November 2004 - cypherpunks-legacy

[osint] NSA director could be in line for CIA deputy director post
by R.A. Hettinga 20 Nov '04

20 Nov '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 - --- begin forwarded text To: osint(a)yahoogroups.com User-Agent: eGroups-EW/0.82 From: "gwen831" <DnNet628(a)netscape.net> Mailing-List: list osint(a)yahoogroups.com; contact osint-owner(a)yahoogroups.com Delivered-To: mailing list osint(a)yahoogroups.com Date: Fri, 19 Nov 2004 19:45:18 -0000 Subject: [osint] NSA director could be in line for CIA deputy director post Reply-To: osint(a)yahoogroups.com http://www.govexec.com/dailyfed/1104/111704g1.htm GovExec.com DAILY BRIEFING November 17, 2004 NSA director could be in line for CIA deputy director post By George Cahlink gcahlink(a)govexec.com The Central Intelligence Agency has been rocked in recent weeks by changes brought by new director Porter Goss, and the shake-up could continue with the appointment of a tough deputy director. Reuters reported on Tuesday that Goss was considering naming National Security Agency Director Lt. Gen Michael Hayden to the agency's No. 2 slot. John McLaughlin, who served as acting CIA director this summer, recently announced his retirement from the deputy director post. Hayden has been one of NSA's most visible, powerful and, in some quarters, controversial directors, as he has fought to reorganize the signals intelligence agency. If he were tapped for the CIA slot, he'd likely bring the same aggressive management style to the beleaguered agency. Goss served as chairman of the House Permanent Select Committee on Intelligence before being nominated for the CIA job in August. In that position, he conducted oversight of the NSA and worked closely with Hayden to increase the agency's budget. Hayden, who is NSA's longest-serving director, has been relentless in pushing change at the intelligence agency since taking over in March 1999. He's asked longtime agency workers to retire to make way for new hires, outsourced information technology work, expanded the pool of contractors, raised the agency's profile, and consolidated leadership ranks. Few would argue that changes were not needed at an agency with a veteran workforce trained and computer systems designed for the Cold War. James Bamford, author of two best-selling books on the NSA, credits Hayden with continuing to let veteran workers go even after the Sept. 11 terrorist attacks. "The people they had were people they did not need," said Bamford, who noted that the agency had a surplus of Soviet analysts and linguists but too few Middle East experts. Retired Air Force Lt. Gen. Charles Boyd, now head of Business Executives for National Security, who served with Hayden, said, "He sold needed reforms to those with oversight and resources. He's presided over a transition there from an institution geared toward the Cold War into one for a new world with different technology." Some NSA veterans however, have protested Hayden's moves. "Coming to a place and telling a large group of well-qualified professionals they need be cleaned out is not the way to change an agency," said Michael Lavin, who worked at the agency from 1947 to 1993, first as an analyst and later as a policymaker and spokesman. NSA veterans with obsolete skills should be retrained to prevent the loss of corporate memory, Lavin argued. Hayden earned praise for his efforts to expand the NSA's contracting base and upgrade the agency's aging computer systems. In 2001, the agency inked a $2 billion outsourcing deal with an industry team, led by Computer Sciences Corp., to upgrade and run the agency's computer operations over the next 10 years. Congress, however, has not been happy with how the agency tracked its spending. In 2004, the NSA lost its independent spending authority, and its budget is now managed by Defense undersecretaries. Steven Aftergood, an intelligence expert with the Federation of American Scientists, noted that Hayden is one of the few intelligence managers to escape blame for Sept. 11. "Everyone has been down on the CIA," he said, "but NSA came through almost completely unscathed." - ------------------------ Yahoo! Groups Sponsor --------------------~--> $9.95 domain names from Yahoo!. Register anything. http://us.click.yahoo.com/J8kdrA/y20IAA/yQLSAA/TySplB/TM - --------------------------------------------------------------------~-> - -------------------------- Want to discuss this topic? 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We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/osint/ <*> To unsubscribe from this group, send an email to: osint-unsubscribe(a)yahoogroups.com <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/ - --- end forwarded text - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ9PcMPxH8jf3ohaEQK8BACgm/szNVus6K4hMs2QjovuLi8gAVIAoLPk ej+MqbixbWbBSP0oa9WxXFQc =hesR -----END PGP SIGNATURE-----

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Stephen Moore: A Tax-Ban No Brainer
by R.A. Hettinga 19 Nov '04

