a banking question for pollyanna types(not a troll post)

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To the "bump-in-the -road"crowd,does anyone know if,come january 3,if SOME banks(obviously not in america) have problems with corrupt data,can said banks be shut off from the rest of the international banking world and what would the process be??People who get upset with us doomsters should realize that we are making these outlandish,nutbag survival plans because y2k scares the sh*t out of us and the polyannas never seem to give us informed rebuttals,just an abusive"nothing is going to happen","it's a hoax disigned to sell water filters"and other unqualified,unproductive remarks.if there is happy news that's more reliable than big govenments',and big business'own unverified compliancy statements,we'd love to hear it,might make some of us change camps.It's not that doom-sayers are dupes,we just don't happen to believe everything our mc-spokespeople say on television.

"Those that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." (Ben Franklin)

"If you believe everything you read, you better not read." (Japanese proverb)

"It is better to remain silent and be thought a fool than to open one's mouth and remove all doubt." (Abraham Lincoln)

"Most people would rather die than think; in fact, they do so." (Bertrand Russell)

-- zoobie (zoob@aol.com), April 26, 1999

Answers

Here is more evidence of the banking systems interconnectedness and the bankers solution to any "Crisis" --- MORE AND EASIER CREDIT!

05:27 PM ET 04/25/99

IMF Approves Global Crisis Program

IMF Approves Global Crisis Program By MARTIN CRUTSINGER= AP Economics Writer= WASHINGTON (AP) _ The International Monetary Fund said today it had given final approval to a major change in procedures that will allow it to make available billions of dollars in resources to countries in hopes of averting future global financial crises. The IMF endorsement represented a major victory for President Clinton. He had put the idea forward last fall, at the height of the economic crisis which has pushed one-third of the globe into recession and sent America's trade deficit to record levels. At a hastily called news conference, IMF Managing Director Michel Camdessus and Italian Finance Minister Carlo Ciampi announced that the agency's executive board had given final approval to creation of new ``contingent credit lines'' to make IMF loans available to countries before a crisis strikes. Ciampi, who is chairman of the IMF's policy-setting interim committee, called the approval by the agency's executive board, a ``good start for the spring meetings'' of the 182-nation lending institution. The new pre-approved credit lines represented the biggest initiative being pursued by the Clinton administration, although U.S. officials are also hoping to win endorsement for an array of smaller proposals to remodel the global financial architecture to prevent or at least better handle future crises. To garner widespread support for the reform effort, Deputy U.S. Treasury Secretary Lawrence Summers and Federal Reserve Vice Chairman Alice Rivlin were hosts to key finance officials from 32 other nations at a day-long, closed-door seminar. Those discussions will be carried forward at meetings Monday of the world's seven richest industrial countries and then at the spring meetings of the IMF and its sister lending institution, the World Bank. Referring to the new credit lines, Camdessus said, ``I am confident this will be an important contribution for the world to be better prepared for future crises.'' The hope is that by announcing the pre-approved credit, the IMF will signal to investors that a particular nation is pursuing sound policies and has the foreign reserve resources to support its currency against speculative attacks. In the Mexican peso crisis in 1994 and the subsequent Asian currency crisis in 1997 and 1998, the IMF mobilized more than $100 billion in loans but only after the crisis countries had depleted their own reserves in vain efforts to prevent devaluation of their currencies. The idea behind the contingent credit lines is to prevent a sudden rush to the exits by foreign investors by convincing them that the nation has sufficient resources of its own, combined with IMF backing, to support its currency. There had been speculation that Mexico might be the first to qualify for the pre-approved IMF credit, but Camdessus gave no hint as to which country will be first, saying only that nations will have to meet stringent IMF standards on economic reform. The spring meetings of the IMF and World Bank are occurring at a time when the outlook for the global economy is brighter than during last October's fall meetings. At that time, Russia's default had sent Wall Street and many global markets into tailspins and raised the specter of global recession. The Federal Reserve was able to restore investor confidence by cutting U.S. interest rates. Now U.S. stocks have soared to records, and even many of the countries forced to seek billions of dollars in IMF rescue packages have seen rebounds in their financial markets and currencies. Camdessus, asked whether the 20-month global currency crisis is over, said, ``It seems to be.'' But he counseled unrelenting efforts to remodel the global financial architecture and make countries less vulnerable to market instability. In a statement announcing approval of the contingent credit lines, the IMF said it will not grant approval to countries unless they also have received such pre-approved credit lines from private banks. If the loans are activated, the IMF said they will carry interest rates that will be 3 percentage points to 5 percentage points higher than normal IMF loans, which currently have an interest charge of around 4.75 percent. The higher cost is to discourage countries from drawing on the credit unless absolutely necessary. The IMF's executive board approved the new credit lines for two years with a review of the operations scheduled after the first year. In addition to overhauling the global architecture, finance officials at the spring meetings have more country-specific issues to grapple with. One is whether and on what terms to resume loans to Russia, which has been in economic turmoil since August when it had to devalue the rubble and default on billions of dollars in foreign loans.

