"Year 2000 Readiness Disclosure"
To the Chief Executive Officers of all State Member Banks, Bank Holding
Companies, Edge and Agreement Corporations, and Branches and
Agencies of Foreign Banks, in the Second Federal Reserve District:
As part of its ongoing efforts to prepare for the century date change, the Federal Reserve is continuing to refine its event management plans. As part of this effort, the Federal Reserve Bank of New York (FRBNY) will be periodically collecting status information from institutions that it supervises in the Second District. This information will be used to monitor, assess, and report on the operational status or "health" of financial institutions, markets, and payment and settlement systems to senior FRBNY management and the Board of Governors and, more broadly, to the general public through the Presidents Council on Year 2000 Conversion and other appropriate means.
Collection of Year 2000 Status and Problem Reports
Year 2000 status information will be collected periodically by Bank Supervision staff during the event management period (October 1, 1999 through January 7, 2000) from domestic and foreign banking organizations in the Second District. For most organizations, this information will be collected at least monthly during the fourth quarter of 1999; the frequency of contact will increase during the rollover period (December 27 through January 7). The Federal Reserve will be coordinating these efforts with other federal and state banking agencies in order to avoid duplication to the extent possible. Where appropriate, within the next several weeks your organization will be contacted by your FRBNY relationship manager or by one of our Y2K specialists to discuss in more detail this effort and to establish a schedule, as necessary, for contacting your organization.
Institutions will be asked for information similar to that contained in the "BS&R Y2K Status and Problem Report" (Y2K Report). The report includes information on operational status, as well as the organization's insights on funding, liquidity or capital pressures, customer behavior and markets. The information requested will be tailored to each organization's size, level and range of activities. An organization that is not operating normally or reports unusual activity in customer or market behavior will be asked to provide a description of the behavior or problem, including the source, severity, expected duration and effect on operations.
Disclosure Responsibilities of Financial Institutions
During the rollover period, financial institutions may be subject to rumors about their operations or may experience internal or external disruptions affecting their ability to provide services to customers or meet obligations to counterparties. All financial institutions supervised by the Federal Reserve should contact their Reserve Bank immediately if such an event occurs. Moreover, institutions are expected to communicate with affected customers and counterparties about the problem and alternative measures that can be or are being taken to minimize its effect. Adherence to these communication policies should be an integral part of an institution's Year 2000 communications program: effective communication will be necessary to defuse overreactions by customers and counterparties if problems arise and to lessen the potential for disruptions to the financial markets.
Please make sure that affected personnel are aware of the Federal Reserve Bank of New York's monitoring plans during the event management period and are prepared to provide the information contained in the attached Y2K Report. Moreover, please take steps to ensure that your event management plans call for effective and timely communications with this Reserve Bank's business offices and bank supervisors and with affected customers and counterparties as appropriate. Finally, please be prepared to provide updated information about your institution's event management plans when we call to discuss our effort; this information should include the names and contact numbers of personnel designated to communicate with the FRBNY during the event management period.
Questions concerning this letter or any of the related reports should be directed to Sarah Dahlgren, Senior Vice President, Ira Adler, Bank Supervision Officer, or Joseph Galati, Bank Supervision Officer. Other questions should be directed to your FRBNY Bank Supervision relationship manager.