going to be ready. Believe it. Of course we want to reassure the public we are going to be ok. WE ARE, and nothing you can say will change the fact that nearly 97% will be done with testing of mission critical systems on June 30.
FYI: this whole mission critical/non mission critical controversy is simply bogus. Here are some of the non-mission critical systems that we are not testing: everything in our Marketing department, Virus software, Anything in HR that is not payroll related, program to do credit analysis for a self-employed borrower. You know why we aren't testing these: BECAUSE THEY ARE NOT MISSION CRITICAL.
-- newlurker (email@example.com), May 14, 1999.
Okay newlurker, you're a banker. Can you please answer these questions for me?
Wht is the number of banks that make up the 100% of banks that you mentioned? >The actual total number of institutions that make up this 100% you speak of.<
Does this include all financial institutions? Or just banks?
Why do they not advertise this fact more than is currently being done?
What banks are in the 3% that will not be ready? Who has this information?
Since when is the potential bank run you speak of based solely on bank compliance? Others things can cause bank runs. To name one, just the fact that there is not enough cash in the world to cover everyone's assests in the event that everyone wanted to withdraw their money right away. Even if they waited a week, it couldn't happen. A month? NOT!
-- cents less (firstname.lastname@example.org), May 14, 1999.
I apologize for my somewhat nasty tone in my previous messages. I am just frustrated.
Question 1: the 100 percent is made up of 10379 FDIC insured institutions. There are banks (read fin inst) that are not FDIC insured. Why anyone would bank at these, I don't know. This can be found at the FDIC website at the April 13 testimony by FDIC chairwoman Donna Tanoue. 96.8% (10042) received satisfactory ratings on the last round of examinations. This means at the time of the examinations, they were on track to meet the June 30 deadline. the next phase will start pretty soon and end by September. I think that many banks will make serious announcemants on July 1 or thereafter saying they are done with mission critical testing. If not, take your money elsewhere. (I would suggest waiting a month or so-July 30 It has to go through their lawyers, after all.) 2: This includes state and federal chartered banks, S&Ls, NATIONAL Credit Unions, and National banks (those with the N.A. after their name.) 3: They are trying to. Many banks' Y2K customer info has these statistics in the materials. However, it's just a matter of what info people trust. I asked the question above: Who do you want to hear it from? The most any bank can do is tell its customers clearly what it is doing for the Year 2000. The rest is up to the customer. 4: Unfortunately, banks cannot disclose individual ratings. Believe me, those 96.8% would love to, but their hands are tied. 3% are rated "needs improvement", which means they might be somewhat behind, or the documentation isn't up to snuf, or their contingency plans aren't where they should be. (cont plan deadline is June 30, as well. However, these are not static documents and must be validated...).2% are rated unsatisfactory (24). These are the serious problems. inadequate test plans, very poor documentation, not entirely done with assessment phase, etc. The full report is in the page above. I don't have the link itself, but the page is www.fdic.gov 4: Unfortunately, you are correct about the possibility of bank runs at any time. This is the way the system is. I personally (not as a banker, but as a realist) think it is the best we have. How could we buy anything that has a large price tag w/out the current system. the majority of large purchases require a loan. Where does the loan money come from: deposits. I'm sorry if I am getting too simplistic. Fear of failures cause bank runs. The major fear of Y2K regarding banks is failure of the bank because of non-compliant systems (i.e. your balances vanishing). With our systems almost completely tested, many banks are very comfortable with the compliance status of our systems. Our focus now must turn to educating the public on the status of our systems, to minimize this fear, if we can, and possibly prevent bank runs AS A RESULT OF FEAR OF BANK FAILURES AS A RESULT OF Y2K.
I hope I answered your questions
Not as frustrated as before
-- newlurker (email@example.com), May 14, 1999.
Get it straight: unless and until a major financial institution somewhere in the world stands up and announces "We are on routine maintenance," percentages mean nothing. Today, there is simply no benchmark. You can rant all you want, but such behavior doesn't make your bank or any other bank a benchmark by which I can judge the efforts of the industry.
I still think Pounding Paul is right. Look, just this morning, after making a deposit at my branch of a very large bank, I walked over the the Customer Service desk and asked the two people behind it if my bank's telecommunications provider or providers had reached routine maintenance early enough for my bank to adequately test their telecommunications functions. Both bank employees backed up and become very nervous. Finally, one of them scurried away and, after five or so minutes, came back with a torn piece of paper. On the piece of paper was a local telephone number. I was told to call the number with my question. Upon arriving home I called the number and the person on the other end turned out to be the Remediation Chief for a financial institution that had been swallowed up by my bank about a year ago. The Remediation Chief gave me a long-distance telephone number to call with my question.
Now my point is that I don't think the average person in New Orleans, reading the Times-Picayune (the only daily) over the last year, would have enough information to ask questions about, say, the relationship between a telecommunications provider and a bank. Plus, I will bet my bottom dollar that no New Orleans banking offical in his or her right mind would voluntarily tell a customer that without the telecommunications providers the bank is dead in the water. Thus, the general public is left with general responses such as, "We're compliant, of course."
OK, newlurker, did your financial institution's telecommunications providers or providers reach routine maintenance early enough for your bank to adequately test your telecommunciations operations? Don't be too quick to answer this question. If you answer in in the positive, then several other questions arise. Exactly when did your bank's telecommunications providers or providers achieve routine maintenance? Can your providers prove that? Have they proved that in a way that will stand up in court if your bank's telecommunications operations fail?