******

What will these "new improved credit lines" do?

The crash will be wider, deeper, farther, .......................

-- Jon Johnson (narnia4@usa.net), April 26, 1999.


at least banking will die a clean death,and not need to be out down like a sick dog

-- zoobie (zoob@aol.com), April 26, 1999.

Dear Sir,

The banking system is not monolithic. There are a great number of domestic and international banks. I am not sure what exactly you mean when you talk about "corrupt" data. If a foreign bank has a total computer "crash," it will not be able to use its system for international monetary transactions. If the foreign bank attempts an invalid transaction, the domestic bank should catch this. (They do now.) U.S. banks with international activities generally compartmentalize the domestic and foreign divisions. The transaction process currently relies on computers, but it is also possible to process transactions in methods other than "computer-to-computer." If FedEx is running (and I imagine they will), a great deal can still be done using paper. Finally, the firms most at risk are those firms doing international business. I think the Fortune 1000 multinationals are checking and double-checking their financial services partners to ensure they can conduct business smoothly in the year 2000. The reports from Europe and Japan have not been encouraging. Y2K-related problems in foreign financial systems may disrupt international trade. Given our current trade deficit, some might find that good news. Of course, you may not be able to buy a VCR.

The U.S. financial system has been a leader in Y2K remediation. The Federal Reserve has indicated it will increase the supply of currency to meet Y2K-related needs. The U.S. government also has broad powers to control banking activities. In a "worst case" scenario, the government can force a "banking holiday" to allow the system time to process financial activities. The government can also "force" creditors to accept personal checks, suspend creditor's ability to foreclose, limit financial transactions to "essential" purchases, limit the amount you can withdraw, etc. I believe the government will take strong steps to preserve the financial system, if needed.

The FDIC has taken a harder stance on "closing" noncompliant banks. Some banks have now conducted drills where checks were manually processed. Not so many years ago, we had a paper system. In fact, I still have my first bank book... a cloth-covered gem with my first deposits. A paper system is labor-intensive, slow and has a higher error rate... but it does work.

On the other hand, all of the regional banks I work with have worked very hard to ensure compliance. They are testing, retesting and testing again... and they are working with customers to ensure a high level of confidence. If you want me to suggest a regional bank, please ask.

There will be errors. There are errors every day among the billions of transactions. That is why everyone should check their financial statements with regularity and ask their bank about Y2K compliance.

If I might digress, much has been made about the potential shortage of currency. Money circulates. Most people withdraw cash to pay bills, not to bury in Mason jars. As soon as you pay a merchant, the money is returned to "the system." Now, most merchants do not want huge stacks of paper money sitting in the back room. They deposit money in the bank. I suppose they could send boxes of it to their suppliers, but that is not as safe or efficient as writing a check. In fact, checks are simply a more efficient way of doing financial tranactions than using cash. The government can force the qualified honoring of checks and maintain a huge amount of liquidity in the system.

A bank can only fail if the government allows it to fail. Of course, the steps taken can have worse results than allowing the bank to go under.

A viable financial system is a huge benefit to almost everyone. Look at countries where there has been a true financial collapse... like the hyperinflation in 1920s Germany. There was no shortage of currency, but it took a armful to buy a loaf of bread.

I am not sure I have given you enough details, but I can try another post when I have given this more thought.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), April 26, 1999.



zoobie,

does anyone know if,come january 3,if SOME banks(obviously not in america) have problems with corrupt data,can said banks be shut off from the rest of the international banking world and what would the process be??

Very few things are more securely guarded than the electronic gateways into a bank, and _any_ transaction over a certain amount requires human approval (the larger the transaction, the higher the rank of the person required).

