Crisis pro contests banks' Y2K preparedness policy

WILLIAMSBURG, VA: Banking regulators are committing a PR blunder by refusing to make public their examinations of bank Y2K readiness, according to one crisis counselor.

WILLIAMSBURG, VA: Banking regulators are committing a PR blunder by refusing to make public their examinations of bank Y2K readiness, according to one crisis counselor.

Richard Torrenzano, chairman and CEO of NY-based The Torrenzano Group, took bank regulators to task in a speech at the Conference of State Bank Supervisors' annual meeting last month. He chided bank regulators for not alerting customers and shareholders to banks that are non-Y2K compliant, and called for the FDIC to issue a 'Seal of Approval' to banks rated 'satisfactory' on their Y2K preparations.

'Only 3.2% of the more than 10,000 insured banks were rated 'needs improvement' or 'unsatisfactory,' ' said Torrenzano. 'And that's great - unless your money is in a bank that falls in that 3.2%.' Torrenzano also cited a recent survey by Wirthlin Worldwide that found public skepticism on the Y2K readiness of banks to back up his point.

An FDIC spokesperson, however, said Torrenzano was making much ado about nothing. Spokesman David Barr said the reason the FDIC has not released the results of its Y2K examinations is because the information is part of larger 'Safety and Soundness' exams, the results of which are not available to the public.

Every year since its founding in 1935, the FDIC has gone over banks' books and given them a rating from one to five, with five being the worst.

The results of the safety and soundness exams are available only to banks and bank regulators. If this information got out to consumers, it could 'cause a run on banks,' according to Barr.

As for the Y2K readiness of most banks, Barr said the industry is nearing 100% compliance. Since the original exams were done in March, the number of banks rated 'less than satisfactory' has been cut in half?from 337 to 172?out of 10,400 FDIC-insured institutions. 'That's a 99% chance that your institution is satisfactory,' noted Barr. 'And even if you're in the minority, we're not anticipating widespread problems?just a glitch or two.'

Torrenzano challenged the regulators to take a leadership role in communicating the Y2K message, but Barr said the onus is upon the banks themselves.

'We don't care how they notify their customers. We just want to see that they have a game plan in place.'

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