One or two little errors in a big computer program can cost a hideous amount of money, as United Education & Software Inc and BankAmerica Corp are finding to their chagrin: according to the Wall Street Journal, for eight months, the new computers at United in San Francisco, designed to collect repayments on student loans, […]
One or two little errors in a big computer program can cost a hideous amount of money, as United Education & Software Inc and BankAmerica Corp are finding to their chagrin: according to the Wall Street Journal, for eight months, the new computers at United in San Francisco, designed to collect repayments on student loans, routinely rejected payments from overdue borrowers, and came up with such inspired addresses for New Yorkers as Radio City, New York; the music hall farce is not raising any smiles in the banking community, because now the US Education Department has refused to pay out on guarantees on federally-backed student loans, which means that BankAmerica and other major banks including CitiCorp and most of the blue-blood banks in Tokyo face default on as much as $650m on letters of credit they issued to finance the loans; most of the banks reckon that the buck stops with already troubled BankAmerica, which managed the loans, and the bank will increase its first quarter reserves to cover some of the expected losses – but its view that the losses of the other banks are their own affair has triggered threats to sue it.
