Bank of America: Y2K Risks, from SEC 10-Q filed August 16, 1999.. : LUSENET : TimeBomb 2000 (Y2000) : One Thread

[Apologies if this has already been posted.]

Although the Corporation's [Bank of America] remediation efforts are directed at reducing its Year 2000 exposure, there can be no assurance that these efforts will fully mitigate the effect of Year 2000 issues and it is likely that one or more events may disrupt the Corporation's normal business operations. In the event the Corporation fails to identify or correct a material Year 2000 problem, there could be disruptions in normal business operations, which could have a material adverse effect on the Corporation's results of operations, liquidity or financial condition. In addition, there can be no assurance that significant foreign and domestic third parties will adequately address their Year 2000 issues. Further, there may be some parties, such as governmental agencies, utilities, telecommunication companies, financial services vendors and other providers, for which alternative arrangements or resources are not available. Also, risks associated with some foreign third parties may be greater than those of domestic parties since there is general concern that some third parties operating outside the United States are not addressing Year 2000 issues on a timely basis.

In addition to the foregoing, the Corporation is subject to credit risk to the extent borrowers fail to adequately address Year 2000 issues, to fiduciary risk to the extent fiduciary assets fail to adequately address Year 2000 issues, and to liquidity risk to the extent of deposit withdrawals and to the extent its lenders are unable to provide the Corporation with funds due to Year 2000 issues. Although it is not possible to quantify the potential impact of these risks at this time, there may be increases in future years in problem loans, credit losses, losses in the fiduciary business and liquidity problems, as well as the risk of litigation and potential losses from litigation related to the foregoing.


-- Lane Core Jr. (, September 21, 1999


Thanks Lane!

I never knew that my bank had a bunch of doomers working for it. Haven't they heard that their industry is "the best prepared" and they started so much earlier than everyone else.

there may be increases in future years in problem loans, credit losses, losses in the fiduciary business and liquidity problems, as well as the risk of litigation and potential losses from litigation related to the foregoing.

sheesh...I might have to book a flight to quality ; )



-- Michael Taylor (, September 21, 1999.

Do y'all ever read SEC filings?

Here's another, fairly standard part of the filing:

This report on Form 10-Q contains certain forward-looking statements that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Corporation. This could cause results or performance to differ materially from those expressed in our forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers of the Corporation's Form 10-Q should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report, as well as those discussed in the Corporation's 1998 Annual Report on Form 10-K filed March 22, 1999. These statements are representative only on the date hereof, and the Corporation undertakes no obligation to update any forward-looking statements made.

The possible events or factors include the following: the Corporation's loan growth is dependent on economic conditions, as well as various discretionary factors, such as decisions to securitize, sell, or purchase certain loans or loan portfolios; syndications or participations of loans; retention of residential mortgage loans; and the management of borrower, industry, product and geographic concentrations and the mix of the loan portfolio. The rate of charge-offs and provision expense can be affected by local, regional and international economic and market conditions, concentrations of borrowers, industries, products and geographic locations, the mix of the loan portfolio and management's judgments regarding the collectibility of loans. Liquidity requirements may change as a result of fluctuations in assets and liabilities and off-balance sheet exposures, which will impact the capital and debt financing needs of the Corporation and the mix of funding sources. Decisions to purchase, hold or sell securities are also dependent on liquidity requirements and market volatility, as well as on- and off-balance sheet positions. Factors that may impact interest rate risk include local, regional and international economic conditions, levels, mix, maturities, yields or rates of assets and liabilities, utilization and effectiveness of interest rate contracts and the wholesale and retail funding sources of the Corporation. Factors that may cause actual noninterest expense to differ from estimates include the ability of third parties with whom the Corporation has business relationships to fully accommodate uncertainties relating to the Corporation's efforts to prepare its technology systems and non-information technology systems for the Year 2000, as well as uncertainties relating to the ability of third parties with whom the Corporation has business relationships to address the Year 2000 issue in a timely and adequate manner. The Corporation is also exposed to the potential of losses arising from adverse changes in market rates and prices which can adversely impact the value of financial products, including securities, loans, deposits, debt and derivative financial instruments, such as futures, forwards, swaps, options and other financial instruments with similar characteristics.

In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation, state regulators and the Office of Thrift Supervision, which policies and regulations could affect the Corporation's results. Other factors that may cause actual results to differ from the forward-looking statements include the following: competition with other local, regional and international banks, savings and loan associations, credit unions and other nonbank financial institutions, such as investment banking firms, investment advisory firms, brokerage firms, mutual funds and insurance companies, as well as other entities which offer financial services, located both within and outside the United States; interest rate, market and monetary fluctuations; inflation; market volatility; general economic conditions and economic conditions in the geographic regions and industries in which the Corporation operates; introduction and acceptance of new banking-related products, services and enhancements; fee pricing strategies, mergers and acquisitions and their integration into the Corporation and management's ability to manage these and other risks.

Basically, anything we can possibly think of might go wrong. CYA. The quotes from the Year 2000 are no different.

-- Hoffmeister (, September 21, 1999.

Yep, everything might go wrong, yet everything's just peachy.

Seems prudent to prepare for the "not peachy" case.

-- Dog Gone (, September 21, 1999.

Here's one word that you rarely find in SEC filings when referring to probability of problems occurring: "likely".

