Back in late September, you probably went a couple of weeks unable to access your bank account, thanks to a massive wave of cyberattacks against Bank of America, JPMorgan Chase, and others. Well, Dennis Lockhart, the president of the Atlanta Federal Reserve, certainly hasn’t forgotten about it.
He recently delivered a speech in Berlin, much of which is about as dry as white toast. Mr. Lockhart, whom we’re sure is positively scintillating when you get him a subject like Real Housewives, focused his remarks on “potential sources of financial instability,” namely the payments system and public pensions. It’s appropriately wonky.
But it’s when he turns his attention to cyberattacks that Mr. Lockhart catches our attention. He’s warns that, “A real financial stability concern, however, is the potential for malicious disruptions to the payments system in the form of broadly targeted cyberattacks.” Oh, great!
Let’s harken back to those bank attacks:
The recent attacks involved unprecedented volumes of traffic—up to 20 times more than in previous attacks. Banks and other participants in the payments system will need to reevaluate defense strategies…. What was previously classified as an unlikely but very damaging event affecting one or a few institutions should now probably be thought of as a persistent threat with potential systemic implications.
“Potential systemic implications”? Do we need to start stocking up on canned goods and gold bars, here? The good news is that Mr. Lockhart is pretty sure that, on the grand scale of things that could go wrong with the financial system, DDOS attacks aren’t the absolute worst:
But I feel the need to be measured about the potential for severe financial instability from this source. In my judgment, cyberattacks on payments systems are not likely to have as deep or long lasting an impact on financial system stability as fiscal crises or bank runs, for example. Nonetheless, there is real justification for a call to action.
But we’ve got to say that “not as bad as a bank run” isn’t the most reassuring thing we’ve ever heard. Perhaps Mr. Lockhart has been talking to antivirus mogul Eugene Kaspersky.