Credit Unions Under Attack

November 9, 2012 at 7:49 am Leave a comment

Not that you would know it from the media these days but the largest banks are under an organized cyber attack aimed at taking down their services.  If you think I’m exaggerating, then here is a quote from Homeland Security Secretary Janet Napolitano, as reported in the Hill last Wednesday:

“Right now, financial institutions are actively under attack.  We know that.  I’m not giving you any classified information,” she said. “I will say this has involved some of our nation’s largest institutions. We’ve also had our stock exchanges attacked over the last [few] years, so we know … there are vulnerabilities.”

In early October, several banks were confronted with “denial of service” attacks.  The New York Times has reported that the attacks are being orchestrated with the assistance of governments, including Iran, with a degree of sophistication that has surprised analysts.  Finally, the American Banker is reporting that the cyber-attackers expect to try their hand at data theft.

Why should credit unions care?  Although the cyber attacks are being directed primarily against large institutions, sophisticated groups are already looking for more vulnerable targets.  The FBI issued a warning in September that the employees of small to medium-sized banks and credit unions are being targeted by hackers with bogus emails containing programs that read key strokes.  Once hackers get the right information, they can access third-party data bases such as that maintained by credit reporting agencies.  In addition, this excellent post in the ever informative InfoSecurity Blog details how hackers were able to commit nationwide identity theft by stealing internal passwords of a West Texas Credit Union.

As I pointed out in a previous blog, the US attorney for the Southern District of New York has compared cyber attacks to Pearl Harbor.  I don’t think this is much of an exaggeration.  One effect attacks like these have is to make all internet-based services more expensive for everyone.  Insurance for protection against data theft is already out of reach for all but the richest institutions and if we aren’t careful, we are going to end up with a system where only large institutions can cost-effectively and safely provide the technological services that our members are going to expect.  More importantly, members are going to lose confidence in institutions that can’t provide seamless electronic service no matter how much the disruptions are outside the control of the financial institution.  This is one of those areas crying out for a national response now that the election is over and we know who the President is going to be for the next four years.

 

 

 

Entry filed under: Advocacy, General, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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