Some Y2K'ers have tried to present the idea that, say, the Bank of Fiji can simply wire into NationsBank and request 1 zillion dollars, and the request will be granted without further ado. Yeah, right.

(In fact, here's a little "insider's knowledge" for you: the REAL reason why ATMs have limits is because the banks aren't about to give the public free access to the vault.[g] They figure, worst-case, they lose the few thousand bucks in the machine.)

People who get upset with us doomsters should realize that we are making these outlandish,nutbag survival plans because y2k scares the sh*t out of us...

I do understand that. But there's plenty of good news; the problem is, it's very difficult to get it across to doomsters, because they don't believe it. "Aw, that's just a bank president trying to reassure his customers."

My response, on the other hand, when I hear an IT/IS type talking gloom and doom about banks is, "there's another programmer speculating in an area that's outside of their purview." An IT/IS person can tell me how likely it is that a computer will fail; period. Anything that they tell me beyond that is nothing but an opinion.

polyannas never seem to give us informed rebuttals,just an abusive"nothing is going to happen" ...

Now, that's a little unfair. I myself have tried to give rational answers here -- you can certainly disagree with them, but I haven't just said, "ain't no problem (belch) let's go git dinner." In fact, I've posed what I thought were some really good questions -- such as, "define 'Compliant'" -- only to be treated as a pariah for daring to ask such a thing.

Doesn't it strike you as odd that so many people are getting upset about things like, "only 88% of banks are compliant!" -- WHEN NO ONE CAN EVEN PROVIDE A SINGLE, CONSISTENT, GENERALLY-AGREED-UPON DEFINITION OF THE WORD?

http://www.wwjd.net/smpoole

-- Stephen M. Poole, CET (smpoole7@bellsouth.net), April 26, 1999.


Stephen,

In response to your question about the definition of 'compliant,' I would have to say that for me the very fact that there are so many definitions [views?] being bandied about is enough to raise my concerns.

-- J (jart5@bellsouth.net), April 26, 1999.



thanks for the calm lucid reply,I think of "compliant" as having "mission-critical"systems remediated and tested(preferably by a third party)however,banks do't seem to be forthcoming as to what is "mission critical".To the y2k-alarmed,mission critical seems to be double-speak for "any system remediated"and the S.E.C. 10-Q filings don't seem to point at good news.

-- zoobie (zoob@aol.com), April 26, 1999.

Just an added point... privately held companies have no obligation to report Y2K "compliance" (whatever the definition). The vast majority of U.S. businesses are private. Public companies owe an explanation to their shareholders... but only if the shareholders demand one. As an investor, you can choose to invest (or disinvest) based on a public firms Y2K status. (I'm surprised we have not seen a Y2K "OK" mutual fund advertising via email). Public companies are guarded about making compliance statements because of the massive legal implications. (Every time a stock plummets, there are lawyers pushing class action suits on behalf of disgruntled shareholders.) Until companies have some protection from the legal sharks, the best strategy is to work hard on compliance, and say nothing.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), April 26, 1999.


J,

It _should_ concern you, because most of the defining is being done by those who are convinced that Y2K will be Bad, and by the consultants doing all that "remediation" work.

-- Stephen M. Poole, CET (smpoole7@bellsouth.net), April 26, 1999.


Mr. Decker, et alia:

The question of corupt data is not quite so esily dismissed. Yes, they will catch any date error in transmissions for which the date is out of range. the real question is about data in the transmission which was calculated on a system that did not handle the date correctly, and which generated an invalid value which was still within the expected limits on the transaction.

These will NOT be caught until it is VERY late in the game, and MAY cause the shut-down of certain international fund transit paths, as well as some banks being cut off. See several threads on this topic, specifically the extremely long but well written "VISA is Toast" threads.

Should certain countries' banks be removed from the loop, the international picture gets VERY dark, VERY quickly.

Chuck

-- chuck, a Night Driver (rienzoo@en.com), April 26, 1999.


SMP,CET

Stephen:

Just a few comments regarding some of your statements. You seem to speak with great authority regarding how banks handle computer transactions. Yet when I examine your statements carefully, they do not make any sense. The problem is that you seem to miss what is being addressed and go off on a tangent. For example your response to this statement: Does anyone know if, come january 3, if SOME banks (obviously not in america) have problems with corrupt data, can said banks be shut off from the rest of the international banking world and what would the process be? Instead of addressing the issue, you go on about how banks monitor the transactions based on the dollar amount, and the higher the dollar amount the the greater the involvement of senior level people. You then went on about how no one is going to transfer zillions of dollars without going through the right procedures. You missed the whole issue. If a non-compliant bank transfers data to a compliant bank, will this cause problems?

