Federal Deposit Insurance Corp. examiners are giving some banks a higher year-2000 rating than they deserve, the agency's inspector general has concluded.

Regulators are inspecting every bank to determine whether their computers are ready for the year-2000 change. The FDIC has said that 97% of the institutions it supervises had made "satisfactory progress" as of Feb. 28.

But an internal FDIC report-recently obtained by the House Banking Committee-casts doubt on some examiners' judgments. House Banking has scheduled a hearing April 13 to discuss the industry's preparation.

FDIC Chairman Donna A. Tanoue insisted in an interview Wednesday that the agency's year-2000 supervision program is effective. She described the inspector general's recommendations as "refinements."

"These are ways to improve an already sound supervisory program," she said. Ms. Tanoue also noted that every bank's year-2000 report is already checked by at least two FDIC managers before becoming final.

Inspector General Gaston L. Gianni Jr. agreed.

"I'm not a messenger crying that there's a problem of great proportion out there. I'm a messenger that says, 'Here are some opportunities for you (the FDIC) to strengthen your approach,'" he said in an interview.

The inspector general's office, as part of its routine work, visited several FDIC field offices in January and February to review year-2000 exam reports. It is unclear exactly how the sample of 89 reports was selected, but the choice was not random.

Mr. Gianni said that an unusually large number of the banks had safety and soundness problems, and that generalizations about the quality of FDIC year-2000 exams could not be reached.

The findings nevertheless led the inspector general to recommend extensive changes in year-2000 exams.

Ms. Tanoue said the report's recommendations would be adopted, including an additional review of every bank's year-2000 exam report and supporting documentation. The agency also will issue supplemental guidance to examiners, clarifying standards for distinguishing "satisfactory" institutions from others.

News of the critical report surfaced the day after Ms. Tanoue announced a public relations campaign with state regulators aimed at reassuring a skittish public about the year-2000 threat.

"Don't wait for misleading or false information to surface," she told the Independent Community Bankers of America's convention Tuesday. "Take your message to the community now."

House Banking Committee Chairman James A. Leach, R-Iowa, and ranking Democrat John J. LaFalce, D-N.Y., wrote to Ms. Tanoue on March 10 to express concern about the inspector general's report. The committee sent a similar letter to another banking agency, but a spokesman declined to name it or provide a copy.

According to the IG report, FDIC examiner-determined ratings for nine of the 89 banks were "based on questionable conclusions." Reports on five other banks also were problematic.

"Ratings are not always adequately supported, sometimes have a questionable basis, and there is inconsistency in the development of ratings both within and across field offices," according to the Feb. 24 report.

The FDIC inspector general's report cited a number of examples in which an examiner showed questionable judgment.

In one of the most striking cases, an FDIC examiner gave a bank a "satisfactory" rating despite the fact that the institution had no action plan, lagged in its testing of critical computer systems and its assessment of customer risk, and had received an "unsatisfactory" rating from its own internal audit department.

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