Academic journal article ABA Banking Journal

Liability Concerns Drive Multi-Industry Effort

Academic journal article ABA Banking Journal

Liability Concerns Drive Multi-Industry Effort

Article excerpt

Congress continues to consider legislation limiting or containing liability for banks and other firms caught up in the Year 2000 challenge. At last count five different legislative proposals had been made in the House and the Senate. In March the Senate Special Committee on the Year 2000 Technology Problem, chaired by Sen. Robert Bennett (R.-Utah), held hearings on various liability proposals. John H. McGuckin, Jr., executive vice-president and general counsel, Union Bank of California, San Francisco, testified for ABA.

McGuckin stressed the enormous investment that banks as a whole have made in remediating systems and procedures to be ready for Y2K. He noted that, while some critics believe liability legislation would take away banks' incentive to keep preparing, "it is clear that Y2K readiness is a competitive issue."

"Banks want to keep our customers and build our businesses, and to do so we must be ready for Y2K," testified McGuckin. "We do not need the threat of litigation as a stick to make us remediate. In fact, the litigation threat is an impediment." McGuckin outlined elements that ABA, as part of a coalition of businesses, believes litigation legislation should incorporate. These include: affording service providers like banks a period of time to rectify Y2K-related problems before a lawsuit can be filed; encouragement to solve difficulties through mediation; requirement that any Y2K claims made be specific, not general, in nature; finally, a provision for contracts to be the first point of reference for defining the rights and obligations of any party involved in a Y2K dispute. …

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