Y2K Update

July 7, 2008 - 8:02 PM

Cutting it close

Y2K preparations will be going down to the wire in nine states and in some of the nation's largest cities, according to a report released July 15 by the U.S. Government's General Accounting Office (GAO).

"Some state completion dates are so close to the turn of the century that the risk of disruption to their programs is substantially increased, especially if schedule delays or unexpected problems arise," said Joel Willemssen of the GAO, in testimony before the U.S. Senate Special Committee on the Year 2000 Technology Problem.

The GAO discovered that nine states - Alabama, California, Colorado, Hawaii, Louisiana, New Hampshire, New Mexico, Ohio, and Wyoming - have completed less than 70 percent of the fixes needed to keep their most important computer systems running when the calendar changes from 1999 to 2000.

In addition, governments in 19 of America's 21 largest cities are still working on Y2K repairs. Only Boston and Dallas are considered "Y2K ready." At least ten cities, including Chicago, Los Angeles, and Washington, D.C., say they may not have all their "mission-critical" systems ready until December 31.

"This leaves little or no room for error," warned Sen. Christopher Dodd (D-Conn.), vice chairman of the Senate committee.

Mr. Willemssen of the GAO urged government officials to put contingency plans in place in anticipation of computer breakdowns. "Given the amount of Y2K work remaining to be done in the last months of the year, contingency plans are critical to ensure that cities will continue to provide key services through the year 2000 date change," he said.

Meanwhile, the National League of Cities (NLC) released a survey of 403 municipalities, indicating that 92 percent of them will have their critical systems ready in time. The findings are from a telephone survey conducted in April.

Blowing the whistle

In an effort to educate American travelers about Y2K-related risks abroad, the U.S. will begin issuing reports this fall on the year 2000 status of other nations.

"We have an obligation to be as candid and clear with the public as we can," said John Koskinen, head of President Clinton's Y2K Council, in an interview with Reuters. He noted that the risk of Y2K-induced infrastructure failure is greatest in Africa, Asia, and Latin America.

Earlier this year, the State Department issued a "public announcement" to U.S. citizens, urging them to factor "the potential for [Y2K] disruption. . . into their overall travel plans."

Declaring victory

The Defense Department wrapped up what the U.S. Information Agency (USIA) termed an "extensive six-week-long test of year 2000-related fixes to the [department's] huge and highly computerized. . . logistics system." The 44 interconnected elements of the system are distributed among 22 centers in nine states and contain 200 million lines of computer code.

Defense officials, briefing reporters July 13 at a central test site near Washington, D.C., said the test - conducted using an off-line, duplicate network - revealed only a few, "easy-to-fix" problems.

In addition to checking the system's internal ability to operate, using year 2000 dates, the test determined if the system could continue operating in the face of such contingencies as power failures and/or telecommunications disruptions.

All four branches of the U.S. Armed Forces - the Army, Navy, Air Force, and Marine Corps - participated in the test, along with the Defense Logistics Agency and the Defense Information Systems Agency.

The Defense Department, which has been criticized by government auditors for lagging on year 2000 fixes, is expected to spend $3.65 billion on Y2K-related upgrades, according to the White House Office of Management and Budget. That's almost half of the entire federal Y2K bill of $8 billion.

Bank seized

Y2K problems were among a host of difficulties that prompted federal banking regulators to seize a North Miami Beach savings bank July 9. Oceanmark Bank was insolvent, with negative capital of $1.8 billion, according to the U.S. Office of Thrift Supervision (OTS). The Miami Herald reported that regulators had issued an enforcement action against the bank just last month because of a lack of Y2K preparedness.

Some of the bank's assets and liabilities will be transferred to the newly chartered Third Federal Savings and Loan Association of Florida.

Customers with accounts under $100,000 were protected by deposit insurance, but, with the seizure, investors in Oceanmark lost all they had invested.

Printed with permission from Christian Financial Concepts.