United States General Accounting Office

GAO Testimony

Before the Committee on Banking and Financial Services,

House of Representatives

For Release on Delivery

Expected at

10 a.m.

Thursday,

September 17, 1998

YEAR 2000 COMPUTING

CRISIS

Federal Depository

Institution Regulators Are

Making Progress, But

Challenges Remain

Statement of Jack L. Brock, Jr.,

Director, Governmentwide and Defense Information

Systems

Accounting and Information Management Division

GAO/T-AIMD-98-305

Mr. Chairman and Members of the Committee:

I am pleased to be here to discuss the progress of the federal regulatory

agencies in ensuring that the thousands of financial institutions1

 they

oversee are ready for the upcoming century date change. As you know,

banks, thrifts, and credit unions are extremely vulnerable to Year 2000

problems due to their widespread dependence on computer systems to

make loans, invest deposits, transfer funds, issue credit cards, and handle

routine business functions, such as accounting and personnel

management. At the very least, Year 2000 problems2

 could cause

significant inconveniences to financial institutions and their customers.

More significantly, system failures could lead to closings and serious

disruptions to payment systems and credit flows. Today, I will discuss the

Year 2000 risks facing financial institutions and the federal regulators,

highlight actions taken to date to mitigate these risks, and address the

challenges ahead as institutions and regulators face the more complex and

difficult activities of their Year 2000 programs.

This testimony is one in a series of reports and testimonies that we have

issued at this Committee’s request on the status of efforts by the five

federal financial regulatory agencies to ensure that the institutions they

oversee are ready to handle the Year 2000 computer conversion challenge.

We previously reported on the status of the National Credit Union

Administration (NCUA), the Federal Deposit Insurance Corporation (FDIC),

and the Office of Thrift Supervision (OTS).3

 Today, we are also reporting on

the Federal Reserve System’s (FRS) efforts to oversee the Year 2000

progress of the institutions it supervises.4

 This statement incorporates the

1

In this report, financial institutions refers to commercial banks, thrifts, and credit unions.

2

The Year 2000 problem is rooted in the way dates are recorded and computed in automated

information systems. For the past several decades, systems have typically used two digits to represent

the year, such as “97” representing 1997, in order to conserve electronic data storage and reduce

operating costs. With this two-digit format, however, the year 2000 is indistinguishable from 1900, or

2001 from 1901. As a result of this ambiguity, system or application programs that use dates to perform

calculations, comparisons, or sorting may generate incorrect results.

3

Year 2000 Computing Crisis: National Credit Union Administration’s Efforts to Ensure Credit Union

Systems Are Year 2000 Compliant (GAO/T-AIMD-98-20, October 22, 1997); Year 2000 Computing Crisis:

Actions Needed to Address Credit Union Systems’ Year 2000 Problem (GAO/AIMD-98-48, January 7,

1998); Year 2000 Computing Crisis: Federal Deposit Insurance Corporation’s Efforts to Ensure Bank

Systems Are Year 2000 Compliant (GAO/T-AIMD-98-73, February 10, 1998); Year 2000 Computing

Crisis: Office of Thrift Supervision’s Efforts to Ensure Thrift Systems Are Year 2000 Compliant

(GAO/T-AIMD-98-102, March 18, 1998); FDIC’s Year 2000 Preparedness (GAO/AIMD-98-108R, March 18,

1998); and Year 2000 Computing Crisis: Federal Regulatory Efforts to Ensure Financial Institution

Systems Are Year 2000 Compliant (GAO/T-AIMD-98-116, March 24, 1998).

4

Year 2000 Computing Crisis: Federal Reserve Is Acting to Ensure Financial Institutions Are Fixing

Systems, But Challenges Remain (GAO/AIMD-98-248, September 17, 1998).

Page 1 GAO/T-AIMD-98-305
results of that review as well as our recently completed review of the

Office of the Comptroller of the Currency (OCC). We plan to conclude this

series with a report on the FRS’ internal system conversion efforts in the

coming months. Therefore, my statement today excludes any discussion of

that ongoing review.