19 Nov '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 <http://www.nationalreview.com/script/printpage.asp?ref=/moore/moore20041119…> The National Review November 19, 2004, 11:21 a.m. A Tax-Ban No Brainer Congress should keep the Internet-tax ban in place. Today the House of Representatives will vote to extend the ban on Internet taxation through November of 2007. Keeping cyberspace tax free has long been a goal of anti-big-government and pro-technology forces in Washington. This bill, led by Chris Cox in the House and John McCain and George Allen in the Senate has significant opposition from tax-eater lobbying groups on Capitol Hill, especially state and local governments who hope that the World Wide Web will be their next great cash cow. The Senate enacted the bill earlier this week; the House should follow suit, and keep the Internet-tax ban in place. President Bush strongly supports this legislation. So, if the House does its job, next week this pro-taxpayer legislation will be the law of the land. The new law will mean no taxes on Internet access, unless you use dial up and pay the telephone tax (which should be eliminated as well). It also means no tax on Internet sales. In other words, the Internet will be a genuine tax-, regulation-, and tariff-free zone. A tax on the Internet would do real damage to the U.S. economy. Economic growth in recent years has been propelled by the technology sector, which has made a big-time rally after the implosion of 2000-01, when the NASDAQ fell from 5,000 to 1,500. The argument against the ban on the Internet tax is that states and localities need the money and that Internet purchases are eroding the tax base of city hall and state governments. This is preposterous. The states and localities are now awash in cash. For example, my home state of Virginia has a $1 billion state-tax surplus. The same rosy fiscal picture is true in local governments across the nation. A new Cato Institute study finds that states and localities have already doubled their tax collections over the past twelve years, even without tapping into the new frontier of the digital economy. Governors and mayors should now be aggressively cutting taxes, not finding sneaky new ways to add to their coffers. The policy that Congress is about to adopt is simply a continuation of the federal law that has been in place for the past six years. Since 1998 Congress has wisely declared the Internet a tax-free zone by establishing a moratorium on Internet-access charges. An "access charge" is essentially a toll on using the Internet. The idea was to prevent the government from causing infant crib death of this new consumer technology. After all, as Justice John Marshall once observed, "the power to tax is the power to destroy." By all accounts, the Internet-tax moratorium has been a resounding success. In 1985, about one in six American families and businesses had access to the web; now, three in four do. Moreover, e-commerce is the new frontier of business enterprise. International Data Corporation recently estimated that the Internet economy in 2003 reached $2.8 trillion. In the U.S. alone, e-commerce accounted for $500 billion in business activity and employed 2.3 million Americans. The Internet sector of the economy is growing at 12 percent per year compounded. E-commerce, in short, is to the early 21st century what the steam engine was to early-20th-century economic development. Meanwhile, the telecommunications sector of the economy now stands ready to invest billions to upgrade the nation's communications networks and make high-speed (or broadband) Internet access available to all American homes and small businesses, as it is for large corporations today. All of this is to say, if ever a public policy has worked precisely as hoped, it is the Internet-tax moratorium. Moreover, if the Republicans in Congress really wants to keep tax relief a centerpiece of their domestic agenda, keeping the IRS and state tax collectors away from the Internet is critical. By some estimates, a tax on Internet access could cost families up to $150 a year. If purchases on the Internet were also taxed, these costs could double or triple. There is only one problem with the bill that Congress will vote on today. It does not make the Internet a tax-free zone permanently. Also, it seems that if we want a regime of "tax fairness" and a level playing field, all forms of Internet access, whether dial-up or wireless, should be immunized from state, local, and federal taxation. While Sen. McCain's compromise does not meet all of these criteria, it brings us a lot closer to the ultimate goal. Congress today has a chance to ring the bell for liberty. The opportunity now exists to create, through the growth of the Internet economy, a massive global free-trade zone. Opponents of the Internet-tax ban argue that this bill will only put added pressure on all levels of government to lower taxes on "bricks and mortar" businesses. That's absolutely true - but I suspect most Americans would regard this as an added benefit of the Internet-tax ban. - Stephen Moore is president of the Club for Growth. - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ6i/8PxH8jf3ohaEQJyOwCeKeNAAz7QCyiEng3wz8tLjuKQmZcAoLfG punAsHbRo/bldh6SnM2Qe0Hw =j/kW -----END PGP SIGNATURE-----

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Home Office stalls on weapons scanner health risks
by R.A. Hettinga 19 Nov '04

