With the latest legislation on the Year 2000 computer problem, Congress moves federal financial regulators to the front of the classroom, into a teaching role.
Late yesterday, the House of Representatives unanimously passed a bill that would require federal financial regulators to provide education to financial institutions along with model approaches for solving the Year 2000 bug.
House Banking Committee Chairman James Leach (R-Iowa), who filed the bill, said it would give federal regulators broad latitude to work together with banks and help them prepare their computers.
While the proposed legislation was debated in the house, two other senators amended the bill to boost the regulatory authority of Office of Thrift Supervision (OTS) and the National Credit Union Administration (NCUA).
Senators Bob Bennett (R-Utah) and Chris Dodd (D-Connecticut), both members of the Senate Banking Subcommittee on Financial Services and Technology, introduced the bill, which gives the OTS and NCUA the authority to examine the operations of service corporations or other entities which perform services for thrifts and credit unions. This extended power will give the two agencies the same statutory authority as the Federal Reserve, Comptroller of the Currency, and the Federal Deposit Insurance Corporation .
The millennium bug stems from decisions by programmers in the 1960s to refer to the date by using only the last two digits of a year instead of all four. Programmers continued to use that shorthand until very recently. When 00 comes up for the year 2000, many computers will view it as 1900 instead, causing widespread problems.
The Gartner Group has estimated the worldwide cost of dealing with the bug at between $300 billion and $600 billion. Although not entirely driven by the Y2K bug, the federal government estimates that the nation will need more than 1 million additional IT workers by 2005.
The Bennett-Dodd amendment puts the regulatory authority of credit unions and thrifts on par with that of other financial regulators, Bennett said in a statement. "Given the fact that the General Accounting Office has found the NCUA to be far behind in its race to compliance, this increased authority will eliminate an obstacle which may be holding it back."
The legislation also requires the federal financial regulatory agencies to hold seminars for financial institutions on the implications of the Y2K problem for "safe and sound" operations, according to Bennett.
In related news, Dodd and Bennett recently sent an urgent letter pressing U.S. Treasury secretary Robert Rubin to make the Year 2000 issue top priority for discussions with his counterparts at the G-8 conference for finance ministers held in London last weekend. In the letter the two senators told Rubin they are troubled over recent reports about "the lack of preparation by major industrialized nations to deal with the Year 2000 computer problem."
Rubin could not be reached for comment.
Reuters contributed to this report.