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1998 Ron Paul Chapter 13

Millennium Bug

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24 February 1998


1998 Ron Paul 13:1
Mr. PAUL. Mr. Speaker, this Legislation, H.R. 3116, will not solve the Year 2000 problem. Giving some financial regulators “statutory parity” with other regulators will not solve the problem. Everyone will have to take responsibility to secure that their own systems will be Year 2000-compliant. We must hope that the government will be as diligent in its compliance with the so-called Millennium Bug problem as it want the private sector to be.

1998 Ron Paul 13:2
The General Accounting Office (GAO) has reported unfavorably on the FDIC’s readiness. Before the Subcommittee on Financial Services and Technology, Committee on Banking, Housing and Urban Affairs, US Senate, Jack L. Brock, Jr., Director, Governmentwide and Defense Information Systems, testified on February 10, 1998 (Year 2000 Computing Crisis: Federal Deposit Insurance Corporation’s Efforts to Ensure Bank’s Systems Are Year 2000 Compliant) that the Federal Deposit Insurance Corporation (FDIC) has not met its own “y2k-compliant” standards. According to GAO, the FDIC has not yet completed the assessment phase of the remediation process, despite its own standard that banks under the agency’s supervision should have completed this phase by the end of the third quarter of 1997.

1998 Ron Paul 13:3
The bill requires the regulators to provide information (seminars, etc.), make available to financial institutions model approaches to address the Year 2000 problem, and to give the regulators examination authority to examine third party service provides under contract to federally-insured institutions.

1998 Ron Paul 13:4
James Mills, of NAFCU, testified before the House Committee on Banking and Financial Services, “Historically, the role of providing education and training is one best performed by the private sector, namely trade associations and industry-related organizations . . . Rather than require federal agencies to offer seminars, perhaps any legislative efforts should require federal agencies to participate in such programs or make it advisable and permissible to participate.” NAFCU believes that the focus of H.R. 3116 should be strictly limited to ensuring compliance. In its present form, H.R. 3116 contains a broad and permanent expansion of NCUA’s examination and regulatory authority . . . Legitimate questions may be raised as to whether, absent the year 2000 issue, NCUA, as a federal financial regulatory agency, should have the authority not just to examine but to actually regulate private business enterprises incorporated under the laws of various states. The authority given to NCUA in H.R. 3116, is not limited to the examination and regulation of credit unions, but would allow NCUA to examine and regulate third-party businesses, vendors and outside providers. Do the members of the Committee intend to give NCUA authority to regulate private entities?”

1998 Ron Paul 13:5
Ellen Seidman, Director OTS, added, “Clearly, the primary responsibility and liability for Year 2000 compliance rests with the regulated institutions themselves, including those that rely on service providers . . . Some service providers, however, have been resistant to these contractual provisions and, as a result, thrifts have been hindered in their ability to contract for services.”

1998 Ron Paul 13:6
This bill raises legal liability questions that may actually thwart a financial institution’s ability to address the y2k problem more effectively. Introducing legislation on the y2k issue would only give more people more incentive to sue companies which are not compliant. How does the bill define “year 2000 compliance”? It isn’t clear. Such ambiguity only causes further problems. The real problem with y2k isn’t the computers, its the people. More legislation will only compound the problem.

1998 Ron Paul 13:7
Year 2000 issues with computers cause numerous headaches but by no means unsolvable problems. Solutions exist, and since we do exist in a relatively free market, we should allow it to work.

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