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.
Even if customers don’t lose money from a hacking assault on JPMorgan Chase & Co. (JPM), the episode is a reminder that banks with the most sophisticated defenses are vulnerable. Treasury Department officials have quietly told bank insurers that in the event of a cataclysmic attack, they would activate a government backstop that doesn’t explicitly cover electronic intrusions, two people briefed on the talks said.
“I can’t foresee a situation where the president wouldn’t do something via executive order,” said Edward DeMarco, general counsel of the Risk Management Association, a professional group of the banking industry. “All we’re talking about is the difference between the destruction of tangible property and intangible property.”