Federal Deposit Insurance Corp. Chairman Donna Tanoue announced a major campaign Tuesday to convince the public that banks are ready for the millennium computer bug.

"We have a job to do and we must do it together," Ms. Tanoue told a gathering of some 1,100 community bankers here. "The job is reassuring the public that their money will be safe in the year 2000."

The FDIC will host year-2000 briefings for the media in major markets across the country. The first is scheduled for next month in New York.

State regulators will participate in the briefings. "Bankers feel that it's more credible for the regulators to be saying the banks are prepared," explained Ellen C. Lamb, a senior vice president at the Conference of State Bank Supervisors. "We're getting to the point where the major Y2K issue is public confidence."

Ms. Tanoue said the FDIC's 7,000 employees also are being deployed to spread the word: Banks are well prepared and deposits are covered by government-guaranteed insurance. "We will train our employees to carry the FDIC message," Ms. Tanoue told the Independent Bankers Association of America's annual convention.

The IBAA audience was thrilled.

"Regulators are extremely important figureheads and if they are confident then the public should be too," said James D. MacPhee, the president of Kalamazoo County State Bank in Schoolcraft, Mich.

William L. McQuillan, the president of City National Bank of Greeley, Neb., urged the other banking agencies to publicly applaud the industry's year-2000 readiness.

"It is important for all the regulators to be discussing this," said Mr. McQuillan, who also is the IBAA's president. "They are the people who are in our banks at least quarterly looking at our year-2000 compliance."

Federal Reserve Board officials have begun trying to calm the public's fears, including a speech last week by Fed Governor Edward W. Kelley Jr. But Comptroller of the Currency John D. Hawke Jr. has been more reluctant. After a speech to community bankers last month, Mr. Hawke was asked if his agency would promote the industry's year-2000 preparations to the public. "Banks should be communicating with customers-not us," he said.

Ms. Tanoue said each bank must mount its own public relations effort. She noted a recent Gallup poll found that 55% of adult Americans believe the banking system will fail on Jan. 1.

"Bankers have a good story to tell, but you've got to tell it," she said. "You have got to tell it consistently and you have to tell it again and again."

Banks should tout year-2000 readiness in advertisements and on ATM machines, she said. They should replace hold music with year-2000 messages, establish numbers customers can call for millennium bug information, and train tellers to answer questions on the bank's preparations, she said.

These messages should include a summary of the bank's progress in fixing computer systems and should remind consumers that all deposits are fully protected by the FDIC, she said.

"Don't wait for misleading or false information to surface," she said. "Take your message to the community now."

O. Jay Thomson, chairman of First Citizens National Bank of Mason City, Iowa, said Ms. Tanoue was on target. "It was a fundamentally sound piece of advice," he said. "I'm going home and do what she said."

Also at the convention Tuesday, Federal Reserve Board Chairman Alan Greenspan reiterated his opposition to housing new bank powers in operating subsidiaries of the bank rather than in holding company units.

"To fully empower an op-sub in our judgment would be to compromise safety and soundness of our future financial structure," he said. "New powers should be housed in holding company affiliates and thereby be financed in the marketplace at competitive costs of capital, not in an op- sub inappropriately employing subsidized safety net equity capital."

Mr. Greenspan also blasted a provision allowing unitary thrifts to retain their power to mix banking and commerce, calling it a safety-and- soundness threat.

But the Fed chairman devoted the bulk of his remarks to the agricultural crisis, warning that credit quality troubles on farm loans could emerge.

"Nonetheless, the banks that are more heavily involved in farm lending are, by and large, well capitalized and seemingly better positioned to absorb financial adversities from the farm sector than was the case at the start of the 1980s at the onset of that decade's farm financial crisis," he said.

Chargeoffs of agricultural loans remain relatively low and farmers have been able to stay current on their loans despite suffering serious financial troubles, Mr. Greenspan said.

"On the whole, commercial banks that are active in farm lending appear to have suffered little or no diminution of their profits this past year because of the increased difficulties in farming," he said.

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