19 Nov '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 <http://www.theregister.co.uk/2004/11/18/blunkett_xray_blank/print.html> The Register Biting the hand that feeds IT The Register B; Internet and Law B; Digital Rights/Digital Wrongs B; Original URL: http://www.theregister.co.uk/2004/11/18/blunkett_xray_blank/ Home Office stalls on weapons scanner health risks By John Lettice (john.lettice at theregister.co.uk) Published Thursday 18th November 2004 18:00 GMT Are your children being irradiated? Are you being irradiated? The UK Home Office seems unconcerned by the question, despite being responsible for at least one of the government organisations wielding the devices that might be doing the irradiating. Weapons scanners that use x-rays are now being tested by the Metropolitan Police and at Heathrow airport, and while the effect of a single scan will probably be negligible, the actual health risk will depend on the nature of the particular deployments, and on the individuals being scanned. So they should therefore not be deployed casually, without careful prior consideration, on the basis that they're 'harmless'. Earlier this week Norman Baker MP asked the Home Office the following parliamentary question: "To ask the Secretary of State for the Home Department what air kerma rate has been used to assess radiation doses associated with the use of the Rapiscan Secure 1000 apparatus." David Blunkett's (yes, him again, sorry about that) response was: "The information sought is not in the public domain." Which is not much of a response from a department deploying at least two Rapiscan 1000s, and with a unit offering them to police forces throughout the country. (http://www.homeoffice.gov.uk/crimpol/police/scidev/news/items/xray2907.html) Nor is the answer true. (Air kerma, by the way, refers to the amount of radiation produced by a device.) Rapiscan 1000s are indeed mostly harmless, probably, depending. Technology of this sort has been used for baggage scanning for some time now, but more recently people-sized versions have been undergoing testing in the US and elsewhere in the world, and x-ray scanning is also being used in other, mobile and less controlled environments (e.g. scanning containers and trucks for stowaways). You can find some more about that here. (http://www.theregister.co.uk/2004/11/08/heathrow_scanner_pilot/) One of the public domain sources of information about the effects of x-ray scanners, including the Rapiscan 1000, that David Blunkett says don't exist can be found here. (http://www.fda.gov/ohrms/dockets/ac/03/briefing/3987b1_pres-report.pdf) A presidential report by the US National Council on Radiation Protection and Measurements carried out for the Food and Drug Administration - very obscure, not. The document's very existence provides us with a small case study of how things work in government on either side of the pond. Both the US and the UK are proposing and using x-ray scanners on people, but in the US this involves a diligent process of measurement for potential hazards, while in the UK they just get haphazardly deployed. Both governments still repress us, but the US one is somehow more professional about how it starts off, while the UK one regularly gives the appearance of not being able to find its arse with both hands. Back, however, to the document, the measurements and the risks. The dose of radiation delivered by a scan, which the NCRP team measured in the range 0.04 B5Sv - 0.05 B5Sv, is not terrifying by the radiation standards the US uses. Negligible Individual Dose (NID) over a year is defined as 10 B5Sv, which is the effective dose deemed acceptable for a single source, while ANSI approved a standard in 2002 defining an acceptable dose per scan as being 0.1 B5Sv or less. This would mean that a security scanner would have to deliver 2,500 scans of an individual annually at 0.1 B5Sv per scan in order to reach the US administrative control level of 0.25 mSv. For an airport security scanner, even operating at a rather higher level, you'd probably have to be living in it to achieve that kind of level. But it's not necessarily going to be the only source of radiation you're exposed to, nor will all of these sources necessarily operate at such low levels. Cumulative dosage will be higher from scanners you have to pass several times every day (say, a weapons scanner at a school), and you'll be exposed at the hospital, at the dentist, and maybe there will be high exposures you don't know about. The NCRP speaks of proposals for concealed scanners, and mobile scannners that could check vehicles (which we covered in our earlier piece), while just today UK Secretary of State for Education Charles Clarke was proposing to give schools powers to search pupils for weapons, and to "have arrangements with their local police forces to undertake snap searches if they thought knives were on school premises". What kind of equipment did you have in mind they bring with them when they do that, Charles? - From our reading of the FDA report, it seems unlikely that the level of exposure via the Rapiscan at Heathrow would present a health risk to most people, nor is the Met's happy deployment of x-ray machines for area stop and searches an obvious hazard to anything other than liberty and race relations. However in both cases what goes for most people may not go for particular individuals, so it's extremely important that the operators make the position vis a vis radiation absolutely clear, and that subjects have an absolute right to decline the kind offer of an x-ray scan. The consequences of more widespread deployments are far more difficult to quantify. If fixed scanners became sufficiently common for it to be possible to be exposed several times a day, then the risks would climb, and it would be less possible (it's not exactly easy at the moment) for people too know what their cumulative dose was. Concealed scanners would make that impossible, and high dose vehicle and/or concealed scanners would throw the sums out entirely. Reported doses from a cargo scan test in 2001, for example, ranged from 0.1 B5Sv to 100 B5Sv, depending on positioning in the compartment. The US annual dose limit set by the NCRP is 1 mSv, excluding exposures from natural background and medical care, while the suggested exposure from a single site is 25 per cent of annual dose, or no single source under one control delivering more than 0.25 mSv annually. It recommends the latter being the one set for security screening such as airport scanners, and that it cover multiple checkpoints at a given (say) airport. We commend the report as essential reading for Home Secretaries who might need to bone up on the potential risks associated with equipment their departments are deploying. They could of course just carry on giving MPs dumb and obstructive answers, but it's not clever, and in some cases it's the sort of thing people might think of as negligent. Ask a focus group, David. B. - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ6K6cPxH8jf3ohaEQIDBwCgqyVMif7+rhxP4RaqseORKnCxNZgAniAJ WvJrvj9VdVetp2xD1IOMRmRJ =L1az -----END PGP SIGNATURE-----

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Drivers License Security Hole
by John Young 19 Nov '04

19 Nov '04

The American Assocation of Motor Vehicle Administrators has prepared a series of studies on security of drivers license data, and not least sharing it with law enforcement. Access to some of the docs are supposed to be limited to members but R. notes that the security is illusory, so the docs can be accessed until the hole is closed (see the last appendix for LE access to data): ----- http://www.aamva.org/IDSecurity/index.asp AAMVA determined the need for a comprehensive framework of minimum requirements with enhanced recommendations to improve the quality, reliability, uniformity and security of the driver licensing process in North America. As a result, AAMVA compiled and produced its DL/ID Security Framework: A Package of Decisions Based on Best Practices, Standards, Specifications and Recommendations to Enhance Drivers License Administration and Identification Security. This document is currently available to the AAMVA membership only. Members will be required to present their AAMVA user ID and password to access the framework. -----

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A Less-Visible Role For the Fed Chief: Freeing Up Markets
by R.A. Hettinga 19 Nov '04