-- Big Easy (firstname.lastname@example.org), May 14, 1999.
I share your concern with telecommunciation vendors. We are watching these extremely close. We have verified that our voice telephone Key Service Units and CBXs are compliant. For data, we use Frame Relay through AT&T, as well as a number of local exchanges. We have not tested with them, simply because they haven't been ready early enough. We have relied upon information from them as well as network industry testing done through ATIS, NRIC, and Telco 2000 Forum.
However, any bank worth its salt has contingency plans for off-line posting. This could include w/d limits, no opening accounts, and so forth. Operationally, it would be difficult, but manageable, and would no way affect the accuracy of a customers account balances if the internal system were compliant. All the banks that I work with have contingency plans for this sort of thing now.
did I help?
-- newlurker (email@example.com), May 14, 1999.
Where y'at, Newlurker? OutingsR sorry for any offense. We seek dem here, we seek dem dere, we seek DerBoonkahs everywhere. Not that we are paranoid, you understand, it's just that they're out to get us.
-- OutingsR (firstname.lastname@example.org), May 14, 1999.
Understandable, OutingsR. No offense taken. I'm just here to give my 2cents worth and hopefully give people a glimpse into Y2K from a bankers perspective.
I work in a bank in the Big Red State of Nebraska. Can't tell you which one, though, sorry. Hope I can be of some service.
-- newlurker (email@example.com), May 14, 1999.
Hey newlurker, I'm a banker too. I get frustrated too. (I'm Compliance Officer slash Y2K Project Coordinator) But just remember, everyone has a right to question. Money is too hard to come by to just assume your customers should trust you enough to keep it in your bank. If you get the message about your efforts (which seem great) out to your customers, they will weigh all of the facts and make the decision that suits them best. Our goal, our job, should be to provide as much honest, up-to-date info. as possible with the hope that the conclusion they reach will be to leave their deposits with us. Afterall, it is their money. All of your efforts will not be useless - even if you loose depositors. After all is said and done, and banks are still standing, many will come back. Those that do will be loyal - IF you are loyal to them. Thanks for your input. Try not to let the job bring you down. It will be worthwhile - trust me!
-- Diana (firstname.lastname@example.org), May 14, 1999.
Bankers, don't take it personally.
You're doing your best, probably doing a GREAT job, under a LOUSY system. Not your fault. Some things are bigger than us.
You needed a job when you got out of college. We needed a place to put our paychecks in. All of it possibly a temporary arrangement. (Hey, we'll just call it "downsizing" our banking exposures, OK?)
Blame Paul Warburg, I guess. (Read banking history lately?)
It's not about whether the banks can convince us they are technically ready for rollover; what each of us has to assess is whether the banks will SUCCEED IN CONVINCING 98% OF OUR FELLOW DEPOSITORS not to worry about it enough to abscond with their own funds.
We're listening to you, sure. But we've mostly got our ears and noses to the wind of public (herd) worry/apathy and wondering if they'll pull the plug on you. And excuse us if we're not so sympathetic with the equation of faith in banking with some sort of patriotism.
-- moi_encore (email@example.com), May 14, 1999.
As someone who is intimately familiar with banks and Y2K compliance, I can tell you that bank runs are the regulators' biggest concern because they will be the first effect to be experienced.
Then on 1/1/00 we'll have to deal with whatever computer/technology glitches strike. There will be some, but we'll have to wait to see how serious they are. TEOTWAWKI is possible, IMHO.
Then in early 2000 (if TEOTWAWKI hasn't struck) there is going to be a big fallout from bank borrowers who didn't get compliant and can't make their loan payments. IF we make it that far, this will be a SERIOUS problem. I don't know what your bank is doing, but most banks I've seen are NOT doing enough to ensure their borrowers can repay them in 2000.
Any way it goes, it's gonna be bad...
-- Nabi Davidson (firstname.lastname@example.org), May 14, 1999.
We've heard a lot about overseas banks being much further behind than US banks and that this could cause us serious problems. What is your opinion on this problem? I'm glad to hear from a banker on this. My local bank is less than helpful and makes me feel like an idiot for asking y2k related questions.
mb in NC
-- mb (email@example.com), May 14, 1999.
Thanks newlurker for the info.
I understand the problems related with making anouncements to the effect of who is and isn't ready. The real drag about that is the customer is left in the dark because of it. Alas, it seems it will always be thus...
mb said: <<
The overseas banking issue is a big hassle for customer's as well. Not many people [re:customers] realize just how their bank is connected to overseas banking. I know I didn't think about it much until this y2k thing hit me in the head and I woke up to it. [I really have to thank my sister for that!]
As to asking my bank and feeling like an idiot about it, I couldn't agree more! I also feel that when I do ask, they are noting my account with [[potential y2k nut, watch account!]].
Call me paranoid, but I am looking for a bank with a more upfront handling of the y2k situation. There is a thread here somewhere about a bank, in Kansas I think it is, that is really ready AND upfront about it to the point of making sure the employees and their families are going to be okay. This sounds like the bank I want but I would hate to drive all the way over there! I think it is about seven states away.
Well, at minimum, I have reduced the amount I keep in my primary bank to just that which I need for checking without incurring a monthly charge, and the rest is going to another that I have learned is more upfront about these things. The new one has limited branches  but is close to work. Still looking for a new primary, though...
-- centsless (firstname.lastname@example.org), May 17, 1999.