"... it is likely that one or more events may disrupt the Corporation's normal business operations".

-- Cheryl (, September 21, 1999.


Great post. I was thinking pretty much the same thing. Problem is, here, at STINKBOMB 2000, they don't WANT to get it -- instead, I suspect most of the doomers here will wave the Y2K legal boilerplate from the bank's SEC filing around as "PROOF!!!" that "the code is broke", "it won't be fixed in time" and therefore, it's TEOTWAWKI. With cheers from the doomer section no doubt, with their chant of IF! IF! IF! IF! ad IFinitum....

I also suspect the usual "prove they won't have any problems" gauntlet to be thrown by several know the routine.....

FWIW, I do NOT think Y2K will be either a non event or TEOTWAWKI. But....seems like most here are closed minded...and HOPEFULL of whatever scenario they have "bet on"....and read into or out of any post what does or does not support their "bet"...or is it "hope"...

Rather sad, huh? But then, what else have we come to expect.... See at the meeting get our new assignments from Koshy himself, buddy! After all, you know how much affect this forumn is having on the American people....why, this place is SOOOOO important in the scheme of things...that's why TPTB here scan the logs for anyone posting from a "gubmint" PC like I do at work...expect to be "outed" by the paranoids here, too....Guess they are trying to "save" the doomers from being "duped" by Koshy's band of merry if this place were important enough...or we were actually such's enough just NOT to be a TEOTWAWKI "better"....or doomers reasonable and rational enough to "dupe"....BWAAAHAHAHAHAHAHAHA!!!

The sad thing is those here probably believe we DO work for Koshy...BWAAAHAHAHAHAHAH!!! Well, we CAN laugh at the dummies, huh? BWAAHAHAHAHAHAH!!!! "see ya at the meeting tomorrow, Hoff!"


-- Genius (, September 21, 1999.

Thanks, Hoff. I knew you'd do that: too predictable.

But, see, that SEC filing mentions credit risks and fiduciary risks. Are they not real risks? If they're not real risks, why did you post your diversionary reply?

Credit risks and fiduciary risks are never, never, never, never addressed in public WRT Y2K. Let the people think about ATMS and bank vaults: never encourage them to think about the real problems, which are... credit risks and fiduciary risks. Don't encourage them to think beyond the immediate and the obvious.

-- Lane Core Jr. (, September 21, 1999.


I see we have a new visitor from the Cesspool of Lunacy.

-- Lane Core Jr. (, September 21, 1999.

"... it is likely that one or more events may disrupt the Corporation's normal business operation."

Wow, Cheryl, you are right! That is something I have never seen in any 10-Q Y2K statement of any industry...and, yes, Hoff, I have read a number of them. I would guess this is exactly why Lane thought it unusual.

Um, "genius", here's a little challenge...should be very simple with that Mensa IQ of yours :). Can you find one 10-Q from any industry that says disruptions are likely???

-- RUOK (, September 21, 1999.

Glad I could accomodate, Lane.

I believe the FDIC and Federal Reserve have both, publicly, alluded to problems with loans, etc., that could arise due to Y2k.

The point is virtually every SEC filing contains lawyer-speak intended to identify every possible event that can be conjured, in order to cover their a**.

The EDGAR database is literally filled with years worth of SEC filings containing wording such as this from virtually every corporation. If y'all want to obsess over it, be my guest.

-- Hoffmeister (, September 21, 1999.

Gauntlet... thrown down...

Well... Genius (

How ARE the Fedral Reserve Banks doing... since you know so much, huh? Does Greenspan REALLY know, or is he spinning too? You and he have lunch today?

Diane, your favorite fan

(BTW, thanks Lane. That's the most "serious" non-pablum 10-Q I've seen yet!)

-- Diane J. Squire (, September 21, 1999.


You just quoted from ONE, just ONE such filing, didn't you RUOK?

You get the Duh award of the day, RUOK....btw, are you ok...upstairs I mean? Maybe you need to find a toilet, stick in your head, and FLUSH! Try twice a day at first. Adjust as needed until you ARE ok!

Or did you mean find one OTHER such SEC filing...I suspect, with your egomania, that you will have no trouble finding such a character string with a search engine...this is your assignment, RUOK...I'm too busy living my life to indulge your neurosis with more than this insulting reply...remember now, FLUSH daily! Twice a day to start!

-- Genius (, September 21, 1999.


Sometimes you stretch yourself a bit. As you well know I have paid a little attention to the SEC disclosures without to much panic. But the signs are out there that someone is worried. For example

 HEWLETT PACKARD CO - Quarterly Report (SEC form 10-Q)

Sept. 20 1999

While the Company has contingency plans in place to address most
issues under its control, an infrastructure problem outside of its control or some
combination of several of these problems could result in a delay in product
shipments depending on the nature and severity of the problems. The Company
would expect that most utilities and service providers would be able to restore
service within days although more pervasive system problems involving multiple
providers could last two to four weeks or more depending on the complexity of
the systems and the effectiveness of their contingency plans.


I would believe that H.P. would know a thing or two about tech stuff eh?

If any individual postulated the above statement, you would be armed with lots of information to dispute it. But HP is just a bit differant. Same with Motorola. High tech big guys with dire predictions.

-- Brian (, September 21, 1999.

