Circular
Year 2000 Conferences Managing Vendor Relationships
November 21, 1997
Circular No. 10995

To the Chief Executive Officers of All State Member Banks, Bank Holding Companies, Edge and Agreement Corporations, and Branches and Agencies of Foreign Banks in the Second Federal Reserve District, and Related Vendors Serving These Organizations:

The Issue

Financial institutions in the Second Federal Reserve District are generally well into their programs to make their computer applications and operating systems Year 2000 compliant. A significant part of these programs is developing effective partnerships with vendors upon which they depend.

From the financial institution'ss perspective, knowing exactly where a vendor stands on making a product Year 2000 compliant is crucial for developing detailed renovation and test plans. Getting complete and timely information from vendors is proving to be a challenging and time-consuming process for many financial institutions.

Vendors are in the process of developing their own programs and are often reluctant to share incomplete and rapidly evolving information. While most vendors are committed to addressing the issue and have been willing to pledge that their products will be compliant, they may stop short of providing the detailed information needed by financial institutions to fully develop their own detailed plans.

Efforts to share information on vendor plans among financial institutions have generally been met with concerns about potential legal liability. As a result, financial institutions are engaged in intensive due diligence efforts on their vendors -- efforts that many regard as unnecessarily redundant.

The Conferences

In order to explore ways to meet this issue more fully, the Federal Reserve Bank of New York is sponsoring a conference on managing Year 2000 vendor relationships. As described in the accompanying attachment, the conference will be held in the afternoon on Tuesday, January 6, and repeated on Wednesday, January 7, 1998 in the 12th floor Conference Center at the Federal Reserve Bank of New York. Each half-day conference will feature a discussion of how several financial institutions and vendors have crafted their own Year 2000 programs with a view to timely sharing of information to facilitate planning and testing.

The Conference Center holds about 275 people so space for the conferences is limited. We intend to video conference the session on Tuesday, January 6th to this Bank's branch in Buffalo for those for whom this may be a more convenient location. Registration for all sessions is free and will be on a first-come, first-served basis with confirmations required for admittance. We ask that institutions and vendors limit their attendees to no more than two people.

Registration forms may be mailed to Debra Capurso, Business Support Analyst, Bank Supervision Group. Questions regarding the conference may also be referred to Ms. Capurso. Questions regarding Year 2000 issues more generally can be referred to William Francis or Thomas Wines, Bank Examination Officers, Bank Supervision Group, respectively.