WASHINGTON -- A New Mexico bank on Monday became the second US financial institution ordered by the Federal Reserve to beef up its computer systems to prepare for potential year 2000 problems.
With a year to go before a potential computer meltdown on 1 January 2000, the US central bank issued a cease-and-desist order against Zia New Mexico Bank in Tucumcari, New Mexico.
The order gives Zia 10 days to appoint a manager to supervise the bank's 2000 readiness, and 30 days to present a written plan to cope with "risks that may be caused by failures of the bank's core business practices."
The Fed previously served notice that it would toughen efforts to compel banks and other financial institutions to do whatever is necessary to ensure that bank computers operate normally when 2000 rolls around.
Since many computer systems recognize only the final two digits in any year, they might not recognize the "00" of 2000 as a valid date. The concern is that computers would not operate normally or shut down completely when 2000 occurs.
The Fed, in a special supervisory letter to the 12 regional Fed banks in November 1997, said, "achieving Year 2000 readiness is critical to ensuring the safety and soundness of the banking system."
The only other enforcement order it issued against a specific institution was on 17 November 1997. The Fed ordered bank holding-company Putnam-Greene Financial of Eatonton, Georgia, to develop a plan showing that all computerized operations it carries out for itself and for three subsidiary banks would function normally after the 1 January 2000.
The US central bank has previously said it intends to have extra cash on hand, so that if banks face large withdrawals in advance of Year 2000 it can supply the funds to them quickly.
Copyright© 1998 Reuters Limited.
