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Technology Stocks : Discuss Year 2000 Issues -- Ignore unavailable to you. Want to Upgrade?

To: Ken who wrote (6430)	7/10/1999 12:35:00 AM
From: B.K.Myers	Respond to of 9818

Ken, What is your opinion regarding, perhaps, the most serious potential disruptive problem of the banking industry, the 'cascading cross-fault' senarios? In general, banks are very protective when it comes to allowing updates to their databases. Data is usually run through a front-end edit process before it is allow into their systems. These front-end processes should prevent any “bad data” from cascading throughout the entire banking system. Therefore I don't believe that there will be a serious cascading effect. Obviously, the banks that are the original source of the bad data might experience serious problems, depending on the cause of the bad data. If the problem bank's database has become corrupted, then the bank is in serious trouble. But if the problem is cause by the program(s) that create or send the bad data, it can be easily and quickly fixed. I think that the most likely serious problem that the banking industry is going to face will come from their customers that fail as a result of Y2K. As failing companies start withdrawing funds for current financing and start defaulting on their loans, banks could face a liquidity problem. As former employees of the failing companies start withdrawing their funds and start defaulting on their loans, the problem could quickly grow out of control. I don't know how the banking system will handle this crisis. We could see a rash of bank failures, which will only add fuel to the fire. I don't see any valid reason for withdrawing large amounts of money from the banking system because of Y2K fears. I believe that most people should only withdrawal enough cash to pay for 2 - 10 weeks of necessities. Of course it depends on the individual's situation. Bill Gates may not need much on-hand cash to survive Y2K, but a cab driver might want to withdraw most of their funds in order to survive Y2K disruptions. I am also a believer in diversifying, especially during risky and uncertain times. Don't put all of your funds in one financial institution or instrument. Because we don't know which institutions are likely to fail, it is best to spread your risk among different institutions. B.K.