A genius codeslinger? still slinging,genius?

-- genius at rest (, September 21, 1999.

There's your problem, Brian. These are not predictions. These are CYA statements, meant to cover any possibility they can conjure. If statements such as these were predictions, H-P and everyone else would have failed long ago.

-- Hoffmeister (, September 21, 1999.

Genius (NOT)

Must of lost your brain in the code eh? I would think nothing would change your challanged mind but the infomation is out there. You are all talk and no info. Put out or shut up.

-- Brian (, September 21, 1999.

Hoff mentioned

"There's your problem, Brian. These are not predictions."

Where oh where do you see me saying that these are predictions? They are potentials but not predictions. Don't start putting words in my mouth. What I would like to point out is we are dealling with potentials, and neither me, you, or H.P. can define the outcome. But the potential must be there or they wouldn't mention it. Show me a 10 - k from the past that claim utilities could shut down for weeks and I can produce several that suggest it could happen during the rollover.

I don't have a problem. If you want to see a problem I could fill the forum with such statements but it is irrelevant if they are all potential consequences. Or would you like me to fill the forum with the disclosures plus a few other handy bits of information?

-- Brian (, September 21, 1999.


I understand your logic about CYA, boiler plate and due diligence, but do you ever suppose that these statements are motivated by a real threat?

Bottom line: I see no benefit to these companies by making these statements. CYA? Perhaps their A** needs covered.

-- Bill P (, September 21, 1999.

My apologies I did say predictions but I do know that the disclosures are maybe's and not for sures.

-- Brian (, September 21, 1999.

Err, OK, Brian.

My eyes may be bad, but did you or did you not post:

...High tech big guys with dire predictions.

-- Hoffmeister (, September 21, 1999.

Sorry, Brian. Was posting at the same time.

-- Hoffmeister (, September 21, 1999.


Knew I could count on you! You are so predictable. Have you been mothering here so long that you have actually begun to believe all the conspiracy theories you really think that if I was some sort of industry shill that I would be posting from work since I know you spend your "valuable" time scanning the server logs? If you sure have gone down hill since you first started posting on this forumn. If I was anything other than a regular guy who happens to be working in the banking industry...if I was any sort of PR shill or some such would never know it, it is, my personal bank account is with Bank of America...and you know what? I'm not worried about it! When I read the someone who has read many 10-Q type docs when I was doing research into starting a public company and going public a while back, I learned a little about the laws and how lawyers prepare boilerplace to cover any possible situation they can think up -- so as to forstall liability. When I originally read the me, ANYTHING out of the ordinary would qualify as making "likely" a true statement...duh.

BTW, everything is going fine with me...thank you for "caring" so warms my heart so knowing I have such a fan in you, Diane. My, I must give you such a thrill, digging around in the logs to find my every post and "lurking" your profile of my post and browsing habits giving you something to fill up the lonely hours with Diane?

Is there anyone else who gives you such delight "outing", and invading what I regard as my privacy and civil rights, Diane?

If I ever travel to Washington DC, I'll make sure to log on from their computers, so as to give you more "proof" just how important your "work" here is...I just hope the REAL government never goes to such lengths at monitoring, recording and developing "files" on it's citizens as you do here on some who visit here....however, don't hold your breath. I'm just a low level programmer/analyst here...never met Greenspan, or Mr. Koshkinen...or had anybody tell me to visit your little kingdom or post anything, or report anything, sorry to disappoint you...but I'll bet there are plenty of other technical types working at other places that end in .gov or some such government affiliated place that also have an interest in Year 2000, and thus visit here, that you could "out" also as more "proof" for your -- whatever you call your thoughts -- nowdays, Diane.

Oh, well, enjoy your reign as petty dictator at STINKBOMB 2000, Diane...after all, there are only 101 days left till 01-01-2000!!!

The one you "care about" so,


P.S. Ever stalked anybody Diane?

-- Genius (, September 21, 1999.

To whom it may concern,


Thanks for the laughs, doomers...can only stand so much amusement from observing the pathologies here! BWAHAHAHAHAHAH!!!

-- Genius (, September 21, 1999.

Hoff and Lane

If you would like to see a good disclosure, Lehman Bro. is one of the best IMHO (financial). It actually provides information. Amazing :o)


For the quarterly period ended May 31, 1999

  Commission file number 1-9466

Lehman Brothers Holdings Inc.
 (Exact Name of Registrant As Specified In Its Charter)


Year 2000 Readiness Disclosure

The year 2000 issue originates from computer programs and imbedded chips using two digits rather than four to define the calendar year. Computer programs that have date-sensitive software may recognize a date using "00"as the year 1900 rather than the year 2000.

If not addressed and completed on a timely basis, failure of the Company's computer systems to process year 2000 related data correctly could have a material adverse effect on the Company's operations and financial condition. Failures of this kind could, for example, lead to incomplete or inaccurate accounting, settlement failures, trade processing or recording errors in securities, currencies, commodities or other assets. It could also lead to uncertainty regarding risk, exposures and liquidity. If not addressed, the potential risks to the Company include financial loss, legal liability, interruption of business and regulatory actions.

The Company established a team in 1996 to modify or replace and then test the appropriate software and equipment to ensure that year 2000 issues were addressed. The Company presently believes that, with modifications to existing software and conversions to new software, the year 2000 issue will be resolved for all the Company's own systems worldwide.

