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Summary and Comments

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Category: 

Banking

Date: 

1998-02-18 14:17:25

Subject: 

Banker's Warning: Breakdown of Payments System

Comment: 

This is by far the strongest warning on the vulnerability of the banking system that I have seen from anyone inside the profession.

The report was sent to me by someone at one of the Federal Reserve regional banks.

The article quotes David Iacino's Feb. 17 testimony at a U.S. Senate field hearing. Mr. Iacino heads up the Year 2000 repair project at the Bank of Boston, generally regarded as the most y2k-advanced large bank in the U.S., and therefore the world.

This appeared in AMERICAN BANKER (Feb. 18).

* * * * * *

Time is Short for Year-2000 Fix, Congress Told

A BankBoston executive warned Congress Tuesday that the banking industry may be running out of time to solve its year-2000 computer glitches.

David M. Iacino, senior manager of BankBoston's millennium project, told a Senate Banking Committee field hearing in Hartford, Conn., that his company has been concentrating on the year-2000 problem for nearly three years and still has repairs left.

"Knowing that all financial institutions must address the very same issues that we have faced with much less time remaining, I am concerned with the general preparedness of the rest of the financial services industry domestically and, more so, internationally," he said.

Laggards could pose a danger to the entire payments system because of the "enormous interdependency" of financial institutions, he said.

"Unless comparable programs to BankBoston's are put in place within the next few months, the effect will adversely impact even those that are adequately prepared."

Mr. Iacino called for federal legislation that would give all regulators of financial institutions broad examination powers, ease software copyright laws that slow computer reprogramming, and protect financial institutions from punitive damages in class actions spurred by year-2000 computer errors.

His testimony also warned banks to closely scrutinize whether vendors and acquired institutions have fixed their computer systems.###


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