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The Aging Network

Information Memoranda

October 15, 1999
INFORMATION MEMORANDUM
AoA-IM-
99-04

TO : STATE AND AREA AGENCIES ADMINISTERING PLANS UNDER TITLE III AND TRIBAL ORGANIZATIONS ADMINISTERING PLANS UNDER TITLE VI OF THE OLDER AMERICANS ACT OF 1965, AS AMENDED

SUBJECT :FINANCIAL LITERACY, BANKING and Y2K

LEGAL AND RELATED : Older Americans Act, As Amended

REFERENCES :


PURPOSE:

The purpose of this memorandum is twofold:

1) to share with you some of the steps the Administration on Aging (AoA) is taking to help midlife and older Americans prepare for the transition to the Year 2000 (Y2K) and plan for their future financial security, and

2) to ask for your immediate assistance in disseminating information on Y2K to the elderly and their caregivers.

AoA is committed to preparing America for population longevity and the challenges associated with it. Increasing numbers of Americans are aware that this potential for longer life expectancy increases the need to be financially literate and secure. As such, AoA is working with the Federal Deposit Insurance Corporation (FDIC) to conduct an informational campaign about the importance of establishing a banking relationship, and the benefits of deposit insurance. The FDIC, an independent agency of the U.S. government, was established by Congress to insure bank deposits, help maintain sound conditions in our banking system and protect the nation's money supply in case of financial institution failure. The basic amount of deposit insurance, for insured deposits maintained in different categories of legal ownership, is $100,000 for each category. At a later date, we will share with you plans for our long-term goals related to financial literacy and education. Presently, the short-term goal of the AoA/FDIC relationship is to enhance confidence in the safety of the banking system as we approach the Year 2000.

BACKGROUND ON Y2K:

The Y2K date change can affect any computer system that uses software programs or computer chips, including automated equipment and machinery. Many software programs store years as two-digit rather than four-digit numbers. So the year 1999 is read as A99" by the computer. This approach will work until the Year 2000 when the two digit A00" may be read as 1900 instead of 2000.

Companies that use computerized systems may experience problems related to Y2K. Banks and financial institutions use computers to perform financial calculations, track deposits and loan payments, transfer funds, and make direct deposits. Computer software is also used to run security systems, vaults, and other bank equipment. Because banks rely so heavily on computers, they are placing a great emphasis on making sure their systems are ready for Y2K.

The Boards of Directors of financial institutions have adopted detailed plans that set out specific dates when critical steps must be taken. Banks and savings associations are also working closely with outside companies that support their operations o make sure that the companies' systems will be ready for the century date change. FDIC-insured banks and savings institutions have also developed contingency plans that will provide for alternative ways of doing business in the event of any unforeseen problem.

Y2K PREPARATION STATUS:

Recognizing the need for Y2K preparation, the FDIC and other regulatory agencies conduct special examinations of insured banks and savings institutions to make sure they are taking necessary steps to get ready for Y2K. They believe that the institutions have made substantial progress in preparation for Y2K and are assured that banks, and savings institutions, are prepared for the date change. Currently, the vast majority of insured institutions are rated "Satisfactory." Institutions rated less than satisfactory are receiving intensified supervision. FDIC-insured deposits are completely safe. FDIC insurance is a guarantee you can bank on

CONSUMER EDUCATION AND AVAILABLE RESOURCES:

We know that you share with us the need to educate older consumers about Y2K and to help them take advantage of information pertaining to their financial security. FDIC has prepared several informational materials to help consumers prepare for the date change, including the attached FACT SHEET Y2K,Your Bank and You,which may be duplicated. FDIC has also prepared a Y2K Tool Kit, which the FDIC will send to you shortly. [You can request additional Tool Kits directly from FDIC by contacting the regional office responsible for your state on the attached Regional list.] FDIC also maintains a Website at www.fdic.gov that contains information about Y2K preparations, general banking news and statistics, fraud and abuse protections, and guide to financial caregiving.

We ask that you share these resources with network agencies/contractors so that they may appropriately inform the elderly and their caregivers about FDIC insured banks' Y2K readiness. Specifically, we recommend that state and area agencies take the following steps to promote awareness:

o Disseminate FDIC Fact Sheet, Y2KTool Kit and Website address to state, area and local l&R units, hotlines, resource centers, Ombudsman programs, SHIPs, wellness and family support centers, and other community programs;

o Encourage distribution of materials by contractors and providers at senior centers, long-term care programs, congregate meal sites, home delivered meal routes, etc;

o Refer to FDIC's Website and include information on Y2K readiness in all state, local and area newsletters, publications and Websites;

o Include Y2K information in local speeches, public forums and advisory committee meeting.

We invite you to join in our effort to reassure the midlife and elderly populations and their caregivers that, in reality, Y2K poses no threat to their FDIC-insured deposits.

Jeanette C. Takamura
Assistant Secretary for Aging -      

Donna Tanoue
Chairman, FDIC