In its approach to the year 2000 problem, Lehman Brothers has been guided by a three-step methodology. The steps are:

o Inventory and Assessment o Remediation o Testing

Inventory and assessment consisted of initial technical and functional analysis across the Company's applications. Initial analysis identified systems and applications. Each application was then reviewed and classified as highly critical, critical or non-critical. This process is complete.

Remediation is divided into three phases. Applications specified as year 2000 non-compliant have been analyzed to determine business impact and those that have been deemed critical were targeted for remediation. Selected Lehman Brothers mainframe applications were sent to an outside vendor for remediation, while the remaining applications have been repaired internally. Remediation of critical applications was completed by the end of the second quarter of 1999.

All remediated applications are tested for non-year 2000 functionality to confirm they still run correctly prior to year 2000 testing. At the time of remediation, applications are logged into a change management system to further ensure any additional changes are monitored and re-tested for year 2000 compliance.


Testing for year 2000 compliance has also been organized into three phases. Phase one involves testing individual applications or groups of applications on mainframe or on distributed platforms. Consultants were engaged to assist with the testing of distributed applications classified as highly critical. Phase two involves real-time testing across platforms (integration testing). Phase three involves testing applications between firms (external testing).

Each of these phases has been pursued in a worldwide effort coordinated in New York, London and Tokyo where project teams and segregated lab environments have been established.

External testing itself is being performed in three steps. "Point- to-point" testing confirms that application interfaces between the Company and individual services and utilities function correctly. Point-to-point testing began in February 1998. "Beta" testing for a product follows Point-to-point testing and is a dress rehearsal for industrywide testing. Beta testing is only performed in the U.S. Many of the markets are not providing Industrywide testing, but they are providing some amount of end-to-end testing, where data is passed to more than one exchange or utility. Industrywide testing follows beta testing as the final external testing step.

In 1998, the Company participated in two Beta tests in the U.S., for the SIA and for the Futures Industry Association (FIA). The Company has also participated in the SIA Money Market Beta Test, the Mortgage- Backed Securities Clearing Corporation Test, the Participant Trust Company Mortgage Test and the Government Securities Clearing Corporation Test, the SIA Market Data Beta Test. Overseas tests in which the Company has participated include the Central Gilts Office (CGO) and CREST in the United Kingdom and the Singapore International Monetary Exchange (SIMEX) test in Singapore.

In March and April of 1999, the Company participated in the SIA Industrywide Test, as well as the Stock Loan Test and SIA Market Data Test in May. The Company has participated in a variety of point-to-point oversees tests in Hong Kong and Tokyo. We are currently participating in Industrywide testing in Japan with a June 27 completion. The Company has participated in testing in Germany, Italy, U.K., Sweden, and France. The Company is also participating in a cooperative test with Euroclear. The Company is also participating in Custody 2000 testing of cash and securities settlement systems with banks in Italy and Poland. Additional European tests are scheduled to October, 1999. All tests to date have been successful.

The Company has taken a leading role in the industry's efforts to deal with the year 2000 issue by actively participating and in some cases, leading, industrywide testing efforts. Lehman Brothers chaired the Participants' Industrywide Testing Subcommittee of the Securities Industry Association (SIA) which, with partners such as exchanges, depositories, market data vendors and buy-side firms, set up, refined and coordinated industrywide testing in the United States. Industrywide testing is the forum in which firms within the financial industry test the applications that transfer data between them. These tests started in March 1999 and are expected to be completed in July, 1999.


In addition to its leadership in U.S. testing efforts, through membership in the Executive Committee of Global 2000, a group of international financial firms, the Company is participating in the coordination of global year 2000 readiness in the financial community. The Company is also pursuing separate point-to- point testing with firms not participating in industrywide testing. Lehman Brothers also serves as a member of the Custody 2000 Working Group whose goal is to assist the financial community in the assessment of year 2000 readiness of custodians in a variety of global markets. The Custody 2000 Working Group will also conduct proxy testing of selected sub-custodians in a number of markets globally.

Year 2000 also affects building and infrastructure systems. The Company is engaged in a global effort to address facilities issues. Critical areas include facilities components such as building management systems, elevators, heating systems, security and fire alarm systems, electrical and other building services. Facilities staff has surveyed and continues to test equipment and components and, with the Third Party Vendor team, is working to ensure that vendors and suppliers are year 2000 ready.

However, even if these changes are successful, the Company remains at risk from year 2000 failures caused by third parties. Externally, the Company is an active participant in the SIA Third Party Vendor Committee. Internally, the Company is evaluating efforts of key counterparties, banks, exchanges, agencies, utilities and suppliers, among others, to assess and remediate their year 2000 issues. As part of this effort, the Third Party Vendor team has inventoried and has sent surveys to vendors whose software and hardware products the Company uses and whose services the Company employs to determine their year 2000 readiness. The team is also testing critical software and hardware products to ensure year 2000 readiness. To date the Company has received information from 99% of its vendors, including overseas vendors whose year 2000 awareness seems to be less advanced than in the United States.

