U.S. financial services companies are heavily exposed abroad but have taken steps to protect themselves from foreign year-2000 problems, the General Accounting Office said last week.
In response to a request from Rep. John D. Dingell, D-Mich., the GAO visited seven major U.S. banks and securities firms, as well as foreign banks and U.S. and foreign regulators.
The GAO determined that U.S. firms have a significant stake abroad, including loans, foreign exchange, over-the-counter derivatives, and foreign securities. Their foreign lending exposure, for example, was $487 billion as of June 30.
This exposure is risky, the GAO said, because foreign firms lag the U.S. in their year-2000 preparations, and because their regulators are less strict. A power outage or a computer failure in a foreign market or bank could obstruct cross-border funds transfers and cause U.S. firms to lose control of their foreign assets.
But U.S. firms told the GAO they have made ample preparations and expect the date rollover to have a limited effect on their bottom line.