Procrastinators and the FEDSgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Why do the FED's aknowledge people will procrastinate in preparing? Are there not any polly's sitting over there? What might the "after effects be" the FED's refer to here?
Federal Reserve proposes Y2K loans Feds want cash reserve to help procrastinators prepare and undo the after effects.
By Reuters May 22, 1999 9:06 AM PT
WASHINGTON -- The U.S. Federal Reserve Friday proposed making loans available to banks that may need access to extra funds as a result of the millennium bug. The Fed proposed making the facility available to depositary institutions between Nov. 1 through April 7, 2000.
The loans would accommodate liquidity needs which may arise during the period should, for example, companies rush to banks seeking money to deal with last minute problems caused by the bug, or consumers hoard cash to have it on hand.
The loans would accrue interest at a rate above the federal funds rate, an interbank lending rate that is a benchmark for short-term borrowing costs.
Unlike normal borrowings under the Fed's regular discount window loans, the Y2K loans would have less restrictions on use and duration, and banks would not need to seek funds elsewhere first.
"The facility should enable depositary institutions to confidently commit to supplying loans to other financial institutions and businesses through the rollover of the new century," the Fed said in a statement.
The millennium bug, often referred to as Y2K, arises because many older computers record dates using only the last two digits of the year. If left uncorrected, such systems could treat 2000 as 1900, generating errors or system crashes next Jan. 1.
Uncertainty exists The Fed noted in its proposal, "Uncertainty exists ... as to the extent of demands and the cost and availability of credit during the year-end period."
The Fed said that while it can normally meet demands for reserves, including normal seasonal peaks, during the millennium change, "Demands and supplies of reserves will be very difficult to predict."
The Fed noted that while it has encouraged banks to take advantage of loans under its discount window, banks have typically been reluctant to do so in the past because of the restrictions on the loans and their short duration.
Under the Fed's proposal, it would loan money at 1.5 percentage points above its Federal Open Market Committee's targeted funds rate which currently stands at 4.75 percent.
The Fed said it would accept comments on its proposal until July 2.
-- y2k dave (firstname.lastname@example.org), May 22, 1999
A really outstanding post, Dave. I appreciate your insight into the government's solution to the "non-problem".
In truth, I think there is no way the government could produce enough green backs to cover the demand of just the red necks here in Idaho, let alone all over the country. I've got mine. Get yours early.
The only thing more important than a few weeks supply of money is a few months supply of bullets. Trust nobody when things get tight. Hey, just because I paranoid doesn't mean they're not out to get me.
-- John Layman (email@example.com), May 22, 1999.
Typical gov move. Release it on Saturday then call it "old news" on Monday. They're getting closer to admitting the obvious. Check in with Drudge for UPI, AP & Reuters stuff daily but sure missed this one. Thanks for the heads-up.
-- Carlos (firstname.lastname@example.org), May 23, 1999.