Banks Lag In Preparing For Year 2000

Many small banks just raising awareness of problem; big banks doing better

By Bruce Caldwell

mall banks are lagging far behind the goals set by federal regulators for fixing the industry's year 2000 date-field problem, according to a survey conducted by the American Bankers Association.

Federal regulators had set a Sept. 30 goal for banks to complete assessments of their year 2000 problems. But of 153 banks surveyed during an ABA teleconference last week, 17% said they were still raising awareness of the problem-the initial, pre-assessment stage of a year 2000 effort. That "implies a significant portion are behind t he curve, and that is of great concern to us," says Howard Amer, assistant director of the division of banking supervision and regulation at the Board of Governors of the Federal Reserve System. Another 63% categorized themselves in the assessment stage. Only 20% have started implementation.

The ABA, an industry association in Washington, says most survey respondents were community banks-most of which rely on third parties for software and IT services. "Large banks are much further along in preparation," says Amer. But among the nation's smallest banks "there's a presumption that they're not affected because some are totally dependent upon third-party providers for processing, and incorrectly assume they will be taken care of."

Amer warns that if banks fail to prepare for the year 2000, federal regulators may issue statements identifying laggards. He thinks that threat, along with internal and external audits, will help bring banks into line.

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