To prepare for this testimony, we evaluated regulator efforts to date to

ensure that the institutions they oversee are adequately mitigating the

risks associated with the Year 2000 date change. We compared their

efforts to criteria detailed in our Year 2000 Assessment Guide,

5

 Business

Continuity and Contingency Planning Guide,

6

 and Testing Guide7 as well

as Year 2000 examination guidance and procedures set forth by the

Federal Financial Institutions Examination Council (FFIEC).8

 We reviewed

procedures and guidance developed by the regulators to perform their

industry assessments. We also reviewed regulator reports to the Congress

on the status of their efforts to correct internal systems and to oversee

financial institution Year 2000 readiness. We reviewed relevant

correspondence from the regulators to their examiners and the institutions

they supervise and interviewed officials responsible for overseeing the

safety and soundness of financial institution management practices and

procedures. We also interviewed officials from various trade associations

representing banks, thrifts, and credit unions to obtain their views on the

adequacy of regulatory efforts and determine what the bank, thrift, and

credit union communities were doing to ensure Year 2000 readiness.

5

Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14). Published as an exposure

draft in February 1997 and finalized in September 1997, the guide was issued to help federal agencies

prepare for the Year 2000 conversion. It advocates a structured approach to planning and managing an

effective Year 2000 program through five phases: (1) raising awareness of the problem, (2) assessing

the extent and severity of the problem and identifying and prioritizing remediation efforts,

(3) renovating, or correcting, systems, (4) validating, or testing, corrections, and (5) implementing

corrected systems.

6

Year 2000 Computing Crisis: Business Continuity and Contingency Planning (GAO/AIMD-10.1.19).

Published as an exposure draft in March 1998 and finalized in August 1998, this guide provides a

conceptual framework for helping organizations to manage the risk of potential Year 2000-induced

disruptions to their operations. It discusses the scope and challenge and offers a structured approach

for reviewing the adequacy of agency Year 2000 business continuity and contingency planning efforts.

7

Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21, Exposure Draft, June 1998). This

guide addresses the need to plan and conduct Year 2000 tests in a structured and disciplined fashion.

The guide describes a step-by-step framework for managing, and a checklist for assessing, all Year

2000 testing activities, including those activities associated with computer systems or system

components (such as embedded processors) that are vendor supported.

8

FFIEC was established in 1979 as a formal interagency body empowered to prescribe uniform

principles, standards, and report forms for the federal examination of financial institutions, and to

make recommendations to promote uniformity in the supervision of these institutions. The Council’s

membership is composed of the federal financial institution regulators—FDIC, FRS, OCC, OTS, and

NCUA.

Page 2 GAO/T-AIMD-98-305
Information on Year 2000 readiness of internal regulator systems and the

status of institutions was provided by the regulators and was not

independently verified by us. Our work was performed at the regulators

between October 1997 and September 1998 in accordance with generally

accepted government auditing standards.

In summary, we found that the regulators have made good progress in

assisting banks, thrifts, and credit unions in their Year 2000 efforts as well

as identifying which institutions are at a high risk of not remediating their

systems on time. They have also recognized the risk and potential impact

of Year 2000-induced system failures on their own core business processes

and have implemented rigorous efforts to mitigate these risks.

Nevertheless, there are still serious challenges ahead that could threaten

the financial institution industry’s ability to successfully meet the Year

2000 deadline.

• First, there is the challenge of time. With less than 16 months remaining

before the Year 2000 deadline, the regulators are faced with the daunting

task of overseeing the efforts of more than 22,000 financial institutions,

service providers, and software vendors with a relatively finite number of

examination personnel.

• Second, in the next few months, many of these entities will be undertaking

the most complex and difficult stage of correction—testing. It will be

necessary for regulators to ensure that they have enough technical

resources to review institution efforts during this crucial phase.

• Third, beginning in early 1999, regulators will be pressed to take quick

actions against institutions that cannot successfully complete their Year

2000 efforts. But before they can do so, they need to determine what will

constitute financial institution Year 2000 failures, what regulatory options

can be effectively used, and when they would be implemented.

• Fourth, the U.S. economy is intrinsically linked to the international

banking and financial services sector, yet many countries and their

financial institutions are reported to be behind schedule in addressing

their Year 2000 problem. Working with their foreign counterparts, the

regulators will need to identify and define global Year 2000 risks and work

cooperatively to mitigate those risks. The regulators will also need to

develop contingency plans in case there are unforeseen problems.

• Fifth, financial institution credit, deposit, and payment flows are critically

dependent on public infrastructure, such as telecommunications and

electric power networks; however, until critical readiness assessments and

tests are completed and made available to the public, it is not clear

Page 3 GAO/T-AIMD-98-305
whether there will be uninterrupted telecommunications and power

service. Again, regulators will need to develop contingency plans that

anticipate Year 2000-related disruptions in the public infrastructure.

