Jim Leach (R-Iowa) held hearings on y2k on November 4. His opening statement sounded the alarm.
What he says about Alan Greenspan is crucial. Greenspan says that 100% compliance is mandatory for the banking system. But if it's mandatory for the US banking system, it's mandatory for the world's banking system. They're all tied together in a web of debt.
There is not a shred of evidence that foreign banks are anything but behind the English-speaking countries, and the latter are way behind.
(I met Cong. Leach once, when he and his staff were coming into Cong. Ron Paul's about-to-be-vacated office in January, 1977, and I was the "last man" on desk duty. If Cong. Paul had not been defeated by 286 votes out of 183,000 in 1976, he might be chairman of the Banking Committee today. I wonder where I would be.)
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Although few now recognize it, the nation stands on the threshold of one of the most challenging technical problems the banking and financial services industry has ever faced – the so-called "Year 2000 Problem."
Computer logic is simply unprepared to deal with a steadily ticking logic bomb.
When the clock strikes midnight on December 31, 1999, many computers could malfunction or even shut down. At financial institutions, it could mean errors in checking account transactions, interest calculations, or payment schedules. It could mean problems with ATM systems or credit and debit cards. It could affect bank recordkeeping, investments, currency transfers, and legal liability. It might interfere with payment systems, both here and abroad, and affect EFT transfers for payroll or pension recipients. It takes little imagination to picture the ricochet effects that malfunctioning computer systems could have on important bank operations.
. . . . The problem, while not a virus, can act as what some have called a logic bomb which can effectively infect interrelated computer systems. As a result, millions of lines of computer code at banks across the nation need to be checked, and thousands of computer programs converted or replaced. Further, the problem isn’t confined to computer systems. Everything that has a computer chip in it may be vulnerable – the time lock on a bank vault, the telecommunications system by which data is exchanged, and the computer-controlled elevator in a bank office building. Virtually every institution appears likely to be affected in some way, and costs may be significant. For example, Chase Manhattan has publicly estimated its Year 2000 remediation costs to be in the range of $200 - $250 million. A consultant to the industry, the Tower Group, has estimated the total cost of Year 2000 conversion for US commercial banks at around $7.2 billion.
Experts also emphasize that the problem must be fixed properly and on time if Year 2000 related problems are to be avoided. I was intrigued by a statement Federal Reserve Chairman Alan Greenspan made a couple of weeks ago. He pointed out that 99 percent readiness for the Year 2000 will not be enough. It must be 100 percent. Thus, the message seems clear: all financial institutions must be ready; federal and state regulatory agencies must be ready; data processing service providers and other bank vendors must be ready; bank customers and borrowers must be ready; and international counterparties must be ready.
Unfortunately, the fact that success or failure in meeting the Year 2000 challenge won’t be evident until just over two years from now has led some to ignore or downplay its importance.