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Y2K Glitches: Immunity for All?

on the beat

By Pete Shuler · August 26th, 1999 · Statehouse

On Jan. 1, 2000, we will wake to see if the billions of lines of programming code that underlie almost everything from automatic doors and grocery store scanners to power stations and financial markets have been correctly updated to recognize the four-digit nomenclature of the new year.

Like some of us, Ohio's state legislators have been preparing for the arrival of this anticipated day. As part of the biennial budget signed by Gov. Bob Taft in June, the General Assembly established a $10 million loan program designed to help county, municipal and township governments avoid Y2K problems.

These interest-free loans may be used to upgrade or purchase computers and software and to correct any problems related to the accurate reading of century dates by computerized devices. Each government entity whose application is approved will get an amount based in part on the population of that entity's jurisdiction. The funds, available until June 30, 2000, must be repaid within two years of receipt.

The program will be administered locally by each county government or, if the county declines, by the largest municipality in the county. It will be overseen at the state level by the Ohio Year 2000 Competency Center, a division of the Ohio Department of Administrative Services.

Area Y2K officials say that because compliance projects for Hamilton County and Cincinnati are fully funded, neither entity will submit loan applications.

"The county won't apply for the funds," said Chuck Schlegel, Hamilton County's Y2K coordinator. "But we will administer the program for those principalities who wish to participate."

In addition to this financial assistance, lawmakers have provided county and local governments, as well as the state government, protection from civil lawsuits related to Y2K-induced computer failures.

Governmental entities may claim immunity from such lawsuits if they have made a good faith effort to become Y2K compliant before the first day of 2000.

The Y2K immunity provision, also included in the biennial budget, is similar to a separate bill introduced by Rep. George Terwilleger, R-Maineville. Terwilleger's bill, however, provided immunity from civil lawsuits without requiring that state and local governments first make a good-faith effort to eradicate Y2K problems.

"I'm happy that it (the Y2K immunity provision) made it into the budget," Terwilleger said. "Eighty percent of my bill is in there, and the way the legislation is written, we have put government on notice that they have to get things done before they receive immunity."

Although much of the Y2K legislation introduced this term has focused on governmental issues, Rep. Diane Grendell, R-Chesterland, has approached the Y2K issue from another perspective.

Legislation that she recently introduced would protect consumers from adverse actions such as foreclosures, defaults and negative credit reports if, because of problems resulting from Y2K-induced failures, they could not make payments or complete other contractually obligated financial transactions.

This protection would last only until the particular Y2K failure had been resolved and would not excuse consumers from ultimately fulfilling contracts or agreements they had signed.

"Loans should not be defaulted, mortgages should not be foreclosed on and credit ratings should not be ruined simply because a computer system crashes," Grendell said.

She thinks that this protection is especially important for those consumers who might not be able to closely monitor their finances.

"Some people, some senior citizens for example, may not realize what has happened until they have been dragged into the foreclosure process," Grendell said. "This bill is a great idea for everyone, but it is especially important for those who may not be able to defend themselves."

A June report issued to the U.S. House and Senate banking committees by the Federal Reserve indicates that 95 percent of American banks already have completed testing of their systems for Y2K compliance, and the remaining 5 percent will do so by September 30, 1999. A similar report prepared by the Federal Deposit Insurance Corporation (FDIC), the federal agency that insures much of the money held in American banks, claims that 99 percent of FDIC-insured banks have passed Y2K compliance testing.

Such reports of preparedness are plentiful and might comfort those concerned about the financial implications of Y2K failures. Grendell's bill, however, provides an additional layer of protection at no additional cost.



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