Fed's Parry Says Y2K Unlikely To Disrupt Bankinggreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Fed's Parry Says Y2K Unlikely To Disrupt Banking SAN FRANCISCO (Reuters) - Federal Reserve Bank of San Francisco President Robert Parry said Wednesday he does not expect the year 2000 computer bug to cause any unusual problems with the U.S. financial system.
Parry, while acknowledging the possibility that the so-called ``Y2K'' bug may have a marginal effect on U.S. economic growth, said that he was fully confident that major U.S banking systems and financial institutions would come through unscathed.
``I'd say we're a lot closer to 'mission accomplished' than 'mission:impossible','' Parry said in a speech to the Commonwealth Club in San Francisco.
The San Francisco Fed chief said all systems critical to the Fed's operations will be ready to handle the rollover from 1999 to 2000 without major glitches. But he did say there are more uncertainties about the preparedness of international financial systems, particularly in developing countries.
``My expectation is that most, if not all, of the (financial) institutions in the developed world will be dealing with these issues,'' Parry said. ``I am less confident as you go down the ladder.''
The U.S. Securities and Exchange Commission has indicated the securities exchanges and clearinghouses should be ready for the rollover well before the new year, Parry said.
The Fed, which has accumulated some $50 billion in extra funds, will be ready to meet any increased demands for cash by a nervous public and will also be prepared to lend to depository institutions ``in appropriate circumstances'', he added.
Parry did say the Y2K bug might have a minor effect on U.S. economic growth for the rest of 1999 and the start of 2000 if people boost investments ahead of the start of year to escape possible Y2K problems in older computers not programmed to recognize dates falling after 2000.
``It is quite possible that you're actually going to see some stimulus to the economy, particularly in the fourth quarter,'' he said, adding that ``at the beginning of the year 2000 you might see an opposite effect, a slowing.''
Parry said the change in either direction would be no more than a couple of tenths of one percent of GDP growth, and would probably pass almost unnoticed.
``My analysis of the situation is that the effects...are going to be pretty modest, particularly relative to the kinds of growth rates we've been used to,'' Parry said.
Parry said he felt the biggest threat involved in Y2K was the possibility of ``irrational behavior'' among members of the public alarmed by Y2K horror stories.
``I don't think it's a good idea to take a lot of cash out of your bank and put it under your mattress,'' Parry said, noting deposits were insured in the banks. ``...Public confidence in our financial system is going to be critical during the century date change.''
He recommended individuals prepare for any potential computer problems by making back-up copies of financial records, checking home computers and asking banks and brokers if they are prepared and being on alert for Y2K scams.
-- justme (email@example.com), June 02, 1999
Europe's banks are well prepared too, but...
It said the EU's financial sector was also generally well prepared but may have underestimated risks not directly associated with information system failures -- such as credit risks or liquidity problems.
-- Linkmeister (firstname.lastname@example.org), June 02, 1999.
Come on, gang! What else would the President of the SF Fed say? He can't really come out and say, no, we'll have problems and we're all planning to take our money out of the system as cash! That would invite a run that could destabilize banking.
Did you notice that he said "We're a lot closer to mission accomplished than mission impossible?" That does verify that they aren't done yet...
SF Fed (Years ago, I used to work in their systems department) is reasonably competent. Since the Fed owns the money supply, they can buy whatever they need to prepare (computers, staff, contractors)...except time. I have little doubt that the Fed systems (or most of them) will be ready. The rest of the banks? They're workin' on it...
-- Mad Monk (email@example.com), June 02, 1999.
Yeah, yeah, yeah.....here we go again. Let's rip apart the news and get to the real gist of it all, right? There's some real conspiracy behind all of the public pronouncements we see these days and they're just keeping us all in place, telling us what we want to hear. Uh, yeah...right.
Geez, the combinations of Zantac and Prozac at your homes hopefully will soothe your anxiety-riddled paranoia.
I'm not sure what I believe about y2k anymore, but I know I won't huddle with your sorry-looking, and sorrier-sounding lot.
-- Three Finger Brown (firstname.lastname@example.org), June 02, 1999.
-- riddance (email@example.com), June 03, 1999.
Mad Monk's right--I'm just amazed that a Fed spokesman would mouth those words. Astonished. Flabbergasted. Flummoxed.
-- Spidey (firstname.lastname@example.org), June 03, 1999.
More positive news somehow interpreted to be spin and lies. Let's pick apart each word to make it sound like what we wanna hear......
A very predictable bunch you are!
-- Deano (email@example.com), June 03, 1999.
Deano-nothing, this Fed guy would say exactly the same thing regardless of what the facts were with y2k. Therefore, his statements have little or no news value.
-- humpty (firstname.lastname@example.org), June 03, 1999.
Don't feed the trolls.
-- moi (email@example.com), June 03, 1999.
Hey bud, troll this.
-- Three Finger Brown (firstname.lastname@example.org), June 03, 1999.
This is a reader's letter in a Utah paper's editorials. email@example.com), June 03, 1999.
This is a letter to the editor of a Utah newspaper.
Sunday, March 28, 1999
Report the real Y2K story
As the emergency preparedness coordinator for my ward in the LDS Church and as a computer professional, I am following the Y2K issues with great interest. I am afraid that your article in the March 3 edition on Utah banks and Y2K falls a bit short of accurate and in- depth reporting. And it fails to critically question the statements behind the PR being issued by our banks.
The threats I see to the banking system are:
1. Bank runs caused by fearful depositors withdrawing cash beyond the banks' reserves. If the information from recent polls is correct, the Federal Reserve and the banking system will be about $200 billion short of cash demand.
2. External computer systems necessary to transfer money from one bank to another may not be compliant. If this occurs, the banks will not be able to move money electronically. This could freeze many payment transactions between one bank and another, between banks and the Federal Reserve or between banks and other businesses.
3. Noncompliant foreign banks may cause transactions to freeze or miscalculations in account balances/transaction/payments.
4. Noncompliance in other economic sectors where banks have lent money may cause large loan defaults. If Y2K failures cause industrial plants to shut down because they aren't able to run their computers or because they aren't able to get the materials and parts they need because some other company's computers don't work or because they can't get the energy they need to run the plant because of a Y2K induced oil shortage, they will default on their debt. They will also lay off their workers, who will also default on their debts.
5. Derivative exposure. Investments in derivatives could easily evaporate from either actual industry failures or investor panic.
It would require a psychotic banker to publicly admit that our banking system is threatened by Y2K. That would cause the bank to fail, perhaps a bit prematurely. Nevertheless, the banks are threatened, as is almost every other part of our worldwide economy. The Deseret News should report accurately and honestly, in the spirit of professional journalism. Dig beneath the surface and find the real story on Y2K.
Tad B. Wimmer
-- I'm (firstname.lastname@example.org), June 03, 1999.
Humpty - it doesn't matter who says it. Yall have proven that time and time again. Good news comes and is immediately called spin and lies. De Jager (slightly) changed his stance a while back because of the work being done and the progress being made and was called a 'TRAITOR' by some in this group. A traitor????? A traitor to what???? My guess is a cult....... what the hell else could it be??
-- Deano (email@example.com), June 04, 1999.