The International Monetary Fund in Washington, DC, was hacked this month. The top suspect: China.
The FBI and Homeland Security Department are investigating the hacking the week before of more than 100 senior Obama administration officials’ private Gmail accounts. The attacks have been traced to Jinan, home to China’s army cyberunit.
These and other recent hacking attacks aren’t isolated events. Some foreign hackers hunt for government secrets; others hope to crash financial computer networks. Our enemies have wanted to wage cyberwar against our markets and government for a long time.
Osama bin Laden bragged in 2001 that al Qaeda is “aware of the cracks in the Western financial system as they are aware of the lines in their own hands.” In February, al Qaeda’s magazine Inspire repeated the threat to attack US financial markets via computerized trades, leading the FBI to brief Wall Street firms on potential risks.
China has been linked to a bevy of cyberattacks, including a good share of the thousands of attacks each month on the Pentagon’s servers and regular problems for human-rights activists interested in China. The trail leads back there for the hit on European Union headquarters on the eve of a major summit in March, the penetration of the French finance ministry that same month and the hacking this month of South Korea’s government servers, which provide Web access for top officials.
The sophistication is growing, too. In one 2008 attack, hackers sent e-mails to participants of a Defense Department conference under the name of a bona-fide presenter. The e-mail attachment promised a copy of his Power Point slides — but in fact triggered a hidden program that scanned the victim’s hard drive.
The White House cyberattack reached hundreds of people, mostly current and former government officials. Only private e-mails were compromised — but officials sometimes break the rules and discuss sensitive subjects in personal e-mails, which are exempt from congressional subpoenas and the Freedom of Information Act. The attackers plainly aimed to capture such conversations.
Nor are the targets limited to governments. Nasdaq was compromised last fall. Last week’s cyberattack on the IMF was so vast that it took officials days just to map the invasion and take countermeasures.
Beyond spying, such activity can also aim at what a recent Pentagon report calls “financial terrorism and economic warfare.” An earlier Pentagon study speculates that the 2008 market meltdown — which cost US investors some $13 trillion in wealth — was worsened by offshore naked short-selling raids on Wall Street firms, especially Bear Stearns and Lehman Bros. While the sources of those raids can’t be traced, the study suspects “economic warfare” by nations like China or groups like al Qaeda.
In response, the House has passed legislation directing the military to find and plug the holes in the nation’s financial and security networks. Certainly, the vulnerability of Wall Street’s electronic trading and settlement system to foreign manipulation is shocking.
On May 6 last year, stock and futures markets experienced what traders call a “flash crash” — a sudden drop in prices across an entire stock exchange. At 2:47 pm, the Dow Jones Industrial Average sank nearly 1,000 points in less than a minute.
By 4 pm, markets had recovered to pre-crash levels. But during that brief Flash Crash, investors lost a bundle. More than 20,000 trades “were executed at prices more than 60 percent away from their values just moments before,” notes a Securities & Exchange Commission report. Somes stock tumbled to less than a penny in seconds or climbed to as high as $100,000.
And that mess was caused by an accident — a single mutual-fund family using a computerized selling program to unload $4 billion in contracts in way the exchange wasn’t set to cope with. Now imagine a hacker, working with an unknowing or shady broker, doing it on purpose: The result might wipe out your retirement savings and sink our economy.
It’s high time for the federal government to trace these cyberattacks and strengthen our computer networks, both federal and financial, against an electronic 9/11.
Richard Miniter’s latest book is “Mastermind: The Many Faces of the 9/11 Architect, Khalid Sheik Mohammed.”