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Feds say banks Y2K ready

February 17, 1999|By LAURA ERNDE

ANNAPOLIS - Maryland banks will be ready for the millennium computer bug, federal regulators told lawmakers Tuesday.

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Now, bankers must convince customers that their money will be safe with them come Jan. 1, 2000.

Only 16 of the country's 10,400 banks have not satisfactorily met the Federal Deposit Insurance Corp.'s standards for Year 2000 readiness, the FDIC's John F. Carter told the Senate Finance Committee on Tuesday.

None of those tardy banks are in the region that includes Maryland and Pennsylvania, Carter said.

Meanwhile, a group of Washington County banks is working on a plan to educate customers about the Y2K problem, Hagerstown Trust spokesman David Barnhart said in a telephone interview.

Hagerstown Trust has put 1,600 hours into fixing computers to make them Y2K compliant.

To save space and money in the early days of computer programming, programmers represented years in code with two digits instead of four. As a result, when the date changes to 2000, many fear computers will read the date designation 00 as 1900.

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"We're doing everything possible to make sure it's business as usual come Jan. 1, 2000," Barnhart said.

Hagerstown Trust and other banks are preparing for the likelihood that some customers will take out extra cash at the end of the year as a precaution.

But they want to get out the message to customers that money in the bank is insured by the FDIC against loss.

"When it stays in the bank, their money is insured. When they take it home, it's not," Barnhart said.

John B. Bowers, executive vice president of the Maryland Bankers Association, said the banking industry is more prepared than most other industries.

However, banks are still dependent on the electric and telecommunications industries.

"There is risk in the world. There will always be risk," Bowers said.

Later this year, the FDIC will tell banks how much reserve cash they should keep on hand for the end of the year, Carter said.

"We hope the public does not overreact and does not draw funds needlessly," he said.

Representatives of Maryland's 128 federal credit unions also reassured the Finance Committee on Tuesday about steps that group was taking to prepare for Y2K.

Every credit union must file quarterly reports with state or federal regulators, said James Brown of the Maryland Credit Union League.

The 10 data processing companies that handle 55 percent of credit union transactions have been given satisfactory ratings by the National Credit Union Association, he said.

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