Year-2000 expert Peter de Jager did not pull any punches in a speech Monday to bank managers and technology staff members.
Like some end-of-the-millennium seer, the Ontario-based consultant preached doom-even for the relatively well-prepared financial sector.
"If today were Jan. 1, 2000, and our systems were in the same state they're in today, every single one of you would have to close your business," he said at a conference on year-2000 liability compliance sponsored by American Banker and the Strategic Research Institute.
Mr. de Jager praised federal bank regulators for "beginning to take a big, thick stick to the heads" of bankers. But he said agencies should accelerate by six months the mid-1999 deadline for banks to finish fixing their computers.
Mr. de Jager-who identified himself as "a poor schmuck programmer who saw a problem and has been speaking about it for seven years"-cited three year-2000 "best practices" for financial institutions.
First, he said, banks must perform triage. Pick the most important services, fix them, and let the rest wait until later, he said.
Second, Mr. de Jager advised against tapping an information technology staff person to lead the bank's year-2000 project. They do not know enough about marketing and customer relations to correctly identify a bank's most critical services, he said. ATM services, for example, are not as important as the ability to have tellers hand customers their money, he said.
Third, banks should maintain an internal checklist on the year-2000 status of mission-critical systems and hardware, he said.
Mr. de Jager said mergers between large banks can safely continue into 1999, provided the banks do not try to merge their systems during the next 20 months. To merge other than in name only while trying to rectify year- 2000 issues would be, in his words, "certifiably insane."
Acquisitions of noncompliant small banks by big ones that are compliant might be an exception. But even system accommodations of that size can strain the larger bank, Mr. de Jager said.
Mr. de Jager's level of concern about year-2000 problems became crystal clear when he labeled Edward Yardeni, the economist who says there's a 60% chance of a year-2000-related recession, an optimist.
Recession "is totally unavoidable," Mr. De Jager said. "Not because we can't solve this problem, but because we're still discussing" it.
"What's to discuss?" he asked. "It's broken. Fix it."
