The Federal Reserve System's Cyberdefense Force

Interesting article on the cybersecurity branch of the Federal Reserve System.

Posted on May 1, 2014 at 6:52 AM • 16 Comments

Comments

Andrew DuaneMay 1, 2014 8:37 AM

Sadly, the article is behind a really annoying sign-up wall. Anyone have a link to an available version?

Nick PMay 1, 2014 10:24 AM

Interesting article. I like the double standard where the peons doing security are prohibited from trading on individual stocks, yet the groups they're protecting get rich off the same thing. And with plenty obfuscated insider trading. That's the "elite club." These guys just endure a lot of bullshit to maintain the elites' lifestyle.

Their one potential point of pride is that they do guard the dollar. At least, they guard the dollar against the kind of threats that just do snatch and grabs. The real threats to the dollar are on Wall St & in DC. They hit it hard at least once a decade, sometimes a few times. That's where we should invent max accountability effort for stability of dollar.

igivanovMay 1, 2014 10:36 AM

"If I was installing a switch in the data center, there was a guy with a machine gun watching. They're not messing around," the former employee said.
Hmmm... the guy with a gun presumably is a security nerd who knows exactly what the guy installing a switch is doing :-)

CallMeLateForSupperMay 1, 2014 10:43 AM

Machine gun(s) in a data center. What could possibly go wrong?
Functional USB ports on workstations; flash drives allowed. What could possibly go wrong?

MyselfMay 1, 2014 11:03 AM

Anyone else find it incredibly annoying that anytime you scroll the page, it reloads it? I went to go back in my browser and it had something like 20 page loads for this article.

Nick PMay 1, 2014 1:00 PM

@ Igivanov and CallMe

Lol I was thinking same thing on both accounts. Just wait till attackers learn about implants, covert channels and bribing/coercing personnel. ;)

NobodySpecialMay 1, 2014 1:28 PM

@igivanov - had that once working in a banks data center.

They had a security guard escort me, so I wouldn't be able to steal anything.
As far as this guy was concerned - if I didn't walk out of the computer room with a machine under my arm, then the bank was safe.

Mr. KronMay 1, 2014 2:27 PM

Paywall: Load page, hit print preview and read.

Content: Ah, the effort they expend to protect the image of their fiat. If this were and honest system we wouldn't need public relations agents armed with machine guns....

Fed EndMay 1, 2014 5:00 PM

@Nick P "They hit it hard at least once a decade, sometimes a few times."

These periodic swings go by the name of the "business cycle", and are caused in the first place by the actions of the Fed.

When the Fed forces nominal interest rates below the natural rate of interest to "stimulate growth", dislocations in the structure of capital result. Factories get built (or not built) in the wrong place or at the wrong time.

Since the cure for the last round of interest rate manipulation is more of the same type of manipulation, a vicious cycle results.

In the long run, this policy will end the dollar, and nothing will protect the Fed from the consequences of their own actions.

Andrew RichMay 1, 2014 6:10 PM

These AdBlock Pro rules work just great for foreignpolicy.com:

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Nick PMay 1, 2014 10:38 PM

@ Fed End

That's true as well. What I was referring to are major market manipulations such as those that led to 2008 failures & necessitated a $1 trillion bailout. The worrying about the millions black hats might steal while giving immunity to banks costing us a trillion seems like backward priorities to me. Of course, the banks paid for this privilege.

SkepticalMay 2, 2014 4:52 AM

@Nick P: The last thing I want to do is get involved in a discussion about the natural interest rate, but here is a very good take on the matter from several months ago.

The security in question here is in part about cybercriminals, but it's also about terrorists and highly sophisticated, state or state-like actors. Undermining the integrity of these transactions would cause immense problems, the systemic effects of which would be hard to predict.

And yes, this stability is what enables the investment and trading world to make money, but it's also vital to business at every level, and therefore, in a predominantly capitalist country, the welfare of people everywhere.

As to the preclearance requirement for trading individual stocks, that's not terribly unusual. Those at the policymaking level of the Fed probably have far less choice, indeed probably no choice at all, as to their investments.

Nick PMay 2, 2014 10:47 AM

@ Skeptical

"Undermining the integrity of these transactions would cause immense problems, the systemic effects of which would be hard to predict."

I agree securing them is hugely important. It's just interesting that they seem to only put token effort to dealing with the biggest banks that regularly do damage to our system.

65535May 3, 2014 12:09 AM

‘I like the double standard where the peons doing security are prohibited from trading on individual stocks, yet the groups they're protecting get rich off the same thing… That's the "elite club."’ –Nick P

I agree.

Taking a look at Citibank, one of the largest banks, shows a list of unfavorable actions starting at reference 14:

"Citigroup agrees to $285 million civil fraud penalty | Jay Bookman. Blogs.ajc.com (2011-10-19). Retrieved on 2013-12-06."

https://en.wikipedia.org/wiki/Citibank#References

This does not include the unfortunate relationship with Saudi Alwaleed bin Talal al Saud, one of the biggest individual shareholders of the Citi’s stock at one time.

“His stake in Citibank once accounted for approximately half of his wealth, prior to the financial crisis of 2007–08. At the end of 1990, he bought 4.9 percent of Citicorp’s existing common shares for $207 million ($12.46 per share)—the most that he could without being legally obliged to declare his interest.”

http://en.wikipedia.org/wiki/Al-Waleed_bin_Talal#Business_interests

The Fed’s actions are usually behind the curve. Their expansion and contraction of the money supply usually amplify - not dampen - economic swings.

DC has it share of scallywags. A quick search of the internet indicates poor accounting and huge losses in the Federal Government – which the guys with the machine guns protect:

“…the federal government flunked its audit for fiscal 2006, with $797 billion, or 53 percent, of its reported assets and an additional $790 billion, or 27 percent, of net costs, on the balance sheets of five agencies that could not be fully audited. This marks the 10th year in a row in which the government's consolidated audit statement received a judgment of "no comment" from auditors. The Defense, State and Homeland Security departments… received disclaimers on their 2006 audits.”

“Fiscal 2006 was the first year for which a statement of social insurance, which covers outlays for Social Security, Medicare, railroad retirement and black lung disease benefits, was considered a key financial statement. The statement showed projected outlays for those programs exceeding revenues by about $39 trillion over the next 75 years, Walker said. Combined with other long-term projected expenses, he said, the total government exposure was about $50 trillion at the end of fiscal 2006…”

http://www.govexec.com/management/2006/12/government-fails-10th-consecutive-audit/23351/

At least part of our financial system appears to be safe due to the NIRT division of the Fed.

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