Separate fact from fiction as clock ticks toward 2000
October 13, 1999
I don’t know about you, but I was a bit surprised to read that two-thirds of Americans recently surveyed in a Gallup Poll said they were going to take extra cash from the bank in the days before Jan. 1, 2000.
It’s a bit surprising and somewhat unfortunate that people are willing to take unnecessary chances with their hard-earned money, rather than leaving it in an Federal Deposit Insurance Corp. (FDIC)-insured bank, where it’s guaranteed safe and secure. Of course, because of the widespread coverage the year 2000, or Y2K, issue has received, it’s sometimes difficult to separate fact from fiction.
Let’s take a look at some of the myths the “doomsayers” are spreading about the Year 2000 issue and your hard-earned money:
Myth: “I should withdraw some or even all of the money in my accounts to make sure it’s safe when the year 2000 arrives.”
Reality: The fact is your depository accounts are completely safe in an FDIC-insured bank, where they’re always insured up to $100,000. And because banks have lots of experience in the art of safeguarding money, your accounts are also secure. If you withdraw your money in the days and months leading up to the year 2000, you’ll not only miss out on valuable interest, but you’ll also run the risk of losing it or having it stolen.
Myth: “The year 2000 issue could lead to widespread banking failures, similar to the events that followed the stock market crash of 1929.”
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Reality: This is an interesting theory, but one that doesn’t hold much water, mainly because of the enormous differences between the financial markets of 1929 and 1999. There are many safeguards by their well-known names or acronyms, including Federal Deposit Insurance Corp. (FDIC); Federal Reserve, Office of the Comptroller of Currency (OCC); Securities and Exchange Commission (SEC); and National Association of Securities Dealers (NASD).
In addition, because of the vast amount of information and technology available to those who participate in the financial markets, investors today are far more knowledgeable than our early 20th Century predecessors.
Myth: “Say what you will, but banks aren’t really ready for the year 2000.”
Reality: By nearly all yardsticks, the banking and financial services industry ranks as the best-prepared industry for the year 2000. Recent statistics show that only 205 of the 10,400 banks insured by the FDIC had earned less than satisfactory marks for year 2000 compliance. That’s down from 537 banks at the end of March 1999.
Myth: “Let’s face it, we really don’t know what to expect from the year 2000 issue. So, when it comes to our money, it’s best to expect the worst.”
Reality: The first part is generally true. Since we’ve never encountered an issue like this before, we don’t know precisely what to expect from the year 2000 issue. At the same time, though, we have many reasons to be optimistic. The financial services industry has spent more than $8 billion testing and repairing its computer systems. While short-term, isolated year 2000-related disruptions to the financial markets are a possibility, the nation’s financial infrastructure checks, automated tellers, credit and debit cards, direct deposits should continue to run smoothly into the next millennium.
The year 2000 issue has received widespread coverage and generated more than its share of “gloom and doom” scenarios. In fact, a healthy bit of skepticism goes a long way when listening to what some so-called “experts” have to say about it. When it comes to the safety of your hard-earned money and the year 2000, here’s some simple advice: Leave your money in an FDIC-insured bank where it’s safe and secure. (Tonya L. Whatley is president of Community First National Bank in Craig.)