Do you have a background in banking? If so, please explain.

Another statement that makes absolutely no sense is the following: " An IT/IS person can tell me how likely it is that a computer will fail; period. Anything beyond that is nothing but an opinion." Think about what you said. The fact of the matter is that an IT type probably cannot tell you what it takes to make a computer fail, unless they had extinsive hardware knowledge. But they could tell you how computer programs can fail. I don'nt think you have much knowledge in how computer programs are developed. In my experience, An IT type, usually a systems guy, gets specifications for a new program from management. They then develop output reports and other system design criteria. They then devlop flow charts by working with key individuals from all the functional departments. They then work with the individual programmers who devlop code. After the code is developed and the system is up and running they then present the program to the functional departments for final review and approval. To say that a IT type does not understand the process is to show your blatent igronance of the development process. As a matter of fact, IT types generally know more than any one functional group about how the whole process works since they are the only one's who are privy to the big picture.

You go on to comment about how nobody can define "compliant". But again, you miss the key issue. The key issue is that there are no standards regarding Y2K. The lack of standards reflects the lack of national leadership.

You seem to get a lot of delight in stirring up issues. I somehow get the impression that you are rather young, I'd say under age 25, and have limited computer programming expertise. Yet you get-off by trying to stir up controversy. The problem with this is Stephen, is that Y2K is a very serious issue and needs to be dealt with by responsible adults.

You keep asking to see examples. Why don'nt you do some research, the truth is out there.

-- Watcher (anon@anon.com), April 26, 1999.



To the "bump-in-the -road"crowd,does anyone know if,come january 3,if SOME banks(obviously not in america) have problems with corrupt data,can said banks be shut off from the rest of the international banking world and what would the process be??People who get upset with us doomsters should realize that we are making these outlandish,nutbag survival plans because y2k scares the sh*t out of us and the polyannas never seem to give us informed rebuttals..."

If you would ask the proper questions, you might get better answers. To even consider your question assumes a number of negatives...none proven. the better question to ask is

"what do banks do right now with corrupt data?"

this was dealt with on other threads, so I'll let you find out for yourself. Might be enlightening to talk (in a rational manner mind you; not the spittle-spewing wild-eyed crap of the doomers) with a local bank and see how they handle corrupt data...and plans for handling y2k data.

-- Long Time Lurker (NOYB@TThis.time), April 26, 1999.


The validity checks for international banking transactions go well beyond range errors. I can ask some friends in banking IT for specifics, but my inquires may sound a great deal like hacking. If you know the rules, you can "game" the system. The international banking system is under constant attack from hackers... in the words of Willie Sutton, because that's where they keep the money. Post-Y2K transactions will receive great scrutiny for many reasons, one being that it's a window of opportunity for hackers. Think of the advantage of blaming Y2K problems to try to open the electronic vault. And do not imagine that bankers are so unimaginative as to not thought the same.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), April 26, 1999.


Hi Watcher,

You're quite correct about how systems are developed.

I'm always amused by non-IT people and their 'understanding' of what's needed to design and implement large scale systems -- and how they say that good IT people "don't understand the business," when in reality, IT people understand the detailed operation of a business better than most people running the business.

-- Dean -- from (almost) Duh Moines (dtmiller@nevia.net), April 26, 1999.


And I am amused by the IT people who run companies into the ground. Having spent some time with IT pros, there are a few who have no shortage of ego (believe it or not). I have known some brilliant technical people, but in the business world, intelligence is not enough. The best technology does not always win (see Microsoft). Oh, and I have seen the IT shop "categorize" IT CEOs. The winners are just like them, and the losers are "management boneheads."

The great thing about a free market, everyone has a chance to step up to the plate and take a swing. Find a venture capital firm and prove to everyone business ain't that tough. While I do not agree with Ed Yourdon about much, he has shown business savvy. I am sure his Y2K book has upped his rate card, and generated a tidy profit along the way.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), April 26, 1999.


I wonder why Stephen M. Poole, CET is not responding to Watcher's comments?

-- Curious (anon@anon.com), April 26, 1999.


