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

To: flatsville who wrote (2598)	9/22/1998 9:16:00 AM
From: Joseph E. McIsaac	Read Replies (2) \| Respond to of 9818

My understanding from the Credit Union Times article was that the gag order was to prevent banks from using the ratings to lure customers away from other banks (marketing ploy.) Yes, this is an example of the type of misuse that would occur if the gag order were not in place. In regards to bank customers, I am frequently asked about how to deal with banks on Y2K as a bank customer. Here's what I typically proscribe: You cannot determine the status of the institution by speculating nor by simply reading the (soon to be omnipresent) bank readiness statements/advertisements. At some point next year (between March and June, I would say), you should ask the bank to prove their readiness to you. There will be banks that can speak to their efforts on this problem fluently. If you aren't comfortable with the answer, then find a bank that makes you comfortable. If you can't find any banks that make you comfortable, take your money out and put it somewhere, or into something, that works for you. I know from first-hand experience that many banks are working hard on this issue. FWIW, the Federal Reserve will have $200b in cash available and widely dispersed, so up to 100 million families can each take out $2,000 in cash. Assuming I want to keep some money in an account where do I go for independent info on the y2k health of my institution? Standards & Poor is just now beginning to rate companies (including banks) on their Year 2000 readiness. I don't know how they will do it, only that they are starting soon. SEC 10Q requirements for Y2K disclosure is becoming very demanding. That information is publicly available. I think there will be other public disclosure forums emerging as we go. Will any of the rating info ever become public? The regulators did release the summary results of their 1st round of examinations. I do not believe, however, that the status of individual institutions will ever be released. I do know that some banks that got a "satisfactory" status on the round I exam got "unsatisfactory" on the round II, testing & contingency planning exam. Of course these were not customers of my firm! :-) What would be the critical disciplinary action/measures to look for? Would the disciplinary action be published somewhere? The Federal Register? Aside from a few banks used to make a point about the seriousness of the regulators, I believe that forced transfers of assets based on Y2K readiness will simply show up as more consolidation within the industry. Press release: "Bank x to merge with bank y, forming bank xy" kinda stuff. Rumors will fly, but I don't think that we'll see the regulators cataloging their Y2K corrective activities. Round II exams are to be completed for all institutions by the end of March. Look for merger activity to pick up in June of 1999, IMHO. This is pure speculation on my part, and is not based on any first-hand knowledge of what regulators plan to do.