19 Nov '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 This is a really good article, with a lot of useful financial history. Also note the following: >"It is in the self-interest of every businessman to have a reputation for >honest dealings and a quality product," he wrote in Ms. Rand's >"Objectivist" newsletter in 1963. Regulation, he said, undermines this >"superlatively moral system" by replacing competition for reputation with >force. "At the bottom of the endless pile of paper work which >characterizes all regulation lies a gun." Cheers, RAH - ------- <http://online.wsj.com/article_print/0,,SB110081981338978661,00.html> The Wall Street Journal November 19, 2004 PAGE ONE The Deregulator A Less-Visible Role For the Fed Chief: Freeing Up Markets Greenspan Blessed Mergers And Blocked Regulation; Using the 1800s as a Model Is Modern Finance Too Risky? By GREG IP Staff Reporter of THE WALL STREET JOURNAL November 19, 2004; Page A1 WASHINGTON -- As Alan Greenspan approaches his last year as chairman of the Federal Reserve Board, he continues to draw praise for his most visible job: steering the economy by raising and lowering interest rates. But behind the scenes, the 78-year-old economist has had a big impact on American life in an entirely different role: pushing the government to stay out of financial markets. Consider what happened in 2002, when Democratic Sen. Dianne Feinstein proposed new rules to govern how traders buy and sell contracts to deliver energy through financial instruments known as derivatives. Her move came after Enron Corp. and others helped send electricity prices soaring in California by manipulating that market. When she telephoned Mr. Greenspan for support, he declined, telling her the proposal threatened the multitrillion dollar derivatives industry, which he considers an important stabilizing force that diffuses financial risk. Mr. Greenspan persuaded other Bush-appointed regulators to join him in a critical letter that Sen. Feinstein's opponents wielded as a weapon on the Senate floor. The bill was narrowly defeated on a procedural motion. Sen. Feinstein reintroduced the proposal a number of times and at least twice Mr. Greenspan rallied fellow regulators to oppose it. "I believe it would have passed without his opposition," Sen. Feinstein says. In addition to thwarting the post-Enron impulse to regulate derivatives, Mr. Greenspan has helped remove Depression-era barriers between the banking and securities industries and has blessed mergers creating banking behemoths. He has implored regulators to keep their hands off hedge funds and other markets that are replacing banks as financiers of American business. Although the Fed is a major bank regulator, it has become a less intrusive one under Mr. Greenspan. Behind this advocacy is a passionate belief that freely functioning financial markets are better than government regulators -- and even central bankers -- at protecting the economy from booms and busts. Mr. Greenspan once read that a B-2 "stealth" bomber would crash without a computer that continuously adjusted its wing flaps. In conversations, he compares markets to the B-2's computer: They continuously redistribute risk so the economy can absorb shocks. The result is a paradoxical position for one of the world's most influential civil servants: He would prefer that the state play virtually no role in the economy. His ideal is the pre-Civil War period when the federal government was so invisible it didn't even issue a national currency. In reality, Mr. Greenspan sometimes tailors that radical position to suit the demands of his job -- such as dealing with the near-collapse of hedge fund Long Term Capital Management -- as well as the political requirements of surviving in Washington. But, on balance, his views have been powerfully influential in deregulating markets at a crucial time in their history when they are increasing in size, complexity, and the number of ways in which they interact with everyday people. With Mr. Greenspan's term set to end in January 2006, an important question is whether his successor will carry on this less visible role. Critics say his hands-off regulatory philosophy has made the Fed a less effective watchdog, citing complicity by Fed-regulated banks in recent corporate scandals. His intellectual opponents also argue that some regulation is necessary to moderate the risks inherent in modern finance. Mr. Greenspan first articulated many of his views in the 1960s when he was part of the intellectual circle surrounding libertarian philosopher Ayn Rand. If businesses were solely responsible for their own reputation, he said at the time, they would do whatever necessary to maintain it or ultimately fail. "It is in the self-interest of every businessman to have a reputation for honest dealings and a quality product," he wrote in Ms. Rand's "Objectivist" newsletter in 1963. Regulation, he said, undermines this "superlatively moral system" by replacing competition for reputation with force. "At the bottom of the endless pile of paper work which characterizes all regulation lies a gun." His language has moderated but he still admires the laissez-faire capitalism of the mid-19th century. At that time, competition, not regulation, kept financial markets honest. Banks, for example, issued their own currency whose value fluctuated with the issuer's reputation. Mr. Greenspan believes the 19th-century economy was inherently stable because of the gold standard, a system in which currencies were exchanged for fixed amounts of gold both within the U.S. and across international borders. Countries that borrowed too much would hear from anxious foreign lenders demanding to be repaid in gold. To prevent that, banks would raise interest rates, encouraging lenders to stay put. Borrowing, which was now more expensive, would abate. In Mr. Greenspan's view, this self-correcting economy was undermined by cumulative government intrusions. The first was the creation of a national currency and national banking system in 1863 whose flaws, he believes, contributed to periodic financial panics in following