http://www.amarillonet.com/stories/092699/bus_fedboost.shtml

Web posted Sunday, September 26, 1999 7:59 a.m. CT

Fed boosts yearend cash level

Bank regulators can't decide what bank customers will do on the last days of 1999.

Will they withdraw thousands of dollars in cash per family, fearful that the millennium bug will kill the ATM machine? Or will $100 be enough to ease fears?

The Federal Reserve has tentatively decided to stockpile the cash held in its vaults to more than $200 billion around the end of the year, up from its usual $150 billion.

"The reason it's hard to get more specific is that there's all sorts of things that affect the cash levels," said David Skidmore, a spokesman for the Federal Reserve in Washington, D.C.

"It's basically a guestimate. We're saying well over $200 billion."

The amount could go up from there if the Fed decides later in the year consumers will withdraw more. But if consumers spend all their cash at Christmas, the amount may go down because people's bank accounts will be depleted, Skidmore said.

The planning needs to come close to the mark because the Treasury's Bureau of Engraving, which prints money, has to print up extra billions. The cash is then trucked in armored vehicles to the Fed's vaults around the nation. Banks order the cash they think they need, and then armored trucks carry the cash to the banks.

"No one can predict what consumers are going to feel they need to do," said Julie Turner Davis, a spokesperson for Bank of America. "We are developing plans that are flexible because there is no way to predict when something will happen."

The Bureau of Engraving can produce 1 billion notes a month, said Mary Ann Terry, a spokesperson for the Fed's Charlotte branch. The Fed put in the millennium order in August 1998.

The Washington, D.C.-based Consumers Union is recommending that people take two weeks' worth of their cash needs out of the bank, said spokesperson Sally Greenberg. People should keep it in cash or traveler's checks, she added.

"If you're fairly affluent, that translates into a couple thousand dollars, or if you're not, like most of us, that may be between $500 and $1,000," Greenberg said.

The group also is telling people to save their bank statements from the month before and after Jan. 1, 2000.

Bankers and regulators, who note that 98 percent of all 10,400 banks are on track on Y2K preparedness, said they believe no one will need any extra money.

-- Uncle Bob (UNCLB0B@Y2KOK.ORG), September 27, 1999

Answers

This is frightening news. I don't read such moves simply as added insurance. I read it as additional concern over serious risks that make upping the insurance an appropriate action.

Sincerely, Stan Faryna

-- Stan Faryna (faryna@groupmail.com), September 27, 1999.

2-3 months ago one of my patients told me he was in charge of supplying cash from the Seattle Federal Reserve bank to local banks. I discussed Y2K with him and learned theat at that time the fed was increasing the amount of cash on hand to 160% of what they would normally stock.

He told me that he was personally not optimistic and he had stored food, water, firewood and had a generator. At that time he had completed his prep.

-- Noll Paynter, OD (worldlink@seanet.com), September 27, 1999.