Officials Say U.S. Banking System Ready for 2000

Updated 5:00 PM ET December 13, 1999

By Paul Simao

ATLANTA (Reuters) - U.S. banking officials on Monday dismissed concerns that automated tellers, credit cards and other forms of electronic payment would malfunction during the transition to the year 2000.

Federal and state regulatory agencies said they were satisfied that all 10,200 banks and thrifts in the United States had upgraded their computer systems to prepare for Y2K, as it has been dubbed.

"We're recommending that people treat the New Year's weekend just as they would any other normal holiday weekend and they make their cash decisions based on that premise," Federal Reserve Bank of Atlanta President and Chief Executive Jack Guynn told reporters during in a press conference.

The advent of Y2K has sparked concerns throughout the world that computers systems will break down by confusing the last two digits of the year 2000 with the year 1900. The fear has moved some consumers to consider withdrawing large amounts of cash in the days leading up to New Year's Day.

Guynn said the Federal Reserve had ensured that $200 billion was available in its inventory to meet any conceivable request for cash, although he said it did not expect that need to be significant.

The Fed also said it had established special lending facilities across the United States, allowing it the flexibility to step in as the lender of last resort if a bank or other depository institution faced the possibility of a liquidity crisis or panic.

Regulators reminded consumers they would be able to rely upon the guarantees provided by the Federal Deposit Insurance Corporation (FDIC) if "glitches" did occur in the banking system.

The FDIC, created in 1933 during the Great Depression to restore and maintain confidence in the banking system, insures deposits up to $100,000. The agency's two major insurance funds total almost $40 billion.

FDIC Chairman Donna Tanoue said consumers who stockpiled cash would be taking an unnecessary risk. A Gallup poll released last summer showed that 25 percent of the public planned to make large cash withdrawals in the run-up to Y2K.

"That is not a good idea. Money is safe in an FDIC-insured deposit account. No one has ever lost a penny of FDIC-insured funds and no one ever will, but anyone who carries a lot of cash or keeps it at home puts it at risk of being stolen," Tanoue said.

Tanoue noted that people should hang onto financial records, balance checkbooks and remain wary of scams designed to prey on Y2K fears.

Although federal officials said they still feared some consumers would not heed their advice, they noted that surveys showed that 90 percent of respondents believed banks were prepared for 2000.

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Ray

-- Ray (ray@totacc.com), December 13, 1999

Answers

The banks only have to be 100% compliant as per Greenspandex. 99% isn't good enough. Here's hoping you all (banks) crash and burn. Bear arms, or wear chains.

-- Willy (Wonka@thechocolatefactory.com), December 14, 1999.

Ready != compliant. They're ready alright...ready to crash and burn.

Only 17 days left...*tick* *tick* *tick*

-- Tim the Y2K nut (tmiley@yakko.cs.wmich.edu), December 14, 1999.