Examples of problems that could result from the failure by third parties with whom the Company interacts to remediate year 2000 bugs include: (i) in the case of exchanges and clearing agents, funding disruptions, failure to trade in certain markets and settlement failures; (ii) in the case of counterparties and clients, accounting and financial difficulties to those parties that may expose the Company to increased credit risk and lost business; (iii) in the case of vendors, service failures such as power, telecommunications, elevator operations and loss of security access control; (iv) in the case of banks and other lenders, the potential for liquidity stress due to disruptions to funding flows; and, (v) in the case of data providers, inaccurate or out of date information that would impair the Company's ability to perform critical functions such as pricing securities and currencies.

Additionally, general uncertainty regarding the success of remediation may cause many market participants to reduce their market activities temporarily as they address and assess their year 2000 efforts in 1999. This could result in a general reduction in market activities and revenue opportunities in late 1999 and early 2000. Management cannot predict the magnitude of any such reduction or its impact on the Company 's financial results. However, the Company's Risk Management Department continues to evaluate third party and credit risks posed by year 2000.


Recognizing the uncertainty of external dependencies, the Company is also preparing a contingency plan that identifies potential problems, actions to minimize the likelihood of them occurring and action plans to be invoked should they occur. The plan includes backup processes that do not rely on computer systems, where appropriate. The base contingency plan was finalized at the end of April 1999. The Company's business units continue to review and fine tune the contingency plan and to respond to new information about year 2000 risks as such information becomes available.

However, as stated above, there can be no guarantee or assurance that the systems of other companies on which the Company's systems rely will be remediated in a timely manner. This or a failure to remediate by another company or a remediation that is incompatible with the Company's systems could have a material adverse effect on the Company.

The Company has established an internal auditing plan to ensure ongoing compliance of tested applications.

The Company's total year 2000 project cost is based on presently available information. The total remaining cost of the year 2000 project is estimated at approximately $22 million, which will be funded through operating cash flow and expensed as incurred over the next one year. The Company has incurred and expensed approximately $16 million in 1997, $31 million in 1998, and $19 million through May 31, 1999, related to the year 2000 project.

The costs of year 2000 testing, modifications and/or replacements and the date on which the Company plans to complete the project are based on management's best estimates. These estimates were derived using numerous assumptions of future events including the continued availability of certain resources, third party modification plans and other factors.

New Accounting Standards

In June 1997, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 131 "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 is effective for the Company in Fiscal 1999 and establishes standards for related disclosures about products and services, geographic areas and major customers. The Company will adopt SFAS No. 131 in its 1999 Annual Report.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which requires all derivatives to be recorded on the balance sheet at fair value. In June 1999, the FASB extended the implementation date of SFAS No. 133 by one year. As a result, SFAS No. 133 will now be effective for the Company on December 1, 2000 (Fiscal Year 2001). The expected impact of adoption on the Company's results of operations has not yet been determined, however it is not likely to be material since most of the Company's derivatives are carried at fair value.

-- Brian (, September 21, 1999.

Gosh, Genius (,

Youve claimed in the past, under other names, and many, many trolling posts, that you are a banking industry programmer. You claim YOU KNOW!

So I ask again... How ARE the Fedral Reserve Banks doing... since you know so much, huh?

Simple question. Answer too complex for you?


(I also have an interest in BofA's "readiness").

-- Diane J. Squire (, September 21, 1999.

Talk about spin, Lane, this takes the cake - you posted ONLY the portion concerning RISKS, which never contain anything but legal cya! Why didn't you at least note that this was only the RISK section?


Here's the REST OF THE DISCLOSURE that Lane omitted:

Year 2000 Project The following is a Year 2000 Readiness Disclosure.

General Because computers frequently use only two digits to recognize years, on January 1, 2000, many computer systems, as well as equipment that uses embedded computer chips, may be unable to distinguish between 1900 and 2000. If not remediated, this problem could create system errors and failures resulting in the disruption of normal business operations. Since 2000 is a leap year, there could also be business disruptions as a result of the inability of many computer systems to recognize February 29, 2000. In October 1995, the Corporation began establishing project teams to address Year 2000 issues. Personnel from these project teams and the Corporation's business segments have identified and analyzed, and are correcting and testing, computer systems throughout the Corporation ("Systems"). Personnel have also taken inventory of equipment that uses embedded computer chips (i.e., "non-information technology systems" or "Infrastructure") and scheduled remediation or replacement of this Infrastructure, as necessary. Examples of Infrastructure include ATMs, building security systems, fire alarm systems, identification and access cards, date stamps and elevators. The Corporation tracks certain Systems and Infrastructure collectively ("Projects"). For purposes of this section, the information provided for Systems and Projects is generally provided on a combined basis.

