Tags: JPMorgan | hacker | bank | cyber

How to Keep Hackers Out of Your Bank

By    |   Wednesday, 08 October 2014 08:43 AM

Every week we seem to hear about another well-known brand losing private customer data to mysterious hackers. The latest headlines informed us that intruders had captured information on 76 million U.S. households from JPMorgan Chase (JPM).

JPMorgan claimed it only lost names and addresses, not financial information. Officials also stressed that the intruders did not gain access to bank accounts and no one lost any money. Unnamed sources say the attack was sophisticated and may have been a Russian reprisal for economic sanctions.

Journalists should pursue those interesting angles, but I have a more fundamental question.

Why do 76 MILLION American households have JPMorgan Chase bank accounts?

The U.S. Census Bureau pegs the total number of American households at 115 million. That means 66 percent of us use this one institution. JPMorgan may not be your primary bank, but you probably have a credit card or some other attachment to them.

The banking industry is waving all manner of red flags about the cybersecurity threat. I said months ago this a cleverly disguised grab at taxpayer money. I still think so.

I don't deny that hackers want to get into bank networks. The threat is clear . . . but JPMorgan and the other megabanks make themselves targets by their sheer size. That is the core problem.

Any structural engineer will tell you that constructing a critical system with two-thirds of its load vulnerable to a single point of failure is dangerous. Yet, that's where we are with JPMorgan, along with Bank of America (BAC) and Wells Fargo (WFC).

Look at it from the hackers' point of view. Are the big banks harder targets than the small fry are? Probably so — but the payoff is huge. One successful intrusion and you're set for life. Therefore, hackers gang up on the big banks and mostly ignore the small ones.

The systemic solution is to make sure no single bank holds such a huge proportion of the American public's money.

If this sounds like government intrusion on private business, you've been listening to banker propaganda. Modern banks are not "capitalist" in any sense of the word. They are creatures of a state-protected cartel that could not exist in a truly free market economy.

The top few "too big to fail" banks are also "too big to protect" from cyberattacks. We would go a long way toward solving the problem if we simply restored the competitive balance that prevailed before 2008.

Don't hold your breath for Washington to do this. Wall Street owns both sides of the aisle, on both sides of Capitol Hill. That's why the next crisis will be far worse than the last one was.

You have alternatives, though. Simply do your banking with a locally owned community bank or credit union. You will probably get better service and higher interest rates.

Even better, hackers won't have you in their bull's-eye.

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Every week we seem to hear about another well-known brand losing private customer data to mysterious hackers. The latest headlines informed us that intruders had captured information on 76 million U.S. households from JPMorgan Chase (JPM).
JPMorgan, hacker, bank, cyber
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2014-43-08
Wednesday, 08 October 2014 08:43 AM
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