Fed's ex-regulatory czar Tarullo warns of `nightmare scenario’ from cyberattack

24 May 2019 7:14am
Daniel Tarullo, the former US Federal Reserve governor most responsible for crafting post-financial crisis Washington policies, said a cyberattack on a bank could set off widespread panic by eradicating ownership records held by the institution.

“The nightmare scenario is: someone penetrates the information systems of large institutions and wipes out the records of who owns what,” Tarullo, the Fed’s vice chairman for supervision during the Obama administration, said at a Washington event* this week. “It doesn’t matter how much capital the bank has at that point. You’ve got the equivalent of financial pandemonium when no one knows who owns what.”

He said stress tests that try to determine whether banks have enough capital to absorb economic shocks are “really not directed at big cybersecurity risks. We need to have a whole different approach.”