FDIC may be setting bad example on year 2000, congressman says
Copyright c 1998 Nando.net
Copyright c 1998 The Associated Press
WASHINGTON (February 9, 1998 8:47 p.m. EST nando.net) -- When
it comes to fixing year 2000 computer problems, the FDIC may be setting
a bad example for the banks it oversees, the chairman of the House
Banking Committee said.
Rep. Jim Leach said Monday congressional auditors found the Federal
Deposit Insurance Corp. has not yet completed the assessment of its
computer systems that are critical to getting ready for the year 2000.
According to the FDIC's own standards for insured financial
institutions, Leach noted, such work was supposed to be finished by the
end of last September.
"It now appears that the FDIC may not itself have met the standards it
has set for financial institutions," Leach said in a letter to FDIC
Chairman Andrew Hove.
Leach, R-Iowa, asked the FDIC when it expects to complete the
assessment. He said the congressional auditors at the General Accounting
Office, supported by the banking committee, expect the agency to finish
all needed computer renovations by Aug. 31.
Asked about the letter, FDIC spokesman Phil Battey said the agency had
made significant progress.
Referring to critical computer systems, he said, "We have 40
mission-critical systems. We've assessed 34 of them. We have six to go."
The evaluation of those six will be finished by the end of March, Battey
added.
Sen. Robert Bennett, R-Utah, chairman of the Senate Banking subcommittee
on financial services and technology, has scheduled a hearing Tuesday on
the auditors' findings regarding the FDIC's readiness.
An earlier GAO review of another financial regulatory agency, the
National Credit Union Administration, found that its year 2000 progress
was unsatisfactory and that some credit unions it regulates could fail
as a result if corrections aren't made in time.
The financial industry is especially vulnerable to year 2000 glitches,
and some experts are concerned that consumers could lose faith in the
security of their banks, other financial institutions and the stock
markets.
"The FDIC's ability to address the year 2000 problem in a timely manner
is critical not only to assure public confidence in the nation's
financial system, but to ensure that U.S. financial institutions remain
viable domestically and competitive internationally as we enter the next
century," Leach wrote Hove.
On Thursday, the banking committee voted to give federal regulators of
thrifts and credit unions new authority to monitor the companies that
sell services to those institutions to make them ready for the year
2000. Supporters of the bill said it would put the S&L and credit-union
regulators on an equal footing with the FDIC and other bank regulatory
agencies such as the Federal Reserve and the Comptroller of the
Currency.
When the forerunners of today's massive computer programs were first
designed, storage space was at a premium. To save memory space on the
old-fashioned mainframes, code writers simply omitted the first two
numbers of a date. That means 1998, for example, would read as 98, 1999
as 99, and so on. The year 2000 would be read as 00.
Since the systems are coded to assume that all years begin with 19,
computers will interpret 00 to mean 1900, if changes are not made.
By MARCY GORDON, AP Business Writer |
