The government and the banking industry are working to keep the Y2K computer bug from affecting bank customers. Here's an FDIC guide to what you need to know and do to be ready.
The scenario for the "Year 2000" situation may seem like something created by Hollywood. Computer experts warn that systems worldwide could go haywire when midnight strikes on January 1, 2000. The news touches off a global rescue effort—a race against the clock—to ensure that our most basic services, from water and electricity to medical care and banking, will continue with little or no interruption.
In the movies, the "good guys" usually have just seconds or minutes to solve the problem. But in the real-world story of the Year 2000 (also known as "Y2K" and the "millennium bug"), governments and businesses have spent considerable time in the past few years inspecting computer systems, fixing them and minimizing the potential for problems. The FDIC wants consumers to know about the Year 2000 situation and the extensive efforts of the government and the banking industry to address key concerns. We also want to help you protect yourself. That's why we are devoting this entire issue of FDIC Consumer News to the Year 2000 problem.
"First and foremost, the FDIC wants consumers to know that insured deposits are safe, and that deposit insurance will not be affected by the century date change," says Sandy Comenetz, the Y2K Project Manager for the FDIC's Legal Division in Washington. "We also want people to know as much as possible about the Year 2000 problem—to know what it is, and what it is not. That way people can separate accurate information from scare stories."
While there are no guarantees that a bank customer won't face difficulties caused by the Year 2000 problem—such as a temporary delay in service or an error on a bank statement—the FDIC and other regulators are committed to ensuring that institutions are taking steps to prevent most problems and minimize the rest. In fact, banks and other businesses deal with computer malfunctions all the time (not to mention the occasional flood, fire or other emergency) and, in general, customer service is rarely significantly disrupted or impaired. It's also customary for financial institutions to have contingency plans in place for these kinds of situations.
Why is the Year 2000 glitch happening? Experts trace the problem back to "tabulating equipment" that large businesses and government agencies relied on before electronic computers became common in the 1960s and 1970s. These tabulating machines read, sorted and tallied information entered on thousands or even millions of envelope-sized cards. But each card held only a small amount of information. Moreover, if any digit was mistyped, the whole card had to be redone. So, programmers began using abbreviations and codes to represent longer words, phrases or numbers. For example, typists recorded the year 1953 onto a card by punching holes for "53," and the tabulating machine was programmed to assume that those two digits signified 1953.
That same shorthand method continued in the computer era because of costs and storage problems associated with the limited computer memory available before the invention of computer chips. This two-digit arrangement for calendar years has worked fine . . . until now. Come January 1, 2000, if that date is simply recorded in a computer as 01-01-00, the "00" could be assumed by the computer to mean 1900, not 2000. That could lead to mix-ups and malfunctions unless computer systems are fixed to process dates correctly in the Year 2000.
We hope that after reading this special report you'll realize:
• The FDIC and other regulators are working hard to ensure that financial institutions are minimizing the potential for Y2K disruptions. The government is notifying institutions about what's expected of them regarding the Year 2000. In turn, the banking industry is taking aggressive steps to make sure their computer systems will function properly in the Year 2000. Federal and state bank regulators also are conducting on-site examinations of banks as well as data service providers and software vendors to determine if they are getting ready for the Year 2000.
• FDIC-insured deposits are completely safe. FDIC insurance is a constant, a given, a guarantee you can literally bank on. If a bank were to experience Y2K problems and, in the worst case, were unable to operate, the FDIC will be there to protect insured deposits, as it has been for all 65 years of the FDIC's existence. No depositor has ever lost a cent of insured funds at an FDIC-insured bank or savings institution.
• The FDIC wants you to be an informed consumer. In these pages we provide information, suggestions and lists of resources you can use to learn more about the Year 2000.
So, while the Year 2000 problem may seem like a Hollywood scenario, it needn't be scary or threatening for bank customers. Please keep reading our special Y2K report to find out why. <