The NORTHWESTERN FINANCIAL REVIEW (June 7) reported on the woeful state of medium size U.S. banks.
* * * * * * * * *
In a recent CEO survey of community banks with assets between $50 million and $1 billion by Alex Sheshunoff Management Services, 33 percent responded that they are ``not at all prepared'' for the technological implications of the Year 2000.
The rest of the story is that most do not yet have a documented plan (88 percent) or a budget (95 percent) for dealing with the issue, even though it will touch almost everything they do, from time-stamping deposits to calculating interest to monitoring credit risk, not to mention security and environmental systems. . . .
Other results of the survey confirm that banks aren't very far along on their Year 2000 planning. Eighty-eight percent say their current plan isn't adequate and the same number don't know if their liability coverage would apply to actions stemming from alleged negligence in complying with Year 2000.
Half of the respondents project the cost of compliance at between $10,000 and $50,000. But Johnson is skeptical about these estimates because most were provided by individuals who don't yet have a full understanding of the scope of the problem. ``The real story, in our opinion, is that most of the institutions that responded are dramatically underestimating the true cost.''