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FDIC: fix 2000 bug or else
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November 19, 1997: 11:51 a.m. ET
Small Georgia banks ordered to fix computers before time runs out
From Correspondent Steve Young
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NEW YORK (CNNfn) - State and federal regulators are warning banks to prepare for the millennium, or else.
Officials are cracking down on three Georgia banks they say have not made adequate preparations to deal with the year 2000 bug, the computer glitch which will threaten financial transactions on New Year's Day in the year 2000.
Because most computers can only read the last two digits in a date, banking computers worldwide will roll their internal clocks back to 1900 unless expensive software updates are performed.
The result could be financial chaos. The problem could wreak havoc on business-to-business banking, as well as personal banking, including mortgage and loan payments.
Because smaller banks tend to use older computers designed before the 2000 bug became an issue, many experts think that these are the banks that will be the most vulnerable.
"[With] the very small banks, this issue has sort of crept up on them in the last few months, and it's become abundantly clear that the resolution to this problem is extraordinarily expensive [and] time-consuming," said James McDermott, president of Keefe, Bruyette & Woods. "And for banks that are looking over the horizon and seeing a possible sale in their future, they are questioning whether or not they want to push ahead with this."
Large banks have greater resources, but they also have a greater problem because their databases are so huge.
It's estimated the total cost to the U.S. banking industry for fixing the millennium glitch will be tens of billions of dollars. Regulators warn banks to get started now. That's because fixing the millennium glitch takes time, and there are a limited number of programmers who are up to the challenge.
"They need to make sure through testing that the programs will actually work," said Michael Zamorski, deputy director of the FDIC. "We can't get down to January 1, 2000, and find out that we thought that we fixed the program [but] it doesn't work." 
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