Background The federal financial regulators are responsible for examining and

monitoring the safety and soundness of approximately 22,000 financial

institutions, which, together, manage more than $13 trillion in assets and

hold over $7 trillion in deposits. Specifically:

• The Federal Reserve System is responsible for overseeing the Year 2000

activities of 1,618 entities, including 990 state member banks, 349 bank

holding companies, 221 foreign bank offices, and 9 Edge Act corporations.9

 According to FRS, these organizations have assets totaling over $7.7 trillion

and hold deposits of about $3.6 trillion. FRS’ oversight responsibilities also

include 49 service providers, software vendors, and data centers.

• The Office of the Comptroller of the Currency supervises about 2,600

federally-chartered, national banks and federal branches and agencies of

foreign banks, which comprise about $3.5 trillion in assets. OCC is also

responsible for monitoring the Year 2000 activities of 109 service

providers, software vendors, and data centers.

• The Federal Deposit Insurance Corporation supervises about 6,000

state-chartered, nonmember banks, which are responsible for about $1

trillion in assets. It is also the deposit insurer of approximately 11,000

banks and savings institutions that have insured deposits totaling upwards

of $3.8 trillion. FDIC also oversees 146 service providers, software vendors,

and data centers.

• The Office of Thrift Supervision oversees about 1,200 savings and loan

associations (thrifts), which primarily emphasize residential mortgage

lending and are an important source of housing credit. These institutions

hold approximately $737 billion in assets.

• The National Credit Union Administration supervises about 7,000

federally-chartered credit unions. It is also the deposit insurer of more

than 11,000 federally- and state-chartered credit unions whose assets total

about $371 billion. Credit unions are nonprofit financial cooperatives

organized to provide their members with low-cost financial services.

As part of their goal of maintaining safety and soundness, these regulators

are responsible for assessing whether the institutions they supervise are

adequately mitigating the risks associated with the century date change.

9

Edge Act corporations are corporations chartered by FRS to engage in international banking. The

Board of Governors of FRS reviews and approves the applications to establish Edge Act corporations

and also has supervisory responsibility for examining the corporations and their subsidiaries.

Page 4 GAO/T-AIMD-98-305
To ensure consistent and uniform supervision on the Year 2000 issue, the

five regulators are coordinating their supervisory efforts through FFIEC.

Additionally, under the auspices of the FFIEC, the regulators are jointly

examining 28 major data service providers and software vendors that

support the financial institutions. Each of the regulators, except NCUA, is

responsible for a specified number of these joint examinations.

Year 2000 Risks

Confronting Financial

Institutions and

Regulators

Addressing the Year 2000 problem in time has been, and will continue to

be, a tremendous challenge for financial institutions and their regulators.

Virtually every insured financial institution relies on computers—either

their own or those of a contractor—to process and update records and for

a variety of other functions. To complicate matters, most institutions have

computer systems that interface with systems belonging to payment

systems partners, such as wire transfer systems, automated

clearinghouses, check clearing providers, credit card merchant and issuing

systems, automated teller machine (ATM) networks, electronic data

interchange systems, and electronic benefits transfer systems. Because of

these interdependencies, financial institutions systems are also vulnerable

to failure caused by incorrectly formatted data provided by other systems

that are not Year 2000 compliant.

In addition, financial institutions depend on public infrastructure, such as

telecommunications and power networks, to carry out critical business

operations, such as making electronic fund transfers, verifying credit card

transactions, and making ATM transactions. However, these networks are

also susceptible to Year 2000 problems. Thus, financial institutions must

also assess the Year 2000 readiness efforts of their local utilities and

telecommunications providers.

Financial institutions and their regulators cannot afford to neglect any of

these issues. If they do, the impact of Year 2000 failures could be

potentially disruptive to vital bank operations and harmful to customers.

For example, loan systems could make errors in calculating interest and

amortization schedules. In turn, these miscalculations may expose

institutions and data centers to financial liability and loss of customer

confidence. Moreover, ATMs may malfunction, performing erroneous

transactions or refusing to process transactions. Other supporting systems

critical to the day-to-day business of financial institutions may be affected

as well. For example, telephone systems, vaults, and security and alarm

systems could malfunction.

