Banks will probably pass the year-2000 rollover with "flying colors," but they are not doing a good job reassuring skittish customers, a top regulator said Thursday.

"We have good cause to be sanguine," said Comptroller of the Currency John D. Hawke Jr. at a conference sponsored by the President's Council on Year 2000 Conversion. "But that's not what the public seems to think."

Consumers are being bombarded with a variety of negative news about banks' readiness, Mr. Hawke said. Unless countered with honest and frequent disclosures by financial institutions, rumor and innuendo could lead consumers to make unwise decisions, such as withdrawing cash from federally insured banks and thrifts, he said.

Data from a recent consumer survey support this thesis. According to an unpublished survey cited by Mr. Hawke, more than 20% of consumers believe the banking system will crash on Jan. 1, 2000. Twenty-five percent say they will withdraw all their money from banks, the survey found, and 40% say ATMs will malfunction.

As an illustration of irresponsible coverage, Mr. Hawke displayed a recent cover story in the tabloid Weekly World News headlined: "Government Insiders Warn Bank Collapse is Just Months Away! Year 2000 Computer Meltdown Will Wipe Out All Savings & Checking Accounts and Make Credit Cards Useless!" Inside were photos of emaciated, homeless people, citizens leaping off skyscrapers, unruly mobs, and a scowling "financial analyst" predicting global depression.

"Starvation! Mass Rioting! Suicide!" the captions read.

The article's hyperbolic tone drew laughter from the crowd, but Mr. Hawke said the publication's circulation of nearly a million-plus the millions of additional grocery-shopper eyeballs it draws-makes it a potent source of misinformation.

"It's not enough to fix your data systems if your customers don't know about it," he said.

Apocalyptic Web sites and businesses that capitalize on consumer fear by hawking survival items such as wood-burning stoves and freeze-dried food share some of the blame for the public's jitters, he said.

Regulators also need to be "enormously careful" when discussing cash shortages, according to Mr. Hawke. He criticized National Credit Union Administration Chairman Norman E. D'Amours, who testified before the House Banking Committee on Tuesday that if every credit union household withdrew $500 just before Jan. 1, $7.5 billion in cash would be required. Such statements can be self-fulfilling, Mr. Hawke said.

Also at Thursday's conference, House Banking Chairman Jim Leach added his own experiences with misinformed consumers. The Iowa Republican's constituents have asked him for advice on whether they should stockpile canned goods, close their bank accounts, and buy firearms in order to protect their homes.

"Public education is the most critical issue at this point," Rep. Leach said.

Louis L. Barton, director of year-2000 compliance at $6.8 billion Frost National Bank, San Antonio, said banks should repeat their message in as many media and as often as possible. For example, bankers can meet with newspaper editorial boards, make themselves available for interviews, conduct public meetings, take out advertisements, post Web disclosures, testify at city council meetings, and set up telephone hot lines. He said statement stuffers are not enough.

Rep. Leach offered two suggestions for preventing customer panic. Keeping ATMs well stocked with cash "may be a singularly important confidence builder," he said. Echoing a recent suggestion by Connecticut Bank Commissioner John P. Burke, Rep. Leach said banks should consider telling Social Security and other recipients of public benefits that if the direct-deposit system fails, the bank will advance the funds without interest.

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