Regulator warns of ‘Armageddon’ cyber attack on banks

A New York financial regulator said he is considering new rules to protect against “an Armageddon-type” cyber attack that would devastate U.S. financial markets.

Ben Lawsky, head of New York’s Department of Financial Services (DFS), said he fears a large enough hack on Wall Street firms could “spill over into the broader economy” — not unlike the mortgage meltdown of 2008.

“We are concerned that within the next decade, or perhaps sooner, we will experience an Armageddon-type cyber event that causes a significant disruption in the financial system for a period of time,” Lawsky said Wednesday in a speech at Columbia Law School.

He called such an attack a “cyber 9/11.”

Lawsky said he is considering new rules to force banks and insurance companies regulated by DFS to better protect themselves against hackers.

DFS has regulatory oversight over dozens of N.Y. licensed banks and insurance companies, including Goldman Sachs, MetLife and Barclays. As head of DFS, Lawsky has power to punish banks for bad behavior and to impose new standards on their operations.

To help prevent against a devastating hack, Lawsky said he wants to add cyber security to the grades DFS gives the banks and insurance companies it regulates. Financial firms “care deeply” about their grades because they can impact their ability to pay dividends or acquire other companies, Lawsky said.

Read More