The bank computer hacking crime just keeps getting bigger, and even before the extent of damage has been fully assessed the idea of a taxpayer bailout is being floated.
Bankers and U.S. officials have warned that cyber-terrorists will try to wreck the financial system’s computer networks. What they aren’t saying publicly is that taxpayers will probably have to cover much of the damage.Washington never fixed the Too-Big-To-Fail problem (which is also the Too-Big-To-Prosecute problem), thus it is simply assumed that the taxpayer will always be there for the Wall Street banks.
The full extent of the hacks is still being determined. JPMorgan Chase's computer systems were compromised for two full months before it was discovered.
The hackers unleashed malicious programs that had been designed to penetrate the corporate network of JPMorgan -- the largest U.S. bank, which had vowed two months before the attack began to spend a quarter-billion dollars a year on cybersecurity. With sophisticated tools, the intruders reached deep into the bank’s infrastructure, silently siphoning off gigabytes of information, including customer-account data, until mid-August.How much damage was done during those two months is unknown. A new report says that "some bank records at JPMorgan were altered and possibly deleted".
It also turns out that the attack "affected seven financial organizations", not just two as originally reported.
Easily the most amusing part of this whole event is how JPMorgan Chase reported that it wasn't seeing "unusual fraud" in its investigation.
We can only assume that "unusual fraud" is different from the "regular fraud" that JPMorgan Chase typically engages in. JPMorgan has paid around $27 Billion in fines in the last few years from its "regular fraud".
Now that we have some idea of how serious this hacking event was, let's get back to the taxpayer bailout trial balloon.
The government might have little choice but to step in after an attack large enough to threaten the financial system. Federal deposit insurance would apply only if a bank failed, not if hackers drained accounts. The banks would have to tap their reserves and then their private insurance, which wouldn’t be enough to cover all claims from a catastrophic event, DeMarco and other industry officials said.So there you have it. Wall Street will be protected from its own incompetence by the taxpayer because terrorists.
Discussions about the government’s role in cleaning up after a catastrophic cyber assault have centered on the Terrorism Risk Insurance Act, or TRIA. States are also pressing Washington to clarify how the Stafford Act, the main statute for relief from natural disasters, would factor in.
The insurance law, enacted after the 2001 attacks, authorizes the government to provide financial support for insurance companies in the wake of terrorism. It is up for renewal this year. Under TRIA, insurers cover a fixed amount of losses from terrorist attacks with the government backstopping additional costs up to $100 billion. The law gives the Treasury secretary broad latitude to invoke the backstop.
In private meetings, Treasury officials have told insurance industry lobbyists that the department would treat cyber-terror like a physical attack under TRIA, said the people involved with the talks, who spoke on condition of anonymity because the discussions were private.
Republicans in Washington. Democrats in Washington. It doesn't seem to matter to Wall Street because they own both parties.