The United States is supposed to be further ahead of other nations in repairing y2k.
The banking industry is supposed to be ahead of the others.
It turns out that some banks are way behind in their plans to deal with y2k. This is the opinion of a specialist in y2k repairs.
What percentage are only getting started? No one knows. The regulators dare not issue warnings about too many banks. They do not want to begin a panic. Also, no one knows what constitutes a project that is on time.
What little information we are getting out of Japan is bad. International banking is a system. It's not good enough for U.S. banks to be compliant -- and none is, as of May, 1998. U.S. Banks interact with all the rest of the world's banks. A y2k-driven bank run in Japan will spread to the United States. The problem is the same here.
This is from the Bergen, New Jersey, RECORD (May 17).
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Despite all the warnings about the year 2000 computer problem, Ted Rosen says that -- incredibly -- some of the nation's banks have just recently started thinking about how to fix the date-related computer glitch, which could turn their electronic records into a useless mess.
"The banking industry in general is ahead of other industries in dealing with the year 2000 problem, although there is a difference among banks," says Rosen chief operating officer of Market Partners Inc., a King of Prussia, Pa., consulting firm that is working with the banking industry and its regulators to wipe out the so-called "millennium bug."
"We see banks who are nicely ahead of the curve, and some banks that, unbelievably, still have a lot of work ahead of them." . . .
Every industry in the world has to address the year 2000 problem, but financial-services companies may be more vulnerable than most because they are essentially in the business of keeping track of numbers and time, the items at the heart of the millennium bug. . . .
Banks that don't address the so-called "Y2K" problem could see accounts wiped out, electronic transfers lost, records destroyed, and interest calculations hopelessly messed up -- for starters.
And as banks get further into their Y2K repairs, they are discovering that things like automated teller machines, vault doors, elevators, and air conditioning systems also have timers and computer chips that need to be checked.
"This is new to the whole world, and there is no doubt we're not smart enough to think of everything that could pop up," says Larry Betsinger, chief information officer for Princeton-based Summit Bancorp. . . .
The Tower Group, a Boston research company, says U.S. commercial banks have 9.3 billion lines of computer code to check and will spend $7.2 billion to examine and fix them.
Citicorp alone estimates that it will spend $600 million worldwide and Chase Manhattan Corp. pegs its year 2000 costs at $300 million.
Summit, the largest New Jersey-based bank, told shareholders through its annual report that it will spend $23 million to cure the millennium bug. Betsinger says much of Summit's data service is purchased from outside contractors, but the company still has 212 computer systems to worry about.
PNC's Strachan says the company has 50 million lines of computer code to examine, and has 150 people whose time is at least partly devoted to year 2000 work.
The Federal Reserve, which is crucial to the survival of the financial system, is spending $100 million to upgrade its computers.
Small and midsize banks tend to outsource their data processing, but they are still responsible for testing their contractors' year 2000 fixes and for repairing whatever internal systems they have. . . .
As they get further along, banks are also discovering that the problem doesn't stop at their doors.
Year 2000 preparation is now a condition for a commercial loan at most banks. Banks want to make sure they don't lend money to a company that will be paralyzed by computer problems and unable to make payments. . . .
So to hear bankers tell it, they will be more ready than anyone for 2000.
"Lately it seems like at least half of all the literature you read about banking is devoted to the year 2000 problem," Irwin says. "As an industry we are probably much more aware of it than the rest of the world."
But some banks are clearly behind the curve, and it's hard to generalize about which ones will have problems.
Smaller banks and thrifts are widely considered to be at a disadvantage because they don't have the resources or the access to skilled people that giant institutions do. But bigger banks have a bigger job, and they tend to do more of their data processing in-house.
A survey published last month by eBanker, a magazine published by Financial Times, found that the world's second-largest bank, Bank of Tokyo-Mitsubishi, started its year 2000 repairs in April 1997 -- 22 months after Chase undertook the task.
"The challenges at a big bank are so much greater and different than at a small bank," says Rosen, of Market Partners. "The big bank has thousands, if not millions, of lines of code. The small banks tend to outsource, although of course they cannot just rely on the vendor's testing."
Ed Yardeni, chief economist at the investment firm Deutsche Morgan Grenfell in New York, has been sounding the alarm about year 2000-related bank problems in an on-line newsletter.
He predicts that 5 percent to 20 percent of the nation's banks could fail because of the millennium bug. . . .
The Office of Thrift Supervision, which regulates savings-and-loans, plans to complete on-site inspections of 1,200 institutions by the end of next month. Of the first 199 thrifts inspected and rated by the OTS, 77 percent were deemed satisfactory, 22 were said to need improvement, and 2 percent were graded unsatisfactory.