October 15, 1999
||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
SUBJECT :FINANCIAL LITERACY, BANKING and
LEGAL AND RELATED : Older Americans Act, As Amended
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
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 -