YEAR TO COME: TIME TO FIX Y2K

By now most of us are sick of hearing about the millennium bug – the software glitch that could freeze computers when we enter the year 2000. After all, the financial industry has probably committed more money to fixing the problem than any other sector – spending $5 billion by 2000 – so what’s to worry?

A lot. While it’s true financial companies have been preparing for Y2K for the last few years, the bad news is they are still not fully prepared for the switch. Couple that with the fact that much of the rest of the world hasn’t even paid attention to the problem yet, and an imminent danger emerges.

Edward Yardeni, one of the most outspoken Y2K analysts and chief economist at Deutsche Bank Securities Inc., predicts a 70% chance of a recession in 2000 or 2001. Many financial organizations globally are just beginning to assess the problem, says Mr. Yardeni.

Indeed, only half of the 500 banks surveyed last spring by the Securities Industry Association expect to have their computer systems fixed by the end of 1999. That leaves just one year to test the systems.

Aware of these scary statistics, the Securities and Exchange Commission for the first time asked companies to disclose their expected Y2K costs, and found that many companies will have to spend 20% to 30% more than they planned on just months ago to repair problems they have found while testing their systems.

The only good news is that Wall Street does seem on track. The Securities Industry Association last July sponsored a Y2K test with 28 companies and plans a more extensive test with about 400 companies this spring.