Evidently this guy has thrown down the gauntlet to the bankers. Are his questions strong/weak/or irrelevant?

Letter to the Editor Council Bluffs NonPareil Council Bluffs, IA

As a former community bank stock owner, bank stock acquisition consultant, problem bank turn-around consultant and author in a popular banking publication, I challenge Iowa Superintendent of Banking Michael K. Guttau, and also any other bank owners to answer the following questions.

7 Is it true that Federal Reserve Chairman and former mainframe programmer Alan Greenspan, testified to Congress that "no less than 100% of money center banks have to be compliant" for bank payment systems computer networks to avoid serious problems?

7 Is it true that to date, not one money center bank has announced they are fully tested and Y2K compliant?

7 If one or more money center bank(s) does not achieve Y2k compliance by 01/01/00 what will stop the "cascading cross-defaults", as Greenspan has testified to Congress about?

7 If such "cascading cross-defaults" begin, especially if dozens of money center banks would see their mainframes collapse, would this impact your local bank? If not, why not? If so, how? At that time, will you still be able to perform as a bank and be able to return depositor's money?

7 Is it true that the international financial payments network known as S.W.I.F.T. (which settles 4 million transactions for 6,648 member financial institutions, in 184 nations, totaling trillions of dollars, each day) as of July 1 had a "relatively low" level of completion of the Y2K "mandatory testing" from their 6,648 member banks and brokerage houses around the world? If so, with only six months left why haven't these money center banks tested with S.W.I.F.T.? Are their computers still not repaired? Why would these major banks let us form a poor perception about their Y2K compliance, if their systems were truly ready to go?

7 Is it true that the Chairman of the U.S. House Banking Committee, Congressman James Leach (R-IA) told a group of bankers in April, "that [Federal banking regulatory] agency inspectors general have questions about the thoroughness and accuracy of bank [Y2k] examinations." If he did, then I would ask, if the banking regulatory agencies own internal auditors are concerned about the accuracy of the Y2K exams being conducted by their very own examiners, shouldn't depositors share that concern?

7 In an interview published in the 8/11/99 Credit Union Times, FDIC chairwoman, Donna Tanoue, spoke in mixed tenses when she responding to questions about the Y2K compliance of ATMs. First she said, "the ATMS are ready." In the next breath she said, "They're going to be ready. They're going to have cash for customers and they're going to have the means available to service consumers." Has anything been published?

7 Is it true that no independent auditors have done a Y2K compliance audit of a local bank? (FDIC does not qualify - see below.)

7 Is it true that the FDIC has about 1.4 cents of assets to cover every dollar they have insured in the American banking system and couldn't possibly repay most depositors if a "cascading cross-defaults" began?

7 Is it true, that the FDIC is telling the public to keep their account statements, deposit slips, canceled checks, etc. for any potential Y2k disruptions? Yet, if a bank would fail due to a Y2k computer collapse and the depositors would have to put in a claim for their money with the FDIC, is it true that the FDIC's Financial Institution Employee's Guide to Deposit Insurance (Page 11, Fall 1996) says that "The FDIC uses the deposit account records of the institution to determine both the identity of the owner(s) and the right and capacity in which the funds are held?" Doesn't this say that the computerized records of the bank are what the FDIC would employ to determine eligibility for pay back to customers of Y2K failed banks? If so, and these very computers are collapsed due to Y2K, how will the FDIC determine the ownership of and amounts to pay depositors? Would they then use the records that they told the depositors to keep? Not according to question 8 in their Q&A publication (available in most bank lobbies) where it states, "However, account statements, deposit slips, items deposited, and cancelled checks are not considered deposit account records for purposes of calculating deposit insurance." If so, aren't these the very documents that they are telling American depositors to keep for such an event? Why would they tell bankers just the opposite?

7 To protect their life-savings if depositors withdrew their money in currency and waited until January to see how banks respond to the Y2K, how would potential robbers even know that any one depositor(s) has done this? Certainly the depositor would be very discreet about it. Who else would even tell these "robbers"? Besides the local banker, who else would even know the depositor has taken a large amount of currency out of the bank?

