Questions and Answers on the Year 2000 Problem

How widespread is the Year 2000 problem in the banking industry?

Any person or organization that uses computerized systems or equipment can be affected by the Year 2000 date change. But banks and savings institutions are among those companies that can be especially affected by the problem. Why? Because so many of the transactions they handle involve date-sensitive information, such as the dates when deposits or payments are made, which in turn affects account balances and interest calculations. That’s why the financial services industry is taking aggressive steps to make sure its computer systems will process transactions properly in the Year 2000.

What is my FDIC-insured bank or savings institution doing to make sure that its systems will work correctly?

From the smallest to the largest, FDIC-insured institutions are checking and fixing their computer systems to make sure they will operate smoothly in the Year 2000. Banks and savings institutions are required by federal regulators to have plans in place to get their systems Y2K-ready. Each institution’s readiness plan is different because it must be tailored to its own situation. Even so, these plans must be detailed roadmaps that set out specific dates by which required steps must be taken. Banks and savings institutions are expected to have these crucial steps completed well before theYear 2000.

All FDIC-insured institutions are testing whether fixes to their computer systems were done correctly by simulating transactions that use dates after January 1, 2000. Photo: Larry Williams/St. Louis Post-Dispatch

Who’s checking to make sure my bank or savings institution is doing what it needs to do?

The FDIC and other federal and state regulators are closely monitoring the progress of banks and savings institutions in completing the critical steps required by their Year 2000 plans. Examiners from the banking agencies have conducted special Year 2000 assessments of every FDIC-insured institution in the country. Federal and state banking regulators also will be conducting follow-up assessments through the Year 2000 to make sure that insured institutions follow through on their Y2K plans. Thus far, the vast majority of FDIC-insured banks and savings institutions are meeting the regulators’ expectations.

Is there anything I can do to tell if my institution has taken steps to get ready for the Year 2000 date change?

First, read everything your insured bank or savings institution gives you regarding the Year 2000 and its efforts to be Y2K-ready. “Many institutions expect that their customers will have questions, so they’ve prepared statement-stuffers, brochures and articles for customer newsletters that describe their Year 2000 readiness efforts,” says Edward Silberhorn, a Consumer Affairs Specialist with the FDIC’s Division of Complianceand Consumer Affairs in Washington. Another possible source of Y2K information is the institution’s Internet site. Institutions also are holding Year 2000 seminars to provide information to customers and answer questions. If you call or visit your bank and ask about its plans to get ready for the Year 2000 date change, talk to an employee who is knowledgeable about the institution’s Y2K program.

How could a Y2K problem affect my banking routine?

Your daily banking routine generally should not be affected. Despite the banking industry’s best efforts, however, some customers could encounter disruptions in service or other problems. To make sure that banks and savings institutions are ready to deal with problems quickly and effectively, all FDIC-insured institutions are required to establish plans that will provide for alternative methods of doing business, if needed.

What action would bank regulators take if my financial institution isn’t fixing its computer systems in time?

The FDIC and other federal and state banking regulators are closely monitoring the progress of all FDIC-insured institutions to make sure that they address the Year 2000 problem. If a regulator determines that an insured bank or savings institution is not taking appropriate and timely action, the regulator has the authority to impose penalties that range from mild to severe, depending on the nature of the problem. These actions generally would not adversely affect bank customers.

If my institution were to fail because of the Year 2000, will my insured deposits be safe?

Definitely! The Year 2000 date change will not affect your $100,000 deposit insurance coverage. No bank customer has lost a penny of insured deposits since the FDIC was created in 1933. “There’s no safer place to keep your money than in a deposit account at a federally insured institution, both in this century and the next,” says Kathleen Nagle, a Senior Consumer Affairs Specialist with the FDIC. The FDIC’s deposit insurance guarantee is backed by the full faith and credit of the United States government.

How will I know if my account balances are correct after January 1, 2000?

The best way to verify the accuracy of the transactions posted to your account is to review your bank statement. To do that, you need to have complete and accurate records of all your account transactions—a prudent practice under any circumstances. As noted in our Y2K to-do list, we suggest you keep copies of your deposit slips, ATM receipts, bank statements and other records of your transactions, especially those for the last six months of 1999 and the first few months of 2000. Compare your records against what’s shown on your statement. If you find a discrepancy, contact your institution to resolve any error. When it comes to double-checking the amount of interest credited to your account, trying to do the calculations yourself can be complicated. Instead, you might want to simply compare the interest shown on your current monthly statement with the amounts found on some earlier statements. If the amount doesn’t look right, contact your bank or savings institution for help in checking the calculation. Also be aware that institutions are required to keep back-up records for account transactions so they can recover this information in case of an emergency. These back-up records could be used to identify and correct errors that might affect your deposit, loan or other account due to a Year 2000 computer problem.

Got more questions? Consider getting answers from the federal regulators and other sources. Note: Federally insured credit unions are subject to similar oversight and insurance rules as those described here for banks.