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The Federal Reserve wants banks to begin testing their connections with the FED on June 29.
Keep this date in mind. Let's all look for press releases saying that everything is going smoothly.
The FED says that the main testing period will be the first half of 1999. This conforms to the universal form letter that promises the completion of code repair by December 31, 1998.
Put that date on your calendar. Sometime in January, 1999, write to every firm you do business with and ask if it has begun testing. Remind them all of their promise to finish code repairs in December, 1998. Write to all of them now to see how many give you that time schedule. Most of them will.
When, in June of 1999, hardly any bank (maybe no bank) has announced compliance, the worldwide banking panic will begin. Everyone's promise to finish repairs and test for a year will be torpedoed by the mid-1999 failure of the banks to get compliant.
It's interesting that third-party providers of banking software, such as
EDS, are themselves not compliant. But this is rarely discussed by reporters.
This is a Reuters story posted on C/NET (May 8).
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May 8, 1998, 9:10 a.m. PT
NEW YORK--The Federal Reserve will start testing banks for compliance with the Year 2000 problem on June 29, a top Fed official said.
"We continue to be on schedule to begin testing with the banks that use our services," Carl Gambs, the Federal Reserve System's Century Date Change project leader, told Reuters in an interview. "We expect to start testing on June 29, so banks can check their software that connects with us. That's the biggest thing that we're working on right now," he added. . . .
Gambs said the Fed expects the testing phase to last through late-1999, but added that most of the activity will be concentrated in the first half of next year. If true, that would give most banks some six months to operate with the patched systems and flush out eventual incompatibilities that may arise.
"We'll probably continue testing with banks until the latter part of 1999 because...if they find problems we'll have to redo it," Gambs said. "I would anticipate, however, the testing being extremely heavy until mid-1999 and probably a limited amount of testing after that," he added.
Fed applications to be tested as of June 29 include:
The Fed Wire: a network used for final settlements of large transactions between major financial institutions. The network handles an average of $1 trillion a day.
The Automated Clearing House: a nationwide electronic fund transfer system developed jointly by the private sector and the Fed in the early 1970s.
Federal Reserve accounting
Cash management
Check processing. . . .
Major U.S. banking service providers include NCR, Electronic Data Systems (EDS), Alltel, and Fiserv. But like everything else in the computer world, just when you think you've fixed something, another problem emerges.
The Fed regulator said the main concern now is centered on telecommunications and electrical utilities, two sectors that, if not Year 2000 compliant, could indirectly create major disruptions in banking and financial systems.
"Right now, what we're getting from the telecom firms is basically this: 'Trust us. We'll take care of the problem'," the Fed source said. "Well, that's nice, but we want to know exactly how they are doing this. We need more information."
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