The Federal Reserve Board may be stockpiling cash, but the nation's top banks claim they aren't going to need it.
The United States' central bank said this week that it had asked the Treasury Department to print an extra US$50 billion in currency as a hedge against possible panic withdrawals by consumers fearing the Year 2000 bug. But the commercial banks insist that consumers have nothing to fear, and that they are farther along in fixing the millennium bug than many other industries.
"In reality the ATMs are not going to crash," said Lisa Selkin-Lupo, vice president of corporate communications for Chase Manhattan Corp., the nation's second-largest bank with $30 billion in revenues.
"People will be able to get cash."
Bank of America, like most of the largest banks, has made Y2K a top technology priority, said Bob Wynne, vice president of public relations for the company. Bank of America is the nation's third-largest bank with $23 billion in annual revenues.
The company began to assess the problem in 1994, and formed a Year 2000 project office in 1996. Before the dust settles, company officials expect to spend $380 million on Y2K fixes. Most of that money will bankroll a squadron of 1,000 full-time employees working on Y2K, most of whom are busy identifying, correcting, and testing instances where dates may not process correctly.
The effort is enormous. All told, Bank of America programmers will check 90,000 desktop personal computers, and rewrite 200 million lines of code from nearly 300 different software packages, said Wynne.
What's more, to keep those programmers happy, bank officials said they are handing the coders bonuses worth $50,000 to $75,000. Given the amount of resources being marshaled for the problem, it's not surprising that all of the top banks say they expect to be Y2K compliant by the end of this year.
Nevertheless, there is at least a glimmer of consumer worry. Both consumers and small businesses are seeking assurances that their money is in safe hands. Wells Fargo said it has been fielding 200 to 300 calls a month on Y2K.
First Union Corp., the nation's sixth-largest bank, has set up a Y2K hotline.
The bank, based in Charlotte, North Carolina, promises to respond to voicemail messages left on the hotline within five to seven business days. To raise consumer awareness and alleviate consumer fears, many banks have also set up Y2K areas on their Web sites. Links to these sections are prominent on many banks' homepages.
"It's a little bit off people's radar screen, but people are becoming more aware of it as an issue," said Wynne. "We're trying to educate our customers so that they don't take out three months of cash and stick it in the cookie jar."
In the next six months, as the millennium draws closer, many banks are planning to launch more extensive marketing campaigns designed to inform consumers of their progress in eradicating the bug.
Even so, some banking experts fear that despite all the industry's efforts, some complications are inevitable.
For instance, Dennis Grabow, a former investment banker who advises businesses on the financial implications of the Year 2000 problem, said a credit crunch may arise due to the high number of potential bankruptcies from Y2K. When considering a loan application, banks already review a company's Y2K strategy.
"I could see a case where creditors won't extend a line of credit because of Y2K," said Wynne.
