Lawmakers said Wednesday that they are considering a bill to partially protect banks against lawsuits arising from the global computer crash predicted for 2000.

The legislation, which has not been written, would prevent consumers from suing their banks if a mistake resulted from a year 2000 glitch at a vendor or at another bank.

"This thing has the potential to become a litigation lawyers' bonanza," said Robert F. Bennett, chairman of the Senate Banking Committee's subcommittee on technology. "It is important to offer institutions that do fix their computer systems some protection from liability due to failures in other systems over which they have no control."

Regulators, testifying before the subcommittee on the industry's response to the 2000 problem, expressed reservations.

Federal Reserve Board Governor Edward W. Kelley Jr. said banks do not need additional incentives to fix their computer systems. "This is a matter of whether or not you are going to survive and stay in business," he said. "That's a wonderful motivator."

Comptroller of the Currency Eugene A. Ludwig cautioned that the legislation could mistakenly let institutions think they are "off the hook" even if they fail to fix their computer systems.

During his testimony, Mr. Ludwig said 15% of small national banks are unaware how the 2000 problem could affect them and 20% are just starting to deal with it.

Regulators will conduct special exams next year to ensure these banks are up-to-speed, he said.

Sen. Bennett, R-Utah, said that Congress would not force regulators to impose corrective plans on institutions. However, he said the agencies should encourage banks to apply "a MASH-style triage system" to fix their most important computers first. He further recommended that regulators make plans to contain systemic bank failures resulting from trouble in 2000.

Mr. Kelley said the Fed would be ready with emergency loans and cash, and would even provide backup computer systems for banks.

Sen. Bennett also asked regulators whether the government should warn customers of banks that have not fixed their computer systems.

Mr. Kelley rejected the idea, saying data collected during exams must be kept confidential. But he noted that enforcement actions taken against banks that fail to fix their computers would be made public.

Arthur Levitt, chairman of the Securities and Exchange Commission, said public companies already must disclose risks to their businesses, including year 2000 problems.

"The consumer is entitled to know," he said.

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