Well, curious, maybe Stephen is off donig someting in the 'real' world, like earning a living. Having read his previous posts, I'm sure you'll agree he's not usually at a loss for words.

-- Amused (chortling@thats.right), April 26, 1999.

Amused: Yes, I have been working. I can't respond to everyone. But, since he asked ...

Watcher:Instead of addressing the issue, you go on about how banks monitor the transactions based on the dollar amount, and the higher the dollar amount the the greater the involvement of senior level people.

I was using that as an example to counter the idea that the transfers occur entirely without human monitoring.

If a non-compliant bank transfers data to a compliant bank, will this cause problems?

Depends on what you mean by "problems." The question is too broad. Banks get bogus transactions NOW, on a daily basis, so ALL transactions are verified. Why? Because anything that can occur by accident can also occur on purpose (and vice-versa). A foreign bank might send in a corrupt transaction; a criminal might also attempt to do the same thing to get a little extra spending money for the holidays.[g]

an IT type probably cannot tell you what it takes to make a computer fail, unless they had extinsive hardware knowledge. But they could tell you how computer programs can fail.

Boy, you're picking nits now. That's what I meant (and I thought that would have been obvious).

I don'nt think you have much knowledge in how computer programs are developed.

Hush! Don't tell that to the companies I've worked for; they might want their checks back. :)

To say that a IT type does not understand the process is to show your blatent igronance of the development process.

Having erected a strawman, you then proceed to beat it senseless. My point was: IT/IS types can tell me how likely it is that certain programs or systems will fail. But they should stop there. If they try to tell me how likely it is that their company will fail in that case, I consider that just another opinion, because that's not their purview.

IT types generally know more than any one functional group about how the whole process works since they are the only one's who are privy to the big picture.

Yessir buddy, and if you don't believe it, just ask them.[g]

In fact, IT/IS types generally know just enough about company operations to be dangerous, and speculating outside of their purview is about 90% of the reason for Doom and Gloom.

The key issue is that there are no standards regarding Y2K. The lack of standards reflects the lack of national leadership.

No argument there. Personally, I hate the word "compliant." I prefer, "Y2K Ready." But do realize that the latter doesn't require computers. If pocket calculators, a cash drawer, and a simple list of books sold (to replenish inventory) will let Waldenbooks(tm) keep selling tomes to buyers, they're "Y2K Ready" in my ... erm, book.[g]

I somehow get the impression that you are rather young, I'd say under age 25, and have limited computer programming expertise.

Well, I'm 43, and have had enough experience to help write several software packages for various companies. But I realize that doesn't make me an "expert" (another term I've come to loathe with the advent of Y2K).

An "expert" is anyone who's more than 20 miles from home with a briefcase. I moved from NC to AL, so I've got the mileage, but the cats clawed up my briefcase, so the jury's still out.

Yet you get-off by trying to stir up controversy. The problem with this is Stephen, is that Y2K is a very serious issue and needs to be dealt with by responsible adults.

Ah, the old, "we're the experts; the rest of you little people stay out of it and let us run things." Fine. You want to fix programs, that's your job. I appreciate that, in fact; there ARE some Y2K bugs that need to be fixed.

But when you start speculating about bank failures and transportation failures and power failures and stuff like that, you're merely expressing an opinion -- and I can do that, too.

You keep asking to see examples. Why don'nt you do some research, the truth is out there.

Friend, I would invite you to do the same. You need especially to look at the historical precedents here -- like the Michelangelo virus hysteria of 1992, which I cover at my Web site. Millions of computers were at risk. Wide-spread disruptions were predicted. When the Big Day passed, it was a non-event.

The same has already been seen here: the Euro, the airline reservation system, dozens of companies starting their fiscal years 2000, the April non-events -- all of which were predicted in advance to be signs of the Pending Collapse.

In fact, I think it would make excellent study to determine WHY these predictions were so wrong. You might learn something about the Doom and Gloom predicted for Y2K in general -- including the idea that banks might receive "bogus" transactions and die.

-- Stephen M. Poole, CET (smpoole7@bellsouth.net), April 27, 1999.


CET, is it true that yo mama wears combat boots!

-- Curious (anon@anon.com), April 27, 1999.

only when she's wupin' yo ass, and stompin' yo fat head, Curious!

-- NOT Stephen M. Poole (why@do.youcare), May 02, 1999.

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