As the emergency preparedness coordinator for my ward in the LDS Church and as a computer professional, I am following the Y2K issues with great interest. I am afraid that your article in the March 3 edition on Utah banks and Y2K falls a bit short of accurate and in-depth reporting. And it fails to critically question the statements behind the PR being issued by our banks.
The threats I see to the banking system are:
Bank runs caused by fearful depositors withdrawing cash beyond the banks' reserves. If the information from recent polls is correct, the Federal Reserve and the banking system will be about $200 billion short of cash demand.
External computer systems necessary to transfer money from one bank to another may not be compliant. If this occurs, the banks will not be able to move money electronically. This could freeze many payment transactions between one bank and another, between banks and the Federal Reserve or between banks and other businesses.
Noncompliant foreign banks may cause transactions to freeze or miscalculations in account balances/transaction/payments.
Noncompliance in other economic sectors where banks have lent money may cause large loan defaults. If Y2K failures cause industrial plants to shut down because they aren't able to run their computers or because they aren't able to get the materials and parts they need because some other company's computers don't work or because they can't get the energy they need to run the plant because of a Y2K induced oil shortage, they will default on their debt. They will also lay off their workers, who will also default on their debts.
Derivative exposure. Investments in derivatives could easily evaporate from either actual industry failures or investor panic.
It would require a psychotic banker to publicly admit that our banking system is threatened by Y2K. That would cause the bank to fail, perhaps a bit prematurely. Nevertheless, the banks are threatened, as is almost every other part of our worldwide economy. The Deseret News should report accurately and honestly, in the spirit of professional journalism. Dig beneath the surface and find the real story on Y2K.
Tad B. Wimmer
Bountiful