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 co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and…

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike plays an active role in 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 bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.