State of Readiness The Corporation's Year 2000 efforts are generally divided into phases for analysis, remediation, testing and compliance. In the analysis phase, the Corporation identifies Systems/Projects and Infrastructure that have Year 2000 issues and determines the steps necessary to remediate these issues. In the remediation phase, the Corporation replaces, modifies or retires Systems/Projects or Infrastructure, as necessary. During the testing phase, the Corporation performs testing to determine whether the remediated Systems/Projects and Infrastructure accurately process and identify dates. In the compliance phase, the Corporation internally certifies the Systems/Projects and Infrastructure that are Year 2000 ready and implements processes to enable these Systems/Projects and Infrastructure to continue to identify and process dates accurately through the Year 2000 and thereafter. As of June 30, 1999, the Corporation has identified approximately 4,500 Systems/Projects. In addition, the Corporation has identified over 16,000 Infrastructure items that may have Year 2000 implications. For Systems/Projects and Infrastructure, as of June 30, 1999, the analysis, remediation, testing and compliance phases were all substantially complete. As of June 30, 1999, the Corporation substantially completed all phases, in accordance with guidelines established by the Federal Financial Institutions Examination Council (FFIEC), as such guidelines are interpreted by the OCC. The Corporation tracks Systems/Projects and Infrastructure for Year 2000-required changes based on a risk evaluation. Of the identified Systems/Projects and Infrastructure, approximately 1,900 Systems/Projects and approximately 850 Infrastructure items have been designated "mission critical" (i.e., if not made Year 2000 ready, these Systems/Projects or Infrastructure items would substantially impact the normal conduct of business). For mission critical Systems/Projects and Infrastructure, as of June 30, 1999, the analysis, remediation, testing and compliance phases were all substantially complete. The Corporation is also performing additional "time machine testing" (i.e., emulating Year 2000 conditions in dedicated environments) on selected mission critical Systems. Ultimately, the potential impact of Year 2000 issues will depend not only on corrective measures the Corporation undertakes, but also on the way in which Year 2000 issues are addressed by governmental agencies, businesses and other entities which provide data to, or receive data from, the Corporation, or whose financial condition or operational capability is important to the Corporation as borrowers, vendors, customers, investment opportunities (either for the Corporation's accounts or for the accounts of others) or lenders. In addition, the Corporation's business may be affected by the corrective measures taken by 31

the landlords and managers of buildings leased by the Corporation. Accordingly, the Corporation is communicating with certain of these parties to evaluate any potential impact on the Corporation. In particular, the Corporation has contacted its service providers and software vendors (collectively, "Vendors") and has requested information on their Year 2000 project plans with respect to the services and products provided by these Vendors. As of June 30, 1999, any Vendor which had not provided appropriate documentation was placed in an "in process" category, which includes those Vendors previously called "at risk." In addition, as of June 30, 1999, the Corporation has designated approximately 36 percent of its Vendors as "mission critical." As of June 30, 1999, the Corporation has confirmed or received assurances that approximately 98 percent of the services and products provided by its Vendors, and approximately 97 percent of the mission critical services and products provided by its Vendors, are Year 2000 ready, the remainder of which were "in process." In accordance with its contingency plans, the Corporation will continue to focus on "in process" mission critical Vendors in order to mitigate any potential risk. The Corporation is also tracking the Year 2000 compliance efforts of certain domestic and international agencies involved with payment systems for cash and securities clearings. The Corporation has identified 202 agencies, all of which have responded to the Corporation's inquiries that they are Year 2000 ready as of June 30, 1999. In addition, the Corporation has completed Year 2000 risk assessments for substantially all of its commercial credit exposure. By June 30, 1999, the Corporation reassessed all customers deemed to be "high risk" and "medium risk." For any customers deemed "high risk", on a quarterly basis, the Corporation's Credit Review Committee reviews the results of customer assessments prepared by the customers' relationship managers. Weakness in a borrower's Year 2000 strategy is part of the overall risk assessment process. Risk ratings and exposure strategy are adjusted as required after consideration of all risk issues. Any impact on the allowance for credit losses is determined through the normal risk rating process. The Corporation is also assessing potential Year 2000 risks associated with its investment advisory and fiduciary activities. Each investment subsidiary has a defined investment process and is integrating the consideration of Year 2000 issues into that process. When making investment decisions or recommendations, the Corporation's investment research areas consider the Year 2000 issue as a factor in their analysis and may take certain steps to investigate Year 2000 readiness, such as reviewing ratings, research reports and other publicly available information. In the fiduciary area, the Corporation is continuing to assess Year 2000 risks for business, real estate, oil and gas, and mineral interests that are held in trust. Following the merger with BankAmerica, the Corporation identified its significant depositors and assessed the Year 2000 readiness of these customers. The Corporation will continue to monitor these depositors for purposes of determining any potential liquidity risks to the Corporation.

Costs The Corporation currently estimates the total cost of the Year 2000 project to be approximately $550 million. Of this amount, the Corporation has incurred cumulative Year 2000 costs of approximately $477 million through June 30, 1999. A significant portion of the costs through June 30, 1999 was not incremental to the Corporation but instead constituted a reallocation of existing internal systems technology resources and, accordingly, was funded from normal operations. Remaining costs are expected to be similarly funded.

Contingency Plans The Corporation has existing business continuity plans that address its response to disruptions to business due to natural disasters, civil unrest, utility outages or other occurrences. Using these existing plans, the Corporation has developed supplements to address potential Year 2000 issues that could impact its business processes. The Corporation has completed approximately 1,100 supplemental plans, of which approximately 784 are deemed "high risk" or "medium risk" plans that have been tested to date. The remaining "high risk" supplemental plans, of which there are currently four, will be tested prior to September 1, 1999. In addition to these plans, the Corporation has designed and implemented an event management 32

communications center as a single corporate-wide point of coordination and information about all Year 2000 events, whether internal or external, that may impact normal business processes. In addition to this center, the Corporation has developed regional and functional event management teams. The Corporation is conducting regional and global exercises simulating multiple, simultaneous and diverse events to practice communication and coordination skills and processes. During October and November 1999, the Corporation has scheduled all "high risk" business continuity plans to be reviewed and revalidated to ensure readiness for possible implementation in 2000.