Page 5 GAO/T-AIMD-98-305
Regulators Have

Taken Positive

Actions to Mitigate

Year 2000 Risks

Since June 1996, when their Year 2000 oversight efforts began, the five

financial institution regulators have taken a number of important steps to

alert financial institutions of the risks associated with the Year 2000

problem and to assess what these institutions are doing to mitigate the

risks. To raise awareness, the regulators issued letters to financial

institutions that described the Year 2000 problem and special risks facing

financial institutions and recommended approaches to planning and

managing effective Year 2000 programs. In addition, the regulators

provided extensive guidance to assist financial institutions in critical Year

2000 tasks, including guidance on (1) contingency planning, (2) mitigating

risks associated with critical bank customers (e.g., large borrowers and

capital providers), (3) mitigating risks of using data processing servicers

and software vendors to perform financial institution operations,

(4) testing to demonstrate Year 2000 compliance, (5) establishing effective

Year 2000 customer awareness programs, and (6) addressing Year 2000

risks associated with fiduciary services. The regulators have also

undertaken extensive outreach efforts—such as establishing Internet sites

and conducting seminars nationwide—to raise the Year 2000 awareness of

banking industry personnel and the public.

To assess what institutions are doing to mitigate Year 2000 risks, the

regulators performed a high-level and detailed assessment of bank, thrift,

and credit union efforts. The high-level assessment consisted primarily of

administering FFIEC’s Year 2000 questionnaire via telephone and on-site

visits and was completed during November and December 1997. During

this assessment, the regulators examined whether institutions had

established a structured process for correcting the problem; estimated the

costs of remediation; prioritized systems for correction; and determined

the Year 2000 impact on other internal systems important to day-to-day

operations, such as vaults, security and alarm systems, elevators, and

telephones. The more detailed Year 2000 assessment involved on-site visits

to the institutions and was completed in June 1998. These examinations

focused on whether institutions were appropriately planning for the Year

2000 effort and addressing risks posed by service providers, software

vendors, and large customers. They also began to assess whether

institutions had effective customer awareness programs.

These exams found the majority of financial institutions are doing an

adequate job in addressing the Year 2000 issue. Specifically, according to

the regulators, they found that of the over 22,000 institutions with

examinations completed by June 30, 1998, almost 93 percent were doing a

Page 6 GAO/T-AIMD-98-305
satisfactory job of addressing their Year 2000 problems, about 7 percent

needed improvement, and 0.3 percent were performing unsatisfactorily.

The regulators plan to follow up with additional on-site visits that will

address the unique—and more difficult—challenges that the testing and

implementation phases will present. These exams, which the regulators

plan to complete by March 31, 1999, are expected to identify institutions

that are experiencing difficulties completing their testing and

implementation programs or have not developed sufficient contingency

plans.

Regulators Have Also

Taken Positive Steps

to Remediate Internal

Systems

In addition to overseeing the efforts of financial institutions to address the

Year 2000 problem, the federal regulators must also ensure that their

internal computer systems are Year 2000 compliant. This is especially

critical for FRS which operates systems on which the financial institutions

heavily rely. For example, according to FRS, the Fedwire system was used

by financial institutions in 1997 to make about 89 million funds transfers

valued at $288 trillion. While systems belonging to the other regulators are

not critical to the day-to-day operation of the banking industry, they

support the essential business functions of the regulators, such as

personnel management, accounting, budget, travel, and program tracking.

As noted earlier, we are currently reviewing FRS’ efforts to remediate its

internal systems and plan to report the results of our review separately.

However, we have reviewed the efforts of the four other regulators to

remediate their systems and found that they have taken many actions that

are crucial to successfully dealing with the Year 2000 problem. For

example, they have established a good foundation for managing their

remediation efforts by developing Year 2000 strategies, designating Year

2000 program managers, inventorying systems, and developing tracking

systems to monitor progress and prepare status reports. They are acting or

have acted to ensure that core business operations are not disrupted by

identifying core business operations, assessing the potential impact of

Year 2000-induced failures (including public infrastructure failures) on

those operations, prioritizing conversion efforts, and developing

contingency plans. The regulators also have identified their data

exchanges and are working with their data exchange partners to prevent

noncompliant systems from introducing Year 2000 errors into compliant

systems. Finally, to ensure that their systems are adequately tested, the

regulators have developed Year 2000 testing guidance and have begun or

are well underway in testing their systems.

