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. Last Updated: 07/27/2016

Banks Brace for 2000 With Fail-Safe Ploys




LOS ANGELES -- After spending $10 billion to ensure that New Year's Eve will be a nonevent for their computer systems, U.S. banks are nevertheless embarking on the most exhaustive and, in many ways, imaginative disaster-preparedness effort in their history.


San Francisco-based Wells Fargo Bank stands ready to deploy a small fleet of mobile automated teller machines f housed in specially fitted vans f in the event they are needed.


U.S. Bancorp plans to switch its Minneapolis headquarters to backup power generators two hours before midnight, just in case electricity lines go down.


Even midsize Newport Beach, California-based Downey Financial Corp. has two standby helicopters ready to ferry people and supplies wherever needed.


"The process we are going through is similar to what we do to prepare for an earthquake or hurricane," said John Conover, who is heading Bank of America's Y2K preparations. "But here we have the advantage of knowing exactly when the event is going to happen, so we can prepare more."


Banks remain highly confident that their systems are Y2K-ready and that none of these contingency plans will be needed. They say the precautions are designed to comfort customers, not alarm them. And in many cases, federal regulators require the meticulous preparations.


Bankers predict this unprecedented behind-the-scenes campaign will culminate in the dullest, most anticlimactic New Year's Eve they've ever celebrated.


"We think it's going to be a yawner," said Lee Kirkpatrick, senior vice president at Union Bank of California and one of many bank executives who will be working when midnight strikes. "We've spent $50 million to make sure that it's going to be business as usual that weekend. But we realize that everybody's eyes are going to be on us. So we want to make sure we are ready for anything."


The American Bankers Association estimates that the entire industry will spend about $10 billion to get ready for 2000, mostly on updating, replacing and testing computer systems to ensure they don't fail after the date change.


The work has paid off, according to the Federal Deposit Insurance Corp., which says 99.9 percent of federally insured institutions are ready for Y2K.


But as Dec. 31 nears, banks are turning their attention to making sure they survive the tension-filled weekend without a hitch.


"We are extremely prepared, but there is still a tremendous amount of pressure," said Liane Wilson, vice chair of corporate technology at Seattle-based Washington Mutual, the largest U.S. thrift.


Banks have spent months f in some cases years f writing and rewriting contingency plans, trying to anticipate every conceivable disruption. They've made sure that branches are well-stocked with cash in case customers demand it, though officials say they have not noticed any unusual withdrawal activity.


Once the weekend arrives, most of the workers will be testing and monitoring computer systems. In addition to possible Y2K glitches, banks are mindful of the fact that Dec. 31 is already one of the busiest nights of the year for bank computer processing because the systems must conduct additional calculations of year-end statistics for such things as accrued interest and average balances.


"First, the computers have do the daily processing, then the weekly, then the monthly and quarterly," Wilson said. "But we've already simulated this with the computers, and there were no problems."


The volume of transactions also is expected to be higher than normal at the end of the year as customers withdraw extra cash for the holiday weekend, or out of concern for Y2K problems.