00:00So over the past few years, the U.S. Treasury Department has been hit with three very serious hacking attacks.
00:06Every government agency gets hacking attempts.
00:09Very few of those attempts actually turn into actual breaches, and especially very deep breaches,
00:15which is what the U.S. Treasury Department has suffered.
00:18And a couple of months ago, our colleagues at Bloomberg broke news that the latest breach was much deeper than Treasury had disclosed.
00:25And that got us thinking about the question of why does Treasury keep getting hacked?
00:29And why does Treasury keep getting hacked so deeply?
00:33So this is a great cross-team collaboration between the cyber team and the banking team and projects and investigations team.
00:39We set out to answer that question.
00:40And what we found was that the U.S. Treasury Department is not run like a single agency when it comes to cybersecurity.
00:46It's run like different countries.
00:47They all have their own budget from Congress.
00:49They all have their own cybersecurity staff.
00:51They all have their own cybersecurity executives.
00:54Some of them are really good.
00:55Some of them are not so great.
00:56But what's happened, as we found, is that over the years, as these breaches have kind of accumulated,
01:02the U.S. Congress has allocated hundreds of millions of new dollars to the Treasury Department for cybersecurity.
01:08One would think that that would improve cybersecurity overall.
01:12The problem is when you have a number of different essentially countries kind of operating almost totally independently when it comes to cybersecurity,
01:20you're going to get a wide variety of outcomes.
01:23And what we've seen here is that there were some very basic security measures that in these three instances the Treasury Department did not employ.
01:31And what the Trump administration has told us is they said we're aware of this problem.
01:35We're consolidating a lot of these functions.
01:36We're kind of putting a lot of these functions together to improve these problems.
01:40And on the surface, that sounds like that sounds like probably the thing that needs to happen.
01:45However, that's not actually what is happening.
01:48So, yeah, clearly it sounds like there's some some long term structural issues here.
01:53But is there any sense that this has been compounded in any way by, you know, headcount issues?
01:57I'm thinking particularly obviously about the Department of Government efficiency here, DOGE.
02:01Have those cuts kind of come into play in any way?
02:03Absolutely, especially the buyouts.
02:05So what we discovered as we were reporting this was, OK, they have all these different kind of entities that operate independently.
02:11A lot of the leadership at headquarters, these were senior people who have been around a long time,
02:16kind of have been in many cases advocating for a consolidation of a lot of these functions.
02:21Many of them have taken the Musk buyouts.
02:24And, you know, from what we've been told is that a lot of these folks were actually very supportive in spirit of what DOGE is trying to do in terms of consolidating these functions.
02:33However, the buyouts were very lucrative and a lot of these senior senior officials took the buyouts.
02:38And what that that's meant is there's kind of a leadership vacuum in cybersecurity at Treasury.
02:44I don't know that that was necessarily the intended outcome of the DOGE effort, but that certainly was the outcome.
02:50So what you have is an organization that that really does need to kind of consolidate, pull these functions together,
02:58really get strong leadership around what will cybersecurity look like for all the different aspects of this agency.
03:04A lot of those folks have now left.
03:07Wall Street banks and others are therefore pretty concerned.
03:10What does it mean for sort of sensitive data?
03:13I mean, you've talked about the depth of these breaches.
03:15What is being exposed and what are the Wall Street banks worried about?
03:19One of our big reasons for pursuing this investigation was after the latest breach came out,
03:24we also broke news that a number of the biggest banks, J.P.
03:27Morgan, BNY Mellon, they suspended electronic transmissions.
03:32They essentially cut themselves off from the Treasury Department and stopped electronically sending regulatorily required information
03:40because they told us, they said the systems weren't safe.
03:44There was no way for the banks to guarantee that all of the sensitive data they were required to send to Treasury was actually being protected on the other side.
03:52This was an extraordinary thing.
03:53I mean, it's not every day you get a regulated entity telling their regulator, we are not sharing information with you.
03:59If you want to see it, you can see it.
04:01You have to come to our headquarters.
04:02There's a very extraordinary act that they took.
04:06So the banks are looking at this as an opportunity.
04:08Nobody wants more regulation.
04:10They fought a lot of these regulations over the years, and they are using kind of behind the scenes.
04:15The Trump administration has been very accommodating of the banking industry,
04:19and they have signaled that they will pursue deregulation.
04:22So a number of these banks that are very genuinely concerned about the data security, the security of their data at Treasury,
04:30are pushing for a rollback of some of these requirements.
04:33And what security experts have told us is they said that may not be the best outcome because you want the government to have good data.
04:40You want the government to be able to respond in the case of a systemic attack
04:43and reducing the amount of information that regulators have, especially security data, financial data about these big banks.
04:51Security experts have told us that may not be the safest outcome.
Be the first to comment