decades. In 1913, the very organization in which he made his name, the Federal Reserve, was created. As the lender of last resort, the Fed could prop up failing banks, reducing the incentive for bankers and businessmen to act prudently. Market discipline weakened further when the government created federal deposit insurance in 1933, making depositors less concerned about the reputation of the bank to which they entrusted their money. That was compounded when the U.S. went off the gold standard in 1933. "A kind of vicious circle of government replacement of market oversight [was] clearly set in motion," he said in a May 2001 speech. Mr. Greenspan has a complicated way of reconciling his job with his economic theories. In an ideal world, he believes, there would be a gold standard and no central bank. But the end of the gold standard and creation of the Fed weakened market discipline. That created a need for government intervention the Fed chairman must do his best to fulfill. Few things are more important to Mr. Greenspan than keeping the government's hands off financial markets. Former Treasury Secretary Robert Rubin, among others, used to argue to Mr. Greenspan that governments should sometimes use regulation to moderate risks that stem from the complexity of modern markets. Mr. Greenspan was willing to tolerate occasional hiccups to encourage innovations that allow markets to operate more efficiently. MARKET FORCES Key moments in the history of intervention in U.S. financial markets. 1791: Alexander Hamilton starts the first Bank of the United States. Dissolved in 1811. 1816: Second Bank of the United States chartered. Charter lapses in 1836 1863: National Bank Act, national currency issued 1907: Financial panic ends with intervention organized by J. Pierpont Morgan 1913: Federal Reserve formed 1933: Federal deposit insurance introduced 1933: Glass-Steagall Act bars combinations of banks, securities companies 1972: Financial derivatives first traded in Chicago futures markets 1978: States begin to allow interstate banking 1980: Monetary Control Act deregulates interest rates 1981: Over-the-counter derivatives are born with first currency "swap" 1987: Fed gives banks permission to sell bonds 1987: Fed slashes interest rates after stock- market crash 1995: Treasury, Fed bail out Mexico 1996: Fed significantly increases banks' ability to deal in securities 1998: Fed arranges rescue of Long Term Capital Management 1999: Glass-Steagall fully repealed 2000: Deregulated status of most derivatives entrenched in law 2001: Enron collapses 2004: SEC votes to register hedge funds Source: WSJ research To those in the Rubin Treasury, this clash became known as the "wooden tennis rackets" debate. Mr. Rubin's notion, that governments should constrain markets, "was like saying tennis was a better game with wooden rackets," says Lawrence Summers, president of Harvard University and previously Mr. Rubin's deputy and successor at the Treasury. Mr. Greenspan would prefer rackets made with advanced alloys that delivered better shots even if they were occasionally wild. Mr. Greenspan has long disparaged government-imposed limits on mergers. He came to the Fed an avowed opponent of the 1933 Glass-Steagall Act that established barriers between the banking and securities industries. The act was inspired by the belief that bank stock speculation helped cause the 1929 stock market crash and Great Depression; subsequent study casts doubt on this. The act split J.P. Morgan & Co. into two firms whose successors today are J.P. Morgan Chase & Co. and Morgan Stanley. Mr. Greenspan, as a director of J.P. Morgan in 1984, played a part in publishing that bank's anti-Glass-Steagall treatise, according to a book by historian Ron Chernow. The Fed took its first step toward undoing Glass-Steagall in 1987, a few months before Mr. Greenspan's arrival. It further loosened restrictions in 1996. Two years later it precipitated the act's demise by approving the merger of Citicorp, parent of the U.S.'s second-largest bank, and Travelers Group, a major insurance underwriter and securities dealer. The Fed's approval was conditional on Citigroup Inc. -- the merged company - -- later divesting businesses not permitted. But Citigroup correctly bet the law would change. The merger prodded Congress to repeal the remaining barriers a year later. "Greenspan pushed the envelope," says Kenneth Guenther, retired president of the Independent Community Bankers of America, a small-bank trade group that at the time unsuccessfully sued the Fed for pre-empting Congress. Though Mr. Greenspan usually defers to his staff about regulatory matters, their recommendations have tended to track his laissez-faire approach. In his tenure, the Fed has approved the merger of every bank-holding company that has come before it except two. By contrast, his predecessor, Paul Volcker, scotched 10 mergers in an eight-year term. The U.S. now has three banking conglomerates with assets exceeding $1 trillion -- Citigroup, J.P. Morgan Chase and Bank of America Corp. Critics say these mergers concentrate financial risk too heavily in a few institutions. Mr. Greenspan argues that deregulation also produced a more stable financial system. His favorite example comes from the telecommunications sector. Telecom companies borrowed almost $1 trillion between 1998 and 2001, but while many failed, no major financial institution collapsed as a result. Stock and bondholders lost money but banks that arranged the financing used innovative methods to spread their risk. Some sold pieces of loans to other institutions, underwrote bond offerings or bought hedges in the new market for "credit derivatives," insurance policies against companies defaulting. "Even the largest corporate defaults in history -- WorldCom and Enron -- and the largest sovereign default in history -- Argentina -- have not significantly impaired the capital of any major U.S. financial intermediary," Mr. Greenspan said in a speech last month. Banks in the 1980s and early 1990s, by contrast, were crippled by bad loans to developing countries and real-estate