Page 7 GAO/T-AIMD-98-305
In September 1998, each of the regulators reported to the Congress that

they are on schedule to meet the Office of Management and Budget’s

March 1999 implementation date for their mission-critical systems. Their

data indicate that, with continued good management, the regulators

should be able to meet this milestone.

Regulators Have

Responded Quickly to

GAO Findings and

Recommendations

While the regulators have been working hard to achieve industrywide

compliance and remediate their own systems, we have identified concerns

and problems with their efforts during the course of our reviews.

Specifically, we found that all the regulators were late in initiating their

Year 2000 oversight of institutions and in issuing key guidance on business

continuity and contingency planning, corporate borrowers, and service

providers and software vendors. We also found that the regulators had not

assessed whether they had enough information system examiners to

adequately oversee the Year 2000 efforts of the institutions they supervise.

In addition to these general concerns, we also found problems specific to

each agency.

However, the regulators have been quick to respond to our

recommendations and to implement corrective actions. For example, in

October 1997, we made recommendations to NCUA to help it ensure that

credit unions were adequately mitigating Year 2000 risks. Among other

things, NCUA responded by (1) implementing a quarterly reporting process

whereby credit unions would communicate the status of their remediation

efforts between examinations, (2) developing a formal, detailed plan for

contingencies, (3) instructing credit union management to have their

auditors address Year 2000 issues in the scope of their work, and (4) hiring

additional contractor support to assist with exams of credit unions and

service providers. We also made specific recommendations to FDIC to

(1) work with the other FFIEC members to enhance the content of their

assessment work program, (2) ensure that adequate resources are

allocated to complete the corporation’s internal systems’ assessment by

the end of March 1998, and (3) develop contingency plans for each of

FDIC’s mission-critical systems and core business processes. Similarly, we

recommended that OTS develop contingency plans for each of its

mission-critical systems and core business processes. Again, both agencies

agreed with our recommendations and took immediate steps to implement

them.

Page 8 GAO/T-AIMD-98-305
Significant Year 2000

Challenges Ahead for

Financial Institutions

and Regulators

Despite the regulators’ strong efforts to assess industrywide compliance

and remediate their own systems, several complex and difficult challenges

remain in achieving Year 2000 compliance.

First: the challenge of time. Regardless of good practices and good

progress, less than 16 months remain to the century date change. With

over 22,000 institutions, vendors, and service providers to examine and

monitor, the regulators face a formidable task in continuing to provide

adequate coverage.

Second: the challenge to provide effective oversight during the later and

more complicated stages of the remediation effort. By December 1998,

FFIEC expects financial institutions to be well into the testing phase. As

noted in our Year 2000 Test Guide, because Year 2000 conversions often

involve numerous, large interconnecting systems with many external

interfaces and extensive supporting technology infrastructures, testing

needs to be approached in a structured and disciplined fashion. According

to OCC, for many banks, testing will consume upwards of 60 percent of the

cost and time spent to correct Year 2000 problems. Nevertheless, the

regulators have a small window of opportunity for assessing institutions

during this critical phase: they generally expect to complete on-site exams

of service providers, software vendors, and institutions with in-house or

complex systems by December 31, 1998, and plan to complete on-site

exams for the remaining institutions by March 31, 1999. At the same time,

however, they have a limited number of technical examiners to conduct

these reviews. OCC, for example, has 79 full-time bank information system

examiners responsible for providing assistance to 575 safety and

soundness examiners and for examining institutions with complex

systems. FRS currently has 73 such examiners—31 full time and 42 part

time—that conduct complex examinations while supporting 106 other

examiners during their exams. Because of the limited number of technical

examiners and the large number of entities to be examined, we have

recommended to the regulators that they (1) determine how many

technical examiners are needed to adequately oversee the Year 2000

efforts of the institutions, data processing servicers, and software vendors

and (2) develop a strategy for obtaining these resources and maintaining

their availability.

Third: the challenge to develop an effective strategy for dealing with

institutions that by all indications will not be viable by the Year 2000. The

regulators have not yet (1) defined the criteria for finding that a financial

institution will not be viable due to Year 2000 problems or (2) developed a

Page 9 GAO/T-AIMD-98-305
strategy for when and how they will handle such troubled institutions. The

regulators have been working on these issues. For example, they are

querying data centers and service providers on their capacity to service

new clients due to Year 2000 problems and putting together a “bidders list”

for Year 2000 purposes that will include institutions that have

demonstrated, well-managed Year 2000 programs and are capable of

processing acquisitions of other institutions. However, none of these

efforts have been finalized. Developing these plans promptly is paramount

to minimizing the risk of not having enough time to implement a viable

plan for dealing with institutions that cannot successfully complete their

efforts.

