problem. this figure was based on research done by fed economists and while our estimate of a ‘ $ 50 billion bug ’ still seems to be reasonable, i do expect this figure to move upward as we learn more throughout the year. i also perceive that the tools available to companies to address y2k issues have increased substantially. over the past months, most major computer hardware and software companies have released documentation of the y2k readiness of their products on their websites. similarly, most of the major computer publications now have elaborate ‘ how - to ’ guides on their web pages that will aid consumers and small businesses in their efforts to make their systems compliant. commercial software producers have also been busy, and new software products are available to aid programmers in repairing code. i hope and believe people are availing themselves of these new resources. as far as depository institutions are concerned, i am encouraged by the progress that has been made over the past year, and there is every reason to be confident that our banking system will be ready. based on ongoing reviews of all depository institutions as completed by federal banking regulatory agencies, the vast majority is making satisfactory progress in their y2k planning and readiness efforts. only a small percentage has been rated ‘ needs improvement ’ and well under 1 % have been rated ‘ unsatisfactory ’. in these cases, the agencies have initiated intensive supervisory follow - up, including restrictions on expansionary activities by deficient organizations. for the rest of this year the agencies will be continually revisiting any institutions identified as having problems, as well as all those identified as being key to systemic health. while we can be confident institutions are addressing the problem, it is important to recognize that regulators cannot be responsible for ensuring or guaranteeing the y2k readiness and viability of the banking organizations they supervise. rather, the board of directors and senior management of banks and other financial institutions must be responsible for ensuring the institutions they manage are able to provide high quality and continuous service in january 2000. they have every motivation to do so – their survival is at stake. the federal reserve system has itself made great progress on y2k issues, meeting the goals we set for ourselves. in addition to completing two rounds of reviews of the y2k readiness of all banks subject to our supervisory authority, we have renovated and tested virtually all our own applications. as mentioned, we have opened our mission - critical systems to customers for testing with us and have progressed significantly in our contingency planning

have benefits for everyone. of course, it is clearly impossible to coordinate the y2k activities of millions of individual establishments. to help fill this void, numerous organizations have emerged as clearinghouses of information, and other institutions and consortiums are functioning as vehicles for system testing. the federal reserve, for instance, has established an extensive, separate and dedicated computer environment for the purpose of testing with its depository institution customers, and as we speak the securities industry is undergoing a five - week long series of tests to assess its ability to conduct business through its network of institutions. bank supervisors, including the federal reserve, are holding their banks accountable for the effectiveness of their y2k efforts, and i can assure you that there will be regulatory consequences for banks that do not fulfill their obligations. but many other organizations are on their own to test their critical systems with their key suppliers and customers. because this situation is ubiquitous, complex, and fragmented, it is a very difficult task to quantify the aggregate costs of y2k remediation. similarly and perhaps more importantly, we also have no national scorecard on how effective our economy is being in our remediation efforts, and until quite recently very little national preparedness information at all. under these circumstances, it is not hard to understand why the millennium bug is viewed as such as unpredictable phenomenon, and why it has attracted so much gloom and doom commentary. so, what is being done? the short answer is a great deal is being done. in january the president ’ s commission on the year 2000 issued the first of its promised quarterly assessments of the state of preparation in our country and internationally. more recently we have had helpful assessments from the congress and various security analysts. from these and other sources, let me review for you our understanding of the status of efforts by the private sector, government entities, and the world community to deal with the year 2000 problem. as far as the private sector is concerned, efforts to deal with the millennium bug have been steadily intensifying and are now proceeding very rapidly. i think it is a good sign that in the last few days articles have been appearing in the business press that the numerous y2k remediation boutiques which sprang up over the past two years are beginning to experience a slowdown in activity and are starting to look for other things to do. in congressional testimony last spring, i suggested that the private sector might spend approximately $ 50 billion between 1998 and 2000 to tackle the y2k