developers. The resulting credit crunch hobbled the economy. When markets give way to crisis, Mr. Greenspan has reluctantly given way to government intervention. In December 1997, the Treasury wanted banks to roll over loans to South Korea to avert a global financial panic. Mr. Greenspan went along but told Treasury officials he wouldn't call the commercial banks himself, according to people involved in the effort. He argued it was inappropriate for a regulator to influence banks' lending practices. Instead, Mr. Rubin and then-New York Fed President William McDonough made the calls. Mr. McDonough says in an interview that as a former commercial banker, he could convey to the banks that restructuring the loans was in their own best interest. A bigger test came several months later, when the near-failure of hedge fund Long Term Capital Management threatened to halt trading in U.S. debt markets. Again, Mr. McDonough took the lead and brokered a buyout of the fund by its private creditors, including several Fed-regulated banks. While Mr. McDonough says he kept Mr. Greenspan informed, he didn't ask the Fed chief for approval. Testifying to Congress, Mr. Greenspan called the rescue one of "those rare occasions when otherwise highly effective markets seize up and ad hoc responses were required." The LTCM debacle was an embarrassment to the Fed -- which regulated some of the hedge fund's largest creditors -- but Mr. Greenspan didn't think it suggested the Fed needed to significantly beef up its oversight operations. "If we had to meet the standards that people think exist, we would have five times as many examiners," he said at a Fed meeting that September, transcripts show. "We would examine them to death, and they would not have any breathing room." The Fed didn't take public disciplinary action against LTCM's lenders. Congress was more worried about the economic risks inherent in hedge funds than the adequacy of the Fed's regulatory operations. In 1998, it asked the President's Working Group on Financial Markets, which included Mr. Greenspan and Mr. Rubin, to suggest how -- if at all -- to regulate hedge funds and "leverage," large financial bets made with borrowed money. Mr. Rubin was open to increased regulatory oversight, say people involved in the process. Mr. Greenspan was not. He asked why government officials earning $80,000 or $100,000 would be any more likely to spot overly risky hedge-fund activities than the Wall Street experts, earning millions of dollars, who ran them, recalls Gary Gensler, the Treasury official who coordinated the group. Mr. Greenspan refused to endorse the most intrusive of the group's recommendations: expanding oversight over brokerage firms' unregulated affiliates. Mr. Greenspan has also been skeptical of the value of the Fed's many consumer-protection rules. The only vote he has lost on the seven-member Federal Reserve Board was a 4-3 decision in 1995 that required banks to change the way they calculate savings-deposit rates. Some on the board felt the way the rate was calculated was misleading to the public. Weeks later, after banks protested the cost of the change, the board voted unanimously to suspend its action and the proposal didn't take effect. In some ways, Mr. Greenspan has become less hostile to these kinds of rules. For example, he now sees some benefit to Fed-enforced laws that compel banks to do business in poor communities. Although banks have been implicated in recent financial scandals, the Fed has often been slow to take decisive action. Critics note that it was private litigants and Senate investigators who first brought to light evidence that Citigroup and J.P. Morgan Chase helped Enron hide its true financial state from shareholders. Both were eventually charged by the Securities and Exchange Commission and reached settlements with the SEC, Manhattan District Attorney and the Fed. Neither admitted or denied wrongdoing. The Fed "has changed its approach from being a cop on the beat to being a consultant at the elbow of major financial institutions," charges Tom Schlesinger, director of the Financial Markets Center, an often-critical Fed watchdog. The Fed's defenders say its main job is to ensure the soundness of the financial system, not to sniff out fraud. On that score, they note that the banking system has remained strong amid recent economic upheavals. The Fed has also revamped its supervisory procedures and has levied three of its four largest-ever penalties in the last year. Last year, SEC Chairman William Donaldson put hedge-fund regulation at the top of the regulatory agenda by proposing hedge funds register with his agency. The SEC wanted routine access to information and the right to examine hedge funds' operations to search for fraudulent behavior. Mr. Greenspan, who worked with Mr. Donaldson on Wall Street in the 1960s, became one of his leading opponents. He told senators last July that hedge funds provide essential market liquidity, meaning they are often willing to buy when everyone else is selling. Registration would scare them away, "to the significant detriment of our economy," while doing little to stop fraud, he said. Mr. Greenspan's opposition was manna to Mr. Donaldson's opponents. "With due deference to Chairman Greenspan and the tough job that he has, I cannot think of a time when he has been so clear," Paul Atkins, one of Mr. Donaldson's four fellow SEC commissioners, declared during the agency's debate last month. In an interview, Mr. Donaldson suggests he and Mr. Greenspan simply have different priorities. "I think it's a legitimate argument that they do provide liquidity," he says. But "how much fraud are you willing to tolerate for liquidity? And if you asked me that, I'd say, zero." On this rare occasion, Mr. Greenspan's side lost. The SEC voted 3-2 for Mr. Donaldson's proposal. But business groups hope to overturn the SEC's move and are mulling an appeal to Mr. Greenspan for written support. - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ4rhsPxH8jf3ohaEQIbfQCg7uv/AxxC8AtPNedy8fESfCrnVV0AoIuP XmjUFlNFC1PxGDrD44mhuuuw =3b77 -----END PGP SIGNATURE-----