7 Is it true that the average bank has about one penny of currency and coin in their vaults for every dollar they have on deposit? How will they fund large currency withdrawals in the next few months?

7 How many bank "deposit agreements" (legal contracts) state that the customer may not have their money back under the terms of the agreement, if more than 10%, for example, of the depositors would ask for currency all at the same time? How many bank depositors really understand this? Of those who do, how many will forget they knew it if there is a systemic bank computer collapse and their money is gone?

Bank owners, your depositors await the answers to the above questions.

Sincerely,

Paul Dorr P.O. Box 115 Ocheyedan, IA 51354 712/758-3660

-- enough is (enough@enough.com), August 27, 1999

Answers

I can see them scrambling with the answer now:

"Everything you have stated has already been stated by Gary North, a religous extremest who has forecast the end of the banking system and the world numerous times and has been wrong every single time. So go back to sleep, there is no problem. And keep you money in the bank. Thank you and have a nice day."

-- King of Spain (madrid@aol.com), August 27, 1999.

Paul:

The questions are good, but I would be suprised if one banker tried to answer them [or, indeed, could answer them]. Besides the answer would only be meaningful if the whole industry answered. Keep up the good work.

-- Z1X4Y7 (Z1X4Y7@aol.com), August 27, 1999.

This letter says it all. If you think your money will be safe in the bank during Y2K then you are betting that every bank on the face of the Earth will be totally compliant so as to not contaminate the network. Does anyone really believe that this is possible?

-- Wise One (chrysleri@usa.net), August 27, 1999.

Brothers and sisters in Christ good Sunday morning to you!

We have a very special guest speaker today, but first let's sing our first hymn. "bringing in the sheeves" [sp].

Ok, as I said we have a special guest--- and now ladies and gentleman from the podunk first National Bank let me introduce Mr. R.U. Sheep.

"Take it away Mr. Sheep-- we are listening"

-- David Butts (dciinc@aol.com), August 27, 1999.

Enough is enough - I've taken the liberty of asking hoffy, flint et al on another thread to answer these questions, I know we're all interested in the spin they'll try and give.

-- Andy (2000EOD@prodigy.net), August 27, 1999.

Won't the bankers crap there drawers if these questions started to be posted outside banks by some anonymous citizens? Any takers for a monday morning awakening? See at the bank.

-- ima (bad@this.yes), August 27, 1999.

Carefull IMA, activities like that could (I daresay Would) be considered subversive...promoting rioting...I'm certain they'd come up with enough charges to keep you locked up at least 18 months....and remember that banks are gonna have REAL GOOD security around them.

-- Brent James Bushardt (brentj@webt.com), August 27, 1999.

One more question: Is it true all the gold in Fort Knox was sold by President Lyndon (the very first Bubba) Johnson and no independent audit of that gold has ever been done since that time?

-- Porky (Porky@in.cellblockD), August 27, 1999.

Just attended a so-called "Y2K Town meeting" at our local courthouse on Thursday evening.

Represenatives from the local bank, electric, phone and the Federal Reserve were there.

The Federal Reserve boys in particular refused to answer the above questions.

As I got into the questioning (only one was asked before I announced I had questions for each panel member), the meeting was "Officially adjourned" and everyone filed out of the room. While we were permitted to ask the questions privately, (without the benefit of the locals hearing the truth that most of the presentations were bogus spin), it was nothing more than a rah, rah sham for the bankers and utilities. Most folks in the room were bank employees, and while I applaud the contingency efforts the bank has made to provide for the community, the Fed boys pissed me off the most.

According to the Fed thugs (ignoring the quotes I gave of Greenspan's testimony) EVERYTHING including INTERNATIONAL banking will work just fine, because they have families to provide for, and they have too much on the line to allow the system to go belly-up.

