Lawmakers probe large data breaches at US bank insurance agency

The personal banking information of about 160,000 U.S. residents walked out the door of the federal government’s bank insurance agency on removable media of employees departing in recent months.

During the last seven months, seven departing employees at the Federal Deposit Insurance Corporation (FDIC) have left with personal banking information on thumb drives and other removable media, agency officials told a congressional subcommittee Thursday.

The FDIC, which provides deposit insurance to U.S. bank accounts, considered the data breaches as “inadvertent” copying of personal banking information that happened when departing employees were copying personal information to removable media, Lawrence Gross Jr., the FDIC’s CIO, told the House of Representatives Science, Space, and Technology Committee’s oversight subcommittee.

But in one case, the ex-employee denied downloading material and resisted turning it back over to the agency, lawmakers noted. One of the data breaches is the subject of a criminal investigation, said Fred Gibson, the FDIC’s acting inspector general.

Lawmakers accused the FDIC of not taking the breaches seriously.

“Mr. Gross, you and I are viewing this incident from a completely different perspective,” said Representative Bill Posey, a Florida Republican. “[You] call it a data breach. Where I’m from, we call it a theft if you take something that’s not yours.”

The FDIC didn’t immediately report the incidents as major breaches to Congress until prompted by its inspector general’s office, despite new guidance from the Office of Management and Budget to report serious breaches within seven days. 

Lawmakers questioned what they called a lack of transparency at the FDIC and a security policy that allows departing employees to download information from their hard drives.

“Regrettably, the American people have good reason to question whether their private banking information is secured by the FDIC,” said Representative Barry Loudermilk, a Georgia Republican. “The agency is failing to safeguard private banking information.”

The agency has a “long history” of cybersecurity problems, he added. Before the recent removable media incidents, a foreign government in 2011 hacked into the computers of senior officials at the agency and was undetected for more than a year.

Gross, hired as the FDIC’s CIO just last November, said he didn’t originally classify the removal media incidents as major breaches because they appeared to involve accidental copying of files during “nonadversarial” departures of employees. The former employees involved have signed affidavits saying they didn’t share the data with others, he said.

Still, one of Gross’ top priorities as CIO is to revamp the agency’s policy about removable media and to add security safeguards to block downloads of personal data, he said.

Most employees now cannot download FDIC data to removable media, and the agency is adding digital rights management software to its network, he said.

“At the FDIC, we are keenly aware that protecting sensitive information is critical to our mission of maintaining stability and public confidence in the nation’s financial system and we are continually enhancing our information security program,” Gross added.