Year-2000 computer problems will not cause any bank or thrift to fail, according to a Federal Deposit Insurance Corp. forecast.
None of the financial institutions currently listed on the FDIC's "failed-bank projection list" was put there because of year-2000 problems. The list includes banks and thrifts that are considered likely to become insolvent or experience fatal technological failures during the next two years.
"We don't have anybody identified as a potential Y2K failure at this point," said Frank A. Hartigan, the FDIC's year-2000 project manager.
The FDIC's optimism is especially notable now that the March 31 deadline for banks, thrifts, and service providers to test their renovated computer systems has passed. In recent months, bank regulators have praised the industry's efforts but cautioned that its year-2000 fitness would not truly be known until the testing phase was complete. Renovated computer systems are supposed to be up and running by June 30.
The no-failure forecast also came three weeks after an internal FDIC report cast doubt on the validity of some year-2000 exam ratings.
The report, based on an unscientific sample of year-2000 exam notes, concluded that some banks were getting higher ratings than they deserved. The inspector general recommended that year-2000 exam reports be subjected to tougher scrutiny, and FDIC Chairman Donna A. Tanoue agreed.
Mr. Hartigan said rumors that the FDIC was going to shut down year-2000- deficient banks by midyear are unfounded. "People had in their minds that when a magical date came along, we were going to do something," he said in an interview. "The reality is, we've been doing stuff all along."
In August bank regulators engineered the acquisition of a small Georgia data processor that had serious year-2000 problems. More recently, Atlanta- based First Data Corp. signed an agreement with regulators to correct a year-2000 glitch affecting some of its credit card merchant processing business.
Mr. Hartigan also quashed a rumor that the FDIC had compiled a "bidders list" of potential bank acquirers, saying that it made no sense to create such a list in the absence of projected failures.
But he said the agency could swiftly prepare a list of capable buyers if necessary. If a bank were nearing failure, the FDIC would look for year- 2000-ready institutions with branches near the failing bank, strong Camels ratings, healthy capital levels, and competent managements.
"We have all the information available to create a bidders list ... except knowing whether or not bank management is interested," Mr. Hartigan said.
News that the FDIC is predicting no failures met with some skepticism. "I don't know that they can predict Y2K problems," said Gregory P. Cirillo, a partner in the Washington office of the Williams, Mullin, Christian & Dobbins law firm. "I think if they saw one that they could identify now as insolvable, they would act in some way now," not put the bank on a list and wait.
John A. Meyer, president of the financial services unit at Electronic Data Systems Corp. of Plano, Tex., said the FDIC prediction may just reflect the fact that many banks are avoiding year-2000 problems by exiting or outsourcing certain lines of business.
But Paul A. Schosberg, the president of America's Community Bankers, said the FDIC finding proves the industry has been "clear-eyed" about the "hills they have to climb" to vanquish the millennium bug.
At yearend just 16 of all 10,415 FDIC-insured banks and thrifts had received "unsatisfactory" year-2000 ratings. Regulators will issue updated ratings when they testify April 13 before the House Banking Committee.