Fourth: the challenge to protect U.S. banks from international Year 2000

risks. U.S. banks have many external links to financial institutions and

markets around the world. For example, overseas financial institutions

and markets depend on our electronic funds transfer systems and

clearinghouses. Unfortunately, it has been reported that many countries

are well behind their U.S. counterparts in Year 2000 remediation. For

example, a survey of 15,000 companies in 87 countries by the Gartner

Group found that nations including Germany, India, Japan, and Russia

were 12 months or more behind the United States.10 Given the fact that

many countries are behind schedule in addressing the Year 2000 problem,

it will be essential for regulators to (1) ensure that financial institutions

have adequately identified and mitigated their international risks and

(2) prepare contingency plans for handling disruptions caused by

problems abroad.

Fifth: the challenge to protect financial institutions from Year 2000

disruptions caused by their telecommunications and power service

providers. The most vital business operations of financial

institutions—ATM transactions, fund transfers, and credit card

authorizations, for example—are dependent on telecommunications and

power networks. In fact, according to the President’s National Security

Telecommunications Advisory Committee, the financial services industry

may be the telecommunications industry’s most demanding customer:

over $2 trillion is sent by international wire transfers every day.

In June 1998 testimony on the Year 2000 readiness of the

telecommunications sector, we reported that most major

telecommunications carriers expect to achieve Year 2000 network

10Year 2000 World Status 2Q98 Update - A Summary Report (Gartner Group, Report #M-04-6957,

July 21, 1998).

Page 10 GAO/T-AIMD-98-305
compliance by December 1998. For a few though, the planned date for

compliance is either later than December 1998, or we were unable to

obtain this information.11 The carriers are working to test their networks

but until the tests are completed and the results made public, it is not clear

to what degree—if any—financial institutions and the public will be

subject to telecommunications disruptions.

The situation for electric power companies is similar. At the request of the

Department of Energy, the North American Electric Reliability Council

(NERC) is assessing the readiness of the critical systems within the nation’s

electric infrastructure. The Secretary of Energy requested that NERC

provide written assurances by July 1, 1999, that critical power systems

have been tested, and that such systems will be ready to operate in the

year 2000. Until such assessments are completed and results made public,

the precise status of this sector is not completely clear. Because of the

uncertain nature of electric power and telecommunications Year 2000

readiness, it is essential for regulators and institutions to plan for

contingencies should there be service disruptions due to the Year 2000

date change.

In conclusion, the regulators have made significant progress in assessing

the readiness of member institutions; raising awareness on important

issues such as contingency planning, testing, and dealing with service

providers, software vendors, and large customers; and remediating their

own systems. Looking forward, the challenge is for the regulators to make

the best use of limited resources in the time remaining and to ensure that

they are ready to take swift actions to address those institutions that falter

in the later phases of correction and to address disruptions caused by

international and public infrastructure Year 2000 failures. To their credit,

the regulators have spent the last year developing a picture of how their

industry stands, including which institutions are at high risk of not being

ready for the millennium and require immediate attention, which service

providers and vendors are likely to be problematic, and the extent of

problems remaining. In addition, they have undertaken efforts to

determine what conditions will constitute Year 2000 failures and what

actions can be taken to quickly address failures. Nevertheless, more needs

to be done to prepare for major potential disruptions caused by domestic

and international financial institutions, as well as power and

11Year 2000 Computing Crisis: Telecommunications Readiness Critical, Yet Overall Status Largely

Unknown (GAO/T-AIMD-98-212, June, 16, 1998).

Page 11 GAO/T-AIMD-98-305
telecommunications companies, experiencing processing problems at the

century date rollover.

Accordingly, we are now recommending that the regulators, working

through the FFIEC, (1) finalize by December 1, 1998, their plans for dealing

with institutions that will be not be viable due to Year 2000 problems and

(2) develop contingency plans that address international and public

infrastructure Year 2000 risks.

Mr. Chairman, this concludes my statement. We welcome any questions

that you or Members of the Committee may have.

(511120) Page 12 GAO/T-AIMD-98-305
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