An article on Mike Hyatt's website caught my eye. It says that a number of large banks have dramatically increased their estimated spending on Y2K code repair recently. Citigroup, for example, is now projecting a total cost of $950 million, a $50 million increase. $50 million ain't exactly chicken feed, y'all.

The ominous part of the report said that a significant portion of the $3.5 billion that banks plan to spend on Y2K compliance has not yet been spent. We've got only four months left, the banks are increasing their spending estimates, and yet much of this money has not yet been spent? What's wrong with this picture?

To me this adds up to: Time To Withdraw More Cash!

-- cody varian (cody@y2ksurvive.com), September 01, 1999

Answers

I believe the original report (somewhere here, probably archived) also included the explanation from several banks that they were including additional dollars for customer "communication efforts" - brochures, mailers, etc. This was given as a cause for the increase by some. Sure I am skeptical but it also bothers me when things are taken out of context. .........

-- Kristi (securxsys@cs.com), September 01, 1999.

I believe the original report (somewhere here, probably archived) also included the explanation from several banks that they were including additional dollars for customer "communication efforts" - brochures, mailers, etc. This was given as a cause for the increase by some. Sure I am skeptical but it also bothers me when things are taken out of context. ......... Oh, and it was also mentioned that a big cause of extra spending was for independent, third party testing and verification - if my memory serves me correctly........

-- Kristi (securxsys@cs.com), September 01, 1999.

$50 million for customer communications from Citigroup? Come on, Kristi, no one is that naive.

It's also getting rather late for verification and testing.

-- cody (cody@y2ksurvive.com), September 01, 1999.

Link to Michael Hyatt's news site

Link to C/NET News articleDated Aug. 20, 1999.

Five top banks raise Y2K spending estimates By Bloomberg News Special to CNET News.com August 20, 1999, 10:30 a.m. PT

Five of the top 15 U.S. banks have disclosed to the Securities and Exchange Commission it will cost more to fix the year-2000 computer bug problem than they had estimated only three months earlier, according to reports.

Citigroup said it expects to spend $950 million, 5.6 percent higher than its previous estimate, Chase Manhattan estimates its bill for the year alone at $158 million, 24 percent higher than estimated, and the Wells Fargo expects to spend $325 million, a 3.2 percent increase.

[$37,920,000 - the 24% increase for Chase Manhattan - would buy a hell of a boatload of happyface customer brochures. If they previously didn't include IV&V, and have just now thought of it and included it in their budget... that is NOT good news. Only 2 of the top 25 banks in the world are U.S. banks - Citycorp and Chase Manhattan. And both of them are still raising budgets SIGNIFICANTLY. They are NOT done. This is NOT good news.]

The nation's 15 biggest banks, excluding Bankers Trust, now project a combined Year-2000 bill of almost $3.51 billion, up 2.6 percent on their March 31 estimate of $3.42 billion, the Wall Street Journal said, citing the SEC report.

Four small brokerages were ordered August 3 by an administrative-law judge to pay a total of $170,000 in fines for failing to file Year 2000 progress reports with federal regulators.

Copyright 1999, Bloomberg L.P. All Rights Reserved.

-- Linda (lwmb@psln.com), September 01, 1999.

Two corrections:

The above link to the C/NET article didn't work. Try this:

http://www.news.com/News/Item/0,4,41010,00.html?st.ne.bp..bphed

And my math was wrong. If their *this year's* budget is $158 million, and that is an increase of 24% - then previously it was $127.4 million, and has increased by $30,580,000. Still will buy a boatload of brochures. Sorry for the oops.

-- Linda (lwmb@psln.com), September 01, 1999.

Almost ALL systems at those two U. S. based large banks are mission critical. At one of these banks, I can think of only two non critical apps...The one that manages the Bank's art collection (including an INFAMOUS pair of dueling pistols), and one that runs a swimming meet in Westchester County.

-- K. Stevens (kstevens@ It's ALL going away in January.com), September 01, 1999.

Cody,

I was simply pointing out "the rest of the story" - I also am skeptical. Linda, thank you for your followup. :)

-- Kristi (securxsys@cs.com), September 01, 1999.

$50 million for "communication efforts" for one entity is a red flag. Unless they plan on doing more than print advertising. Maybe we'll start seeing special Y2k spots on TV.

The thing that gets to me is that budgets are increasing at this late date. This means that either costs were underestimated or the scale of the project was underestimated. Maybe by now the "only good news" to managers has switched to "oh, sh*t!" and the big push is starting. Regardless, I can't see how this is good news, even if the increase is partly for IV&V, because there isn't a heck of a lot of time left.

Mike

==============================================================

-- Michael Taylor (mtdesign3@aol.com), September 01, 1999.