Risks [This is already posted above, and is the ONLY section Lane posted]

-- FactFinder (, September 21, 1999.

Good catch, Diane! I don't think *genius* can tell you how the Federal Reserve is doing until he figures out what it is first...poor little *genius* Hoffmeister-wannabe. He's hoping so hard that he will be accused of being a shill (as if!!) that he hasn't had time to learn who the President's Y2K czar the way, anyone ever heard of KoSHkinen?? LOL LOL

-- (What A, September 21, 1999.


You are right that the risk section is not a good place to start looking at the big picture. IMHO the best disclosures aren't the ones that have heavy risk assessments but the ones that have details rather than the boilerplate statements (there are alot of them).

Now this statement would catch the eye;

"the Corporation is also performing additional "time machine testing" (i.e., emulating Year 2000 conditions in dedicated environments) on selected mission critical Systems."

Why selected mission critical systems? I was of the opinion (being a non IT) that all mission critical systems should be tested. Why would they put this in their statement?

I am not suggesting failure but possibly inadequate testing.

-- (, September 21, 1999.


Since I'm not an organizational spokesperson, and just do my job on my system at my bank, I don't keep tabs on what's happening everywhere. There is a public website you can visit. I'm also sure your local FRB has someone you can call for an industry status. Maybe you can even get in to take a tour! The vault is a neat thing to see!

I will say this. I've only worked here a few years. Never known any spokes people to lie. If company policy allowed me to publically state my impression, I would do so. All I can say is that I'm not at all worried...gee...wonder why?

You know, you USED TO seem to be basically a nice person. Especially when you first started posting on this forumn; I was here before you were...and I remember how full of "peace, love, and harmony" type setiments your post were full they are quite different. Rather sad, don't you think?

My opinion of this place has gone down quite a bit. That's why I refer to it as STINKBOMB 2000 now. Primarily due to all the post advocating murdering public figures via lynch mobs, ect. As an American, I detest such calls and support for what to me is domestic terrorism. Also, the general trend to interpret things negatively, to cling to the negative and discount anything positive. These two reasons -- the anti- rantings and the closed, bias thinking are what have turned me off to here. I still visit from time to time. Sometimes I learn about something interesting as a programmer/analyst. But, as you may have noticed from examining the server logs, my visits have been decreasing quite a bit in frequency and duration. You sure are keeping tabs on me as you have said. I wonder who else you have "files" on who visits here.....

What I find amusing is that I have already answered your question before. On more than one occasion. What I find interesting is that you tend to "forget" this fact...prefering to ask again, using phrases, fonts and other such stuff to try and give the impression that I'm some sort of important "insider" who knows all and is unable to answer your simple question -- simple minded people -- or doomer dummies -- might fall for it, but it is just sad to me, for the following reasons:

1) I've already, on more than one occasion in the past answered questions you've made to me...maybe you have "forgot"...I haven't. And don't try the "prove it...give a link" ploy to call me a liar...I've got too many things to do with my personal time to waste doing so. If you are honest....and have a reasonably good memory, you will remember...but of course, since my answers were positive, instead of negative, I'm not surprised you keep asking the same questions. Reminds me of a kid who keeps asking the same question because he/she doesn't get the answer they want. Pathetic from an adult..."moderator". Accept or discount what I've already shared with you in the past, but don't keep asking the same question -- especially to just imply that I won't or can't answer, since I already have -- more than once. This is very dishonest, bad, and I think illustrative of how desparate you and the others of your ilk are to make "points" since you lack any real horror stories to get into a tizzy about. I for one see right thru such ploys. But you do have such a receptive audience here at STINKBOMB 2000 -- at least for another 100 days or so! Then what will you do, Diane? Hopefully go back to the type of person you used to be before your decline and fall into the stink pit.

2) Your little blurbs about having lunch with Greenspan and refering to me as someone who KNOWS!!! is quite a pathetic attempt to inflate my actual importance and level of knowledge in order to make your attacks and ploy I mentioned in item #1 more effective. As a moderator, YOU should be ashamed of yourself, Diane. Especially as a new-age type who values "the light" and all that stuff. Personally, I think Yourdon should have pulled your plug a long time ago...You've been a petty despot here for quite a while now. And you're getting worse! Ad hominum attacks and ploys are all I expect from you now.

As I've said in prior post, I've never met Greenspan, Koshkinen or any such folks. I haven't heard of them going to lunch with lowly grunt programmer/analyst either. I do know how my system is. And I'm glad it works fine and all the Y2K work was done a long time ago. If you do your "internet infonauting" you are so proud of, you will discover, thru public info on the FRB's website what's going on. The FRB refers to Y2K type stuff as CDC for Century Date Change. That should help your searches. All I can say is all the Y2K testing I've done has gone just fine. I personally, based on everything I know, expect the financial industry to be just fine. But that's not what you wanted to hear, is is Diane? No doubt you will ask the same question again and again...only I've grown tired of repeating myself. You will have to find someone else to indulge you. I have a life to live.

