Yesterday, a subcommittee of the House Financial Services Committee held a hearing to discuss cybersecurity and security threats to the financial sector.  The panelists included officials from the Secret Service, Federal Bureau of Investigation, and Department of Homeland Security, as well as representatives from Verizon, Symantec, Bank of America, and public interest organizations.  The panelists generally discussed trends in cybersecurity threats, including the rise in security breaches affecting small- to medium-sized banks and other financial institutions. 

One noteworthy item discussed during the hearing was the Office of Financial Research established by Title I of the Dodd-Frank Act to collect and analyze U.S. financial data for financial regulators.  The Office of Financial Research is tasked with, among other responsibilities, supporting the Financial Stability Oversight Council’s oversight of systemic risk, developing tools for measuring risk levels and trends in the U.S. financial sector, and performing applied financial research for financial regulators.  Representative Shelley Moore Capito (R-WV) voiced concerns over the possibility of a security breach affecting the Office:

“I am especially interested to hear from our witnesses about the creation of the Office of Financial Research as called for by the Dodd-Frank Act.  I have serious reservations about the creation of this new bureaucracy, and I am most concerned with the potential for new cyber threats.  By compiling sensitive financial information into one federal agency, are we just making it easier for hackers to attack us?”

Some witnesses agreed with Rep. Capito’s concern and others downplayed her concern by pointing out other targets more attractive to hackers.  We will continue to monitor and report any financial privacy implications of the Office of Financial Research and other governmental bodies established by Dodd-Frank such as the Financial Stability Oversight Council and Consumer Financial Protection Bureau.

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works…

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as big data, blockchain and related technologies, bitcoin and other virtual currencies, same day payments, and online lending.