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Summary and Comments

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Category: 

Banking

Date: 

1998-06-12 10:25:11

Subject: 

Banks Are Prohibited from Revealing Much

  Link:

http://www.FFIEC.gov/y2k/custpro.htm

Comment: 

So, you think you aren't getting a straight story from your local bank. Well, there are reasons. One, the bank doesn't know what its programmers are doing. Two, the bank knows, and is afraid to say. Three, the bank is afraid of violating a Federal Finamcial Institutions Examination Council (FFIEC) rule.

On the other hand, the FFIEC tells banks they must inform their customers.

Here is a perfect example of a bureaucratic box. Bureaucratic boxes are designed to protect bureaucrats. Here is how the system works. If the FFIEC tells banks to tell the truth to customers, some noncompliant software vendor might sue the bank for revealing secrets that the vendor reveraled only under the pressure of the FFIEC. The bank would them blame the FFIEC. Oh, no, it won't! On the other hand, some customer might sue the bank in 2000 for failing to disclose information about y2k. The bank would then blame the FFIEC. Oh, no, it won't! The FFIEC has created a document that protects the FFIEC and places the managers of every bank at risk.

In short, "Damned if you do [see paragraph 24(a)(4)]; damned if you don't [see paragraph 37(b)(3)]."

Bureaucratic boxes produce paralysis. Paralysis is bad enough with y2k. Boxes make it worse.

This is from a May 13 FFIEC bulletin.

* * * * * * * * * * * *

Depository institutions are reminded that they may not disclose publicly the contents of federal supervisory agency examination reports or reviews of the institution or any service provider or software vendor, including the confidential Year 2000 summary ratings contained therein. Thus, in designing their Year 2000 public awareness plans and efforts, institutions should be careful not to violate this prohibition. Moreover, they should avoid any statements that indicate or imply that the institution's readiness has been approved or certified by a supervising agency with regard to its Year 2000 plan.

Conclusion

Financial institutions should develop a pragmatic strategy for responding to customer inquiries about their institution's Year 2000 readiness. The guidance in this interagency statement is designed to assist financial institutions in developing their programs. Each institution may choose to tailor its customer awareness program based on its own business environment, but ultimately, it is essential that each institution develop a program to address customer questions and concerns about the status of Year 2000 readiness.

Link: 

http://www.FFIEC.gov/y2k/custpro.htm

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