They outright LIED about the efforts of banking overseas, and when confronted with documents that dispell what they were asserting ( The State Dept. Docs), they dismissed them as "The State Dept. doesn't know the true nature of how far we have become compliant, we've already TESTED all our banks and partnership banks overseas...they all work just fine".

These spin meisters are sickening.

The main thrust was the "DON'T TAKE YOUR MONEY OUT" The Fed rep said that if everyone was to attempt to take out large sums of cash, that it wouldn't be "Prudent or feasible." At which time, when I asked him to elaborate on that, he spun it so nice into "Funds in the bank are FDIC insured...cash in your pocket is not".

They would not hear about the FDIC's documentation that personal bank records do not constitute proof of account status, or that the FDIC insures BANKS, not depositors.

They also lied about the ratio of cash to deposits. He was adamant that it "Depends on the individual banks, and that it's around 4-8%".

Overall I'm convinced more now than ever, we're toast...whether you live in a rural community or not. EVERYONE's SOUND ASLEEP.

And they apparently want to keep it that way.

The local politician of the area summed it up best: "We're not going to have any problems because I say we're not, and THEY say we're not".

So, Y2K remediation has boiled down to "Trust me, because I say so"

God help us if disruptions and glitches do become unmanageable.

It's going to be the equivalent of a category 5 hurricane hitting an area that only has the shoe store prepared.

-- INVAR (gundark@sw.net), August 28, 1999.

Oh yes, one more question they did answer:

>>>"7 To protect their life-savings if depositors withdrew their money in currency and waited until January to see how banks respond to the Y2K, how would potential robbers even know that any one depositor(s) has done this? Certainly the depositor would be very discreet about it. Who else would even tell these "robbers"? Besides the local banker, who else would even know the depositor has taken a large amount of currency out of the bank? "<<<

They said, "Well, I know of several instances where folks that buried their money for Y2K had it dug up and stolen the next day. Also, if many Americans do cash-out...it will be like Christmas robbery. The rate of home robberies goes up during the holidays because most criminals know that most homes have gifts inside. The same thing could happen if everyone hoards cash."

Just thought you'd all like to hear how they're spinning that one.

-- INVAR (gundark@sw.net), August 28, 1999.

Mr. David Butts: Can we have the church program say, "Today's sermon is "Shearing the Sheep," by Pastor Nyerpocket. The music will be performed by Mrs. Nyerpocket. Please have the plates passed when I give the Y2K wink and Mrs. Nyerpocket will begin to play "Bringing in the Sheeves, eeerrrr, "Shearing the Sheep."

-- hertetic (heretic@hereticcc.com), August 28, 1999.

The only answers he'll get are something like, "what is the definition of 'is'?"

Withdraw early and withdraw often. Convert to real stuff: Food, water and water treatment, precious metals such as gold and lead. And hide and/or bury, as applicable.

-- A (A@AisA.com), August 28, 1999.

Months ago I put in a post describing my interactions with an FDIC guy from NYC up to our small Burgh for a similar town meeting. Long story short: After the microphones were turned off, he confessed that the whole meeting was by a bunch of guys who had no clue and that, he personally, was remarkably pessimistic. (Went so far as to suggest a collapse of the legal system.)

See you on the other side...

-- Dave (aaa@aaa.com), August 28, 1999.

Excellent questions enough!

Keepers... and "questions to ask..." locally.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), August 28, 1999.

"As I understand it, Mr. Kemp is simply suggesting we take precautionary measures to provide an anchor for our currency and all the world currencies that wish to link with the dollar in order to simplify financial transactions and record-keeping. The simple fact of the matter is that the global banking network, which not long ago relied on calculators and pen-and-ink ledgers, is now completely reliant on computers. "Money" is now largely electronic. Even if our financial markets are the most Y2K compliant in the world, a breakdown anywhere in this incredibly complex system may feed back to us in ways we cannot foresee or imagine. We need to think through what steps we can take right now to ensure the integrity of this system."

Dan Quayle...

At least one of 'em is a GI...

-- Andy (2000EOD@prodigy.net), August 30, 1999.