Since you love to post perhaps you will read this,and comment on Mr.Kissinger's position.
This appears to be the first story in a major world publication
admitting that this Y2k thing is serious.
Much more of this sort of reporting and we won't have to wait until,
when's it, August/September, for the runs on the banks to start in
earnest.
From Times News Service, London
FEATURE: (BUSINESS) HEADACHES STARTS AS BUG BEARS DOWN ON THE BANKS
The year 2000 looms and all is not well, says Caroline Merrell 1,150
words
WILL THE dawning of the year 2000 bring financial chaos?
This week the man who should know raised just that spectre. Banking
industry regulators do not go in for scare-mongering. But with a few
carefully chosen words, Michael Foot has sent shock waves reverberating
round the City of London and sent savers scurrying for safety.
The quiet, bespectacled man from Britain¹s Financial Services Authority
admitted that 12 large financial institutions are so far behind with
their preparations to cope with the millennium bug that they could pose
a serious risk to their customers and the markets.
He is so worried by their potential to do damage that he is threatening
to close them down.
This grim warning is the first real admission from the City of the
potential horrors that lie in store when the year changes. Until now,
the Bank of England has insisted that Britain¹s financial institutions
were coping with the bug. That is what the institutions themselves
maintained.
Now it is clear that the truth is very different. And so intertwined are
the various financial institutions that if one fails, the entire system
may be put at risk.
³The financial industry is like a house of cards,² shuddered one insider
yesterday (Friday). ³If one business founders, the others feel it.²
Suddenly, those individuals who have insisted that they will be
withdrawing all their cash from the bank before the end of the year do
not seem quite so misguided. The prospect of the millennium bug eating
your savings may be more than just the nightmare of overactive
imaginations.
At a high-powered millennium meeting in Washington recently, delegates
were stunned to hear Henry Kissinger announce that he intended to
withdraw all his money from the bank as 2000 nears.
Mr Foot¹s statement this week has fuelled fears that lesser mortals will
follow the former United States Secretary of State¹s lead, precipitating
a dangerous run on the banks.
There are fears that computer breakdown will wipe out details of
people¹s investments, transfer sums to the wrong accounts and generally
put the finances of individuals and corporations in jeopardy.
The FSA is insistent that companies must have full back-up systems in
case of a massive computer breakdown and it is by no means confident
that all yet do. It was inevitable that a few small businesses would
fail to prepare adequately for the arrival of the new millennium.
But Mr Foot was not talking about small businesses. What was so stunning
about his revelations was that they related to 12 of the most important
160 businesses in the financial services sector.
These, on the regulator¹s own definition, are ³high-impact² companies,
banks and insurers whose failure to be bug-proof would have serious
consequences not just for customers but for the entire financial
markets. Yet we are left to guess the identity of the dirty dozen.
Mr Foot dare not name and shame them for fear of legal action. His
secrecy led to frantic speculation in the City as bankers tried to
identify the culprits. There were equally frantic efforts to insist that
they were not the guilty ones. The favourite line from many British
banks was that all the 12 offenders are foreign-owned.
That, says the Financial Services Authority, is certainly not the case.
At Action 2000, the Government¹s anti-bug unit, the director-general,
Gwynneth Flower, is trying to play down fears of financial disaster.
The former army major proclaimed: ³If I have confidence in any sector in
Britain it is the banking sector. But it would be foolish to say that
everything in the garden is rosy.² She believes that the financial
services industry has spent more time and effort dealing with the bug
than any other industry and that Britain is ahead of any other country
in seeking to cope with the problem.
Robin Guenier, the man whom the last Government first asked to help the
country to cope with the bug, is less sanguine than Ms Flower. He was
widely derided as the Cassandra of the millennium because of the
dreadful picture he painted of national chaos. Now his predictions are
coming dangerously close to being borne out.
He says: ³If the financial services industry is leading Britain, then
that does not say much for the rest. And if Britain is leading the
world, then heaven help us.²
The international nature of the financial services industry does
exaggerate the risks it faces for much of the rest of the world
certainly has lagged behind the UK in year 2000 preparations.
Abbey National, for instance, confident that its own systems are
compliant, has a small operation in France which was recently checked
for compliance under the French Government¹s criteria.
It was, said the Abbey, ³one of the few businesses to meet the
deadline².
There is widespread scepticism in the City about the ability of many
European institutions to address the problem adequately. The potential
computer problems have been compounded for the financial services
industry by the introduction of the euro. Many were deflected from the
year 2000 issue as they struggled to prepare for the new currency. Now
that they need to finish preparing for the end of the millennium, they
cannot find the people to do the job.
Mike Hudgell, marketing director of Gresham Computing, which specialises
in testing IT systems, says: ³A lot of firms have left it too late to do
their year 2000 work. They know what needs to be done but simply do not
have enough time to do it and test that it will work. Almost every major
IT project ends up being delivered late. This is the one that cannot
be.²
Robin Guenier believes that the first casualties could begin to appear
very soon. As many financial companies operate an accounting year that
runs from April to March, their software will soon be covering the
period to March 31, 2000, triggering the bug¹s early appearance.
Mr Guenier does not sound like a scaremonger to Nick Bottomley, of the
Swiss banking software group Fin¹Objects. ³I have never heard of a firm
that has admitted it has a year 2000 problem yet everyone in the City
has it and, up till now, they have been hiding it,² he says.
He argues that companies have tried to take shortcuts and the results
could be disastrous.
Commerzbank, one of Fin¹Objects¹s clients, was forced to ditch virtually
all its computers and start again with a new system to cope with the
euro and year 2000.
Mr Bottomley fears that the 12 companies that feature on Mr Foot¹s list
are only the most visible offenders
³The others, who have been hiding their problems, will be found out
later,² he says. That is why he will be removing all the cash from his
bank accounts before the century ends.
COPYRIGHT - THE TIMES, LONDON //copyright 1999 Times Newspapers |
