Fed officials: Hackers would start small on way to banking system
Hackers looking to sabotage the U.S. banking system could break into larger companies by targeting smaller institutions, warn officials at the Federal Reserve in Boston, who have launched a pilot program to help thwart cyberattacks.
“We’re focused on the small and medium (banks) because they’re a great door into some of the larger organizations,” said Kenneth C. Montgomery, first vice president and chief operating officer at the Federal Reserve Bank of Boston, who joined fed President Eric Rosengren for a sit-down with Boston Herald editors and reporters yesterday.
“They rely on common service providers, they have to exchange information with other third parties,” Montgomery said. “So people are looking to not as much collect money that they can re-route somewhere — that’s harder to do — but to get information on the people sending money and then use that for their own personal gain.”
In an effort to help smaller, more vulnerable banks safeguard their operating systems, Montgomery said officials at the Federal Reserve Bank of Boston are expanding a pilot program aimed at providing them with the classified information they need to prepare for a cyberattack.
“We have somewhere between 40 and 50 mid- and small-sized institutions … that we meet with twice a month and we provide to them information regarding the threat environment,” Montgomery said, adding that they’ve also brought in tech experts to help identify areas where the banks can improve its security systems.
A successful hack of the Federal Reserve’s payment system, Montgomery warned, would trigger a global crisis.
“The Federal Reserve transfers $4.5 trillion a day. So that means the gross domestic product of $17 trillion goes through the fed about every three or four days,” Montgomery said.
“If that process was interrupted, after eight hours you would see a liquidity crisis in the United States. Several hours after that you would see that same situation happening globally.”
Hackers abroad — most notably in China, North Korea, Iran and Russia — may be targeting the U.S. banking system not just for their own personal gain, but to bring the global economy to a grinding halt, analysts warn. (Source: Boston Herald)