Banks will be prepared for potential pandemic.(Edward Yingling of American Bankers Association)

While a flu pandemic presents unique challenges, banks have an established history of disaster preparedness and will be ready, said ABA President and CEO Edward Yingling in testimony before the House Financial Services Subcommittee on Oversight and Investigations.

"When faced with natural disasters, banks have a proven record of operating smoothly, protecting consumers' deposits and providing continued access to their funds," said Yingling. "Banks are also required by law to have extensive disaster recovery plans in place, and state and federal regulators routinely examine each bank on their preparations."

Yingling noted that the banking industry's extensive planning process recently was "battle-tested" by Hurricane Katrina, and that banks continually revise their business continuity plans to accommodate new risks.

"While existing plans will be relevant during a potential pandemic, institutions are isolating those issues that are distinct to pandemics," he said.

Yingling described some of these unique risks, which include:

* Developing business continuity plans that take into account the different phases of a potential pandemic;

* Recognizing that high levels of absenteeism may occur and establishing ...