U.S. Banks Brace for Cash Stockpiling at Year-End

Updated 2:42 PM ET November 19, 1999

By Mary Kelleher

NEW YORK (Reuters) - U.S. banks are bracing for a run on cash machines by consumers who may try to stockpile money for fear of computers failing and savings accounts vanishing as clocks tick into 2000.

Banks are ready to load more money into cash machines and will have fleets of armored trucks on call to deliver sacks of money to branches if coffers are depleted. In a few cases, banks say they will keep doors open if teller lines are long.

The preparations stem from concerns that people will empty bank accounts at the end of December, to guard against losing savings in a system breakdown. Computers that read the last two digits of a year have been fixed so they do not confuse "2000" with "1900" next year, but many still fear glitches.

The U.S. Federal Reserve has ordered the printing of some extra $50 billion to meet any increased demand for cash across the country. It also has made arrangements to make it easier for banks to get short-term loans to meet credit demands.

"We are prepared to put cash into machines more frequently and provide higher denominations of bills," said Jim Schepker, a spokesman for Boston-based bank FleetBoston Financial Corp.. "If people try to enter a bank branch or use ATMs, we will keep them open as long as there might be lines at any given branch."

So far, customers appear calm and have not made abnormally high withdrawals from ATMs as the year draws to a close, but many banks say they are scrutinizing ATM transaction volumes daily and preparing for the worst just in case.

Nearly three in five Americans plan to hold additional cash for fear of any year 2000 computer bugs, according to a poll for Reuters released on Thursday. Of this group -- equivalent to about 65 million households -- one in five believes it is reasonable to tuck away as much as a month or more of income, the survey showed.

But a majority of bank customers who plan to withdraw cash because of Year 2000 concerns said they will take out less than $500, acccording to another poll released on Thursday for U.S. regulators. The survey also showed customers are increasingly confident about banks' technology preparations now.

"Key has had a taskforce on it for more than a year," said Mike Conway, a spokesman for Cleveland-based bank KeyCorp. "We've got all our pipelines ready to go. We've got more than 40 percent additional dollars in our pipelines if they are needed, though we don't think they will be...We have not noticed any additional spikes at all in terms of cash withdrawals. So far, smooth sailing."

The banks also have embarked on a campaign to educate consumers -- stuffing brochures into statements and putting up displays in lobbies to tell people to think of the end of the year as a long weekend and withdraw funds accordingly.

"What we have advised our customers is that they should prepare as they would for any long holiday weekend," said Ed Shell, the director of Y2K cash contingency planning at North Carolina-based regional bank Wachovia Corp..

Republic New York Corp., a multinational bank headquartered in New York, is advising its customers to do the same. The bank also plans to have the amount of cash in its system that it would have for a long weekend, plus some extra money, although it has seen no evidence of unusual activity.

Midwestern banking giant Bank One Corp. said it has been carefully monitoring cash withdrawals across the country, though it has not seen aberrant spikes up compared with this time last year. The bank has also been working with the Federal Reserves in case it needs extra cash.

"We do not see any business or retail customers taking out more cash for any reason, including Y2K," John Russell, a Bank One spokesman, said.

Cash usage is typically about 25 percent higher in the last quarter of the year, and particularly in December, than it is at other times, Russell added.

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Ray

-- Ray (ray@totacc.com), November 19, 1999

Answers

This isn't going to be fun!

-- db (dciinc@aol.com), November 19, 1999.

If the banks work REALLY hard at having as much cash on hand for late December as possible, maybe the SECOND person out of 100 in line to get all of their money out of the bank (and not just the first) will get all their money out.

When, oh, when, will fractional reserve banking be legally banned, with as much opprobrium attached to it (and for as much reason) as food poisoners enjoy? Unfortunately, I don't think it would be anytime soon, not in a country that just revoked Glass-Steagall (sp). Of course, Y2K may speed things along a little...

Check out this item on Gary North's site for some insight:

http://www.garynorth.com/y2k/detail_.cfm/4882

my site: www.y2ksafeminnesota.com

-- MinnesotaSmith (y2ksafeminnesota@hotmail.com), November 19, 1999.

Got cash? Withdraw early and withdraw often.

-- A (A@AisA.com), November 19, 1999.

Minnesota...

.....It was banned at the beginning of the country, reconfirmed when 'ol Hickory through the "den of vipers" out, and it took the civil war to get the banksters back in.

.....Now we have idiot citizens that will actually defend the abominable practice.

-- Patrick (pmchenry@gadall.com), November 19, 1999.

I believe fractional reserve banking requires a percentage (fraction) of reserves to be of the metal (gold-silver) persuasion. We have a fiat monetary system. Money based on debt.

-- Mike Lang (webflier@erols.com), November 19, 1999.

I don't have to draw any money from my account. I haven't made a deposit in 12 months.

-- Moedini (Moe@nodeposit.com), November 19, 1999.