My reply to you is cutting, yes. But I think you deserve it. I really do wish you and all the rest here at STINKBOMB 2000 well. I just hope the changes in y'all I've noticed are not permanent, for y'all's sake. I suggest you "follow your leader" again. Notice how Yourdon's already working on his post Y2K projects.

Maybe you should get yourself a new hobby or something too, since sometime early next year you probably won't have this forumn as your personal little dictatorship or bully doomer pulpit least there won't be many people to bully, "out", violate the privacy and civil rights of, insult, or just "play to" as you did in your pathetic post attempting to puff me up so you could make pretend to be making some petty "points" for your doomer cause.

Only 101 days...then reality will intrude on whatever festering delusions exist here among the doomer crowd...and the world as we know it will still be marching will civilization. Make your preps now, Diane! The end of your petty doomer kingdom is NEAR!

The one you stalk on-line,


P.S. You didn't answer MY question Diane. Ever stalked anybody Diane -- in real life, not just on-line? New age my a$$!!

-- Genius (, September 21, 1999.


And here I was hoping youd have some real insider comfort and details to share with us on your industry, Genius (, rather than personal attacks... one more time. (Shoulda known. Have had to delete some of your OT overly "nasty" viscous comments before. Real "nice" programmer-type guy aren't you?)

At any rate, as you likely know, searching... the SECs EDGAR Archives at... cgi-bin/srch-edgar

Or go to Edgar-Online...

...for the Federal Reserve Banks DOES NOT yield a 10-Q filing. DARN! Theyre private.

The main FRB web-site, of course, for The Board of Governors of the Federal Reserve System is at...

Their Year 2000--Century Date Change info is at... y2k/

Mostly, as you likely know, one needs a shovel to sort through it. Humm. Now where WAS that FRB regulation that said it was mandatory that the FRB banks NOT disclose their Y2K status... under penalty of... yada, yada, yada.

You recall that one?


(BTW, upon business/dressy occasions, like most women, I wear panthose stockings, but no, never stalked anyone. Please dont flatter yourself. And the correct term is... metaphysics).

-- Diane J. Squire (, September 21, 1999.


could arise

is possible AND

is likely

Say entirely different things. "Is likely" implies greater probability than "could arise". No matter how you try and cut it.

The point is virtually every SEC filing contains lawyer-speak intended to identify every possible event that can be conjured, in order to cover their a**.

I agree. That's exactly why I picked up on this. Corporate attorneys labored very carefully over wording.

-- Cheryl (, September 22, 1999.

In retrospect, although this post is certainly biased and wasn't labeled as an excerpt from the "Risk" portion of the filing, Lane's title does include "Y2K Risk" in it, so Lane did provide some indication that this was relating to the risk section. I therefore retract that part of my earlier post. Nonetheless it was'nt very clear in the post itself, and posting only this negative "cya" part is still pure "doomspin".

"Why selected mission critical systems? I was of the opinion (being a non IT) that all mission critical systems should be tested. Why would they put this in their statement? I am not suggesting failure but possibly inadequate testing. -- (, September 21, 1999. "

Imager, a very fair question to which I know not the answer.

By the posts here, it seems that the majority of you have found Y2K "experts" to your liking, the corporate lawyers. Yep, those guys know their programming, BWAAAAHHAHAHAHAHAHAHAHA!

Sorry, couldn't resist, it cracks me up everytime I seen one of Genius' posts. By the way, I'm no psychologist, but I am an observer of human behavior, and I distinctly detect something "playful" in the mock fighting and banter between Diane and Genius. Tis sweet, lol....


-- FactFinder (, September 22, 1999.

Don't worry Genius, Diane "just shag me" Squire couldn't track a cow through a cornfield. She is as technically illiterate as they come. She thinks that if a posters IP number is "pretty close to the same" as someone else, that they are the same person. BWAAHAHAHAHA indeed. She also doesn't understand that anonymouse web services give EVERY user the same ID, that is the point, duh. She needs to understand that just clicking on DNS reverse lookup won't tell her everything. But just like Cory H she is clueless. Oh well, like Mutha Nachu said "let them drown in there own ignorance" Anyone who listens to Lane coredumps lies deserve just whatever they get.

-- Super Polly (, September 23, 1999.

Thanks for calling me a name again, FF. Shows your intellectual caliber quite nicely. I post a section of a report, and INCLUDE A LINK TO THE ENTIRE REPORT, and I am somehow at fault.

What a farce. The idea that you are interested in facts is a farce. A complete, inane, hypocritical, intellectually dishonest farce.

You ducked out of the Embedded Systems Revisted thread on the EUY2K forum because you were going to spend less time on Y2K "discussions"?

How come you can find so much time to post on this forum?

Like I said, "See 'FactFinder'. See 'FactFinder' run."

-- Lane Core Jr. (, September 23, 1999.

Lane: Nice quote from Buckley. Might I suggest PT Barnum? "There's a sucker born every minute".

Look, go back 5 years, 10 years, 20 years and pull the old reports. They all have the same sort of vague "the company doesn't expect this but if we screw up we could all go home wearing barrels" CYA language. If it meant anything but CYA, we would be living in caves.

-- Paul Davis (, September 23, 1999.

Lane, Ducked what? Your "challenge" to read your articles on y2k and debate them with you? No thanks again. Lane, this is not third grade, you can't goad someone into doing what they do not wish to do.


-- FactFinder (, September 23, 1999.

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