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Summary and Comments

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Category: 

Banking

Date: 

1998-03-13 09:40:50

Subject: 

The Party Line: Big Banks, OK; Small Banks, Beware

  Link:

http://www.washingtonpost.com/wp-srv/WPlate/1998-03/10/121l-031098-idx.html

Comment: 

The standard line is that big outfits will make it; smaller ones won't.

The truth is, if the power grid goes down, only little outfits will make it, from governments to businesses.

If an outfit can't move to paper and ink, it's in trouble. It has to get compliant. But big outfits have not been able to do this. And they are too big to move back to paper and ink.

The y2k problem is the threat to systems. It is a systemic problem. It is not this bank or that bank; it is the banking system that is at risk.

To say this is to suggest that people go down and get cash out of their banks. This is not politically correct in any circles, even supposedly anti-bank, free market circles.

But it's the rational thing to do.

This is from the WASHINGTON POST (March 10).

* * * * * * *

The nation's largest banks, including several operating in the Washington area, are spending big bucks inoculating themselves against the so-called millennium bug, but their smaller mom-and-pop counterparts are not doing enough to protect themselves, according to a recent study. . . .

Banks are particularly vulnerable because so many of their products and services involve date-sensitive calculations. Not fixing the problem could, for example, cause automated teller machines to deny access to cash, bank vaults to close or open improperly or bank statements to report erroneous data. . . .

However, a survey of 600 community banks, completed by Grant Thornton LLP last fall and unveiled last week, concludes that the smaller banks, while aware of the problem, are not budgeting enough to fix it.

"Community banks may be further behind than ahead," said Diane Casey, the firm's national director of financial services, noting that about 60 percent of the small banks surveyed planned to spend less than $10,000 on the problem. "It's not going to be easy to meet this year's deadline with budgets of $5,000 to $10,000." . . .

Some small bank operators decried the study, which they said was outdated, because many began reviewing the situation only recently. The survey also failed to consider that many small banks contract with outside firms for the bulk of their data processing services. . . .

Countdown on Contingency Plans

Most community banks don't have a contingency plan for dealing with year 2000 problems that their suppliers may have, according to a survey by Grant Thornton. The larger ones, however, appear better prepared.

Link: 

http://www.washingtonpost.com/wp-srv/WPlate/1998-03/10/121l-031098-idx.html

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