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Inside Washington (06/22/2011)
* WASHINGTON (6/23/11)--Financial services representatives told a Senate panel on Tuesday they would support a national standard for how financial institutions notify members and customers of a data breaches. The Obama administration released a proposed national standard May 12 (American Banker June 22). The White House proposal would make penalties for cyber-crimes more stringent by tying them to other laws, such as the Racketeering Influenced and Corrupt Organizations Act, which is often used to fight organized crime but doesn’t apply to cyber-crimes. Senate Banking Committee Chairman Tim Johnson also expressed support for more robust cyber lows, citing several high profile financial services data breaches. Citigroup Inc. was the most recent high-profile data breach. Citi disclosed a hacker had accessed customer information for more than 360,000 credit card accounts last month. Citigroup has been widely criticized for waiting nearly a month to go public with the news. The bank said it discovered the breach on May 10, but didn’t begin notifying customers until June 3. It initially said 200,000 cards were breached (News Now June 20.) … * WASHINGTON (6/23/11)--The first meeting of the Federal Deposit Insurance Corp. (FDIC) Advisory Committee on Systemic Resolution considered how best the agency can use its new powers to unwind a large, systemically important bank. Among the first concerns raised by the newly formed panel was convincing the market that regulators have the will to shut down “too big to fail” firms, preventing a resolution from creating panic within the banking system and using pre-drawn resolution plans with the details of the next crisis still to be determined (American Banker June 22). During the meeting, FDIC officials presented findings from a recent agency report on how it would have handled Lehman’s demise with the new powers. The report determined it could have recovered 97 cents on the dollar for creditors. But former Federal Reserve Board Chairman Paul Volcker asked the panel what if the Lehman failure created a ripple effect and other institutions began to fail en masse? Volcker said the FDIC would have to be prepared to exercise its authority at other institutions …


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