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Re: China's wealthy bypass the banks
by Enzo Michelangeli 19 Nov '04

19 Nov '04

Re: China's wealthy bypass the banks Tyler Durden Wed, 10 Nov 2004 14:56:08 -0800 > Oh No!!!! > > > Way overly simplistic. Also, you are comparing apples to bushels of > wheat. > > [James Donald:] > However Confucianism vs Daoism/Taoism is rather different from what > you would get in the west. Confucianism is somewhat similar to what > you would get if western cultural conservatives allied themselves with > nazi/commies, in the way that the commies are prone to imagine > conservatives have supposedly allied themselves with nazis. Taoism > somewhat similar to what you would get if anarcho capitalists allied > themselves with pagans and wiccans... > > WOW! I'll skip the obvious comments and ask, In which centuries are > you suggesting this applies? Now? If so, you are clearly NOT talking > about mainland China. Please re-define the centuries/epochs during > which you believe this to have been true, and then maybe I'll bother > responding. Actually, that doesn't apply to any century. The ancient philosophical school that inspired Mao Zedong was actually Legalism, which provided the theoretic foundations to the absolutist rule of Qin Shi Huangdi (to whom Mao liked to compare himself). Mao, as many other Chinese reformers and writers of the early XX Century, hated Confucianism as symbol of China's "ancien regime" and decay. Which is why the campaign against Zhou En-lai of 1974-75 had an anti-Confucian theme (see e.g. the posters at http://www.iisg.nl/~landsberger/plpk.html ) Legalists and Qin Shi Huangdi himself were pretty nasty types, and their domination saw widespread confiscation of books, ridiculously harsh rule (arriving late to work could bring the death penalty!) and large-scale assassination or rivals: several Confucian philosophers were buried alive. The ruthless methods of the Qin dinasty ultimately resulted in its downfall: it only lasted one and half decade (221 - 206 BC), half of what Maoism did. By comparison, Confucianism was remarkably enlightened, which is also why Voltaire expressed a good opinion of it. Some Confucian philosophers like Mencius (372-289 AC) were early theorists of people's sovereignty: "The people are the most important element in a nation; the spirits of the land and grain are the next; the sovereign is the lightest [...] When a prince endangers the altars of the spirits of the land and grain, he is changed, and another appointed in his place." [Mencius, Book 7: http://nothingistic.org/library/mencius/mencius27.html ] ...and of the right to tyrannicide, justified by the loss of legitimacy brought by misrule: "The king said, 'May a minister then put his sovereign to death?' Mencius said, 'He who outrages the benevolence proper to his nature, is called a robber; he who outrages righteousness, is called a ruffian. The robber and ruffian we call a mere fellow." [Mencius, Book 1: http://nothingistic.org/library/mencius/mencius04.html ] Enzo

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[ISN] Under Phishing Attack, British Bank Shuts Down Some Services
by InfoSec News 19 Nov '04

19 Nov '04

http://www.informationweek.com/story/showArticle.jhtml;jsessionid=CIGVP13WT… By Gregg Keizer TechWeb News Nov. 18, 2004 One of the four biggest banks in the United Kingdom has taken the unusual step of suspending some features of its online service following a phishing attack. On Wednesday, NatWest, which is part of the Royal Bank of Scotland Group and one of Britain's big four banks, shut off features to its million-plus online customers. When users logged on to the NatWest site, they saw a message that read, "We have temporarily suspended the ability to create or amend Third Party Payment mandates and create Standing Order mandates." Third-party-payment mandates, said Caroline Harris, a NatWest spokesperson, are ad-hoc electronic-payment requests outside the normal bill payments already established. They're typically used to pay individuals electronically. Standing-order mandates are the U.K. equivalent of a scheduled bill payment. "We've not shut down the entire site, as some press reports would have you believe," said Harris, "but we've only restricted one small part." The phishing e-mail received by NatWest customers claimed to be part of a software update to the online banking service. "This is only temporary," said Harris, "and is a preventative measure to protect our customers. Because we've [blocked third-party-payment and standing orders] the phishers haven't been able to take money out of customer accounts." She reiterated that no NatWest customer had lost money to the scam. NatWest urged customers who may have given up personal information to contact the bank, and said that alternate ways to make payments, such as by telephone, remained an option. Although Harris said such action was "nothing new" and that the bank had done similar things before when faced with determined phishers, a U.S.-based banking analyst said it was news to her. "I've never heard of that tactic before," said Avivah Litan, a research director and vice president with Gartner who specializes in bank fraud and phishing issues. "Not that it's a bad action, but it sounds to me that NatWest didn't have a way to contain the damage. "It's an extreme measure. It probably means that they don't have other risk-control mechanisms in place, or the attack was getting out of hand," she added. And while NatWest reacted quickly, there's a real chance a temporary measure like this won't stop phishers from exploiting stolen information. Increasingly, she said, it seems phishers are a lot more patient than anyone thought. "When you look at the big picture, there's more and more evidence that phishers are sitting on the information [they steal], and that the real damage may not show up for a year or two." Phishers, Litan went on, "are very clever, and have a lot of time and patience." Rather than use their ill-gotten information immediately -- which is what NatWest assumes by temporarily limiting on-the-fly payments -- there's growing concern that cyber-criminals wait a long time before pouncing. One tactic phishers are using, said Litan, is to apply for new credit cards using stolen identity information, use and pay those cards, and over a period of months, even as long as two years, build up the cards' credit limits. "Then they'll do 'bust-outs,'" said Litan. "That's when they run through the credit limit, say $50,000, before the first bill comes due, with no intention of paying." The worst news, about NatWest's move, concluded Litan, is that it may only be the beginning of a new wave of banking business disruptions. "Once I thought that maybe phishing was a fad, and after a while it would be replaced by some other scam, like keyloggers. But it's not a fad. It's going to get worse, and it's not going to slow down." _________________________________________ Open Source Vulnerability Database (OSVDB) Everything is Vulnerable - http://www.osvdb.org/ - --- end forwarded text - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ4H88PxH8jf3ohaEQJ4GwCfQ0s+fQlkneSb6Tqq3l1sfMVCIrIAn04X ophDQhDGRIN6km3/v3liETOO =q56s -----END PGP SIGNATURE-----

