Updated 11:29 AM EDT, Tue, Jun 16, 2020

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NYC Watchdog Warns Banks Prone to ‘Cyber 9/11’ Attack

NYC Watchdog Warns Banks Vulnerable to ‘cyber 9/11’ Attack

(Photo : Reuters) Traders work on the floor of the New York Stock Exchange in this picture taken December 16, 2014.

New York's top financial watchdog mulled new regulations to stave off an "Armageddon"-scale online attack that could bring U.S. financial markets to their knees.

The chief of New York's Department of Financial Services, Ben Lawsky, said a big enough hack on companies on Wall Street could severely affect the whole economy -- something like the sub-prime mortgage crisis in 2008.

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In a speech before a Columbia Law School audience, Lawsky said that within the next ten years or sooner, a "cyber 9/11" event could cause dramatic chaos to the financial system for a time.

The regulator said he is eyeing new measures to force insurance firms and banks under DFS regulations to be prepared against such hacks.

DFS has oversight power over scores of New York insurance companies and licensed banks, including Barclays, Goldman Sachs and MetLife.

As the chief of the department, Lawsky has the power to penalize banks and to enforce new standards.

To help ward off against a financial Armageddon, Lawsky sought to include cyber security to the DFS grading system.

He explained financial companies "care deeply" about their grades because they can affect their ability to acquire other companies or pay dividends.

The department could also require multifactor verification systems for employees of regulated financial firms.

He said single-step passwords are hardly effective anymore and "should have been buried" a long time ago.

The regulator could also tell financial companies to get guarantees from third-party suppliers that security measures meet certain standards.

Lawsky warned such suppliers could open a "backdoor entrance" for cyber attacks.

The warning of a powerful cyber attack on Wall Street comes on the heels of a report warning of a group of global cyber thieves who infiltrate the internal systems of financial companies instead of their customers.

 The report, from Russian security firm Kaspersky Lab, said it had evidence that hackers have gotten away with $1 billion from a hundred banks across 30 nations through infiltration.

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