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[ISN] Under Phishing Attack, British Bank Shuts Down Some Services
by InfoSec News 19 Nov '04

19 Nov '04

http://www.informationweek.com/story/showArticle.jhtml;jsessionid=CIGVP13WT… By Gregg Keizer TechWeb News Nov. 18, 2004 One of the four biggest banks in the United Kingdom has taken the unusual step of suspending some features of its online service following a phishing attack. On Wednesday, NatWest, which is part of the Royal Bank of Scotland Group and one of Britain's big four banks, shut off features to its million-plus online customers. When users logged on to the NatWest site, they saw a message that read, "We have temporarily suspended the ability to create or amend Third Party Payment mandates and create Standing Order mandates." Third-party-payment mandates, said Caroline Harris, a NatWest spokesperson, are ad-hoc electronic-payment requests outside the normal bill payments already established. They're typically used to pay individuals electronically. Standing-order mandates are the U.K. equivalent of a scheduled bill payment. "We've not shut down the entire site, as some press reports would have you believe," said Harris, "but we've only restricted one small part." The phishing e-mail received by NatWest customers claimed to be part of a software update to the online banking service. "This is only temporary," said Harris, "and is a preventative measure to protect our customers. Because we've [blocked third-party-payment and standing orders] the phishers haven't been able to take money out of customer accounts." She reiterated that no NatWest customer had lost money to the scam. NatWest urged customers who may have given up personal information to contact the bank, and said that alternate ways to make payments, such as by telephone, remained an option. Although Harris said such action was "nothing new" and that the bank had done similar things before when faced with determined phishers, a U.S.-based banking analyst said it was news to her. "I've never heard of that tactic before," said Avivah Litan, a research director and vice president with Gartner who specializes in bank fraud and phishing issues. "Not that it's a bad action, but it sounds to me that NatWest didn't have a way to contain the damage. "It's an extreme measure. It probably means that they don't have other risk-control mechanisms in place, or the attack was getting out of hand," she added. And while NatWest reacted quickly, there's a real chance a temporary measure like this won't stop phishers from exploiting stolen information. Increasingly, she said, it seems phishers are a lot more patient than anyone thought. "When you look at the big picture, there's more and more evidence that phishers are sitting on the information [they steal], and that the real damage may not show up for a year or two." Phishers, Litan went on, "are very clever, and have a lot of time and patience." Rather than use their ill-gotten information immediately -- which is what NatWest assumes by temporarily limiting on-the-fly payments -- there's growing concern that cyber-criminals wait a long time before pouncing. One tactic phishers are using, said Litan, is to apply for new credit cards using stolen identity information, use and pay those cards, and over a period of months, even as long as two years, build up the cards' credit limits. "Then they'll do 'bust-outs,'" said Litan. "That's when they run through the credit limit, say $50,000, before the first bill comes due, with no intention of paying." The worst news, about NatWest's move, concluded Litan, is that it may only be the beginning of a new wave of banking business disruptions. "Once I thought that maybe phishing was a fad, and after a while it would be replaced by some other scam, like keyloggers. But it's not a fad. It's going to get worse, and it's not going to slow down." _________________________________________ Open Source Vulnerability Database (OSVDB) Everything is Vulnerable - http://www.osvdb.org/ - --- end forwarded text - -- - ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZ4H88PxH8jf3ohaEQJ4GwCfQ0s+fQlkneSb6Tqq3l1sfMVCIrIAn04X ophDQhDGRIN6km3/v3liETOO =q56s -----END PGP SIGNATURE-----

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Re: Terror Net
by Pete Capelli 19 Nov '04

19 Nov '04

This'll be sweet. Think of the DoS, false positive fun you could have with these ... On Fri, 19 Nov 2004 09:41:32 -0500, R.A. Hettinga <rah(a)shipwright.com> wrote: <http://www.technologyreview.com/articles/04/12/innovation31204.asp?p=0> > > Technology Review > > Terror Net > > By Lakshmi Sandhana > Innovation News > December 2004 > > Ever since the September 11 terrorist attacks, federal agencies have been > wishing for a system capable of issuing a nationwide alert at the first > sign of a chemical, biological, or radiological attack. Now such a system > is undergoing trials in Tennessee. > -- Pete Capelli pcapelli(a)ieee.org http://www.capelli.org PGP Key ID:0x829263B6 "Those who would give up essential liberty for temporary safety deserve neither liberty nor safety" - Benjamin Franklin, 1759

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[ISN] Under Phishing Attack, British Bank Shuts Down Some Services
by R.A. Hettinga 19 Nov '04

19 Nov '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 - --- begin forwarded text

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