FROM THE OFFICE OF PUBLIC AFFAIRS

I am here in Cleveland today because the financial infrastructure we seek to protect exists outside Washington, D.C. As Secretary Snow has said, our financial system is the engine of our economy. No where is that more evident than in a city like Cleveland, where world-class financial institutions stand should to shoulder with leaders of our industrial economy.

In partnership with the FDIC, the Department of the Treasury and our colleagues in the public and private sectors are speaking to audiences in twenty-four cities across the United States. After our eighteen month tour, we will have spoken to 6,000 individuals; on average, 250 people per city. Through this outreach, we hope to encourage you – stewards of financial services in Cleveland – to implement policies and programs that will further strengthen the U.S. critical financial infrastructure.

 As recent events attest, the United States financial system is remarkably resilient. During the power outage in August that affected cities from Cleveland to New York City, the financial system performed extraordinarily well. With one exception, the bond and major equities and futures markets were open the next day at their regular trading hours.

Major market participants were well prepared, having invested in contingency plans, procedures, and equipment such as backup power generators. Our job is to ensure that the financial system remains resilient and that Americans and the world continue to have confidence that the system will be there for them – especially in times of stress or adversity, which is when people need it most. 

Four principles guide our efforts to assist in the protection of the U.S. financial infrastructure. These principles guided our decisions as the financial system recovered from the attacks of September 11th. They guide our actions still. First and foremost, the financial system is about people. We at the Department of the Treasury, our sister regulators, and you in the private sector have a responsibility to protect the people who work in the financial sector, such as tellers, loan officers, traders and technicians.

These individuals make up the institutions upon which we all rely. It was the heroic commitment of these professionals to their institutions, customers, and colleagues that helped the system recover from the attacks of September 11th and weather the power outage of August 14-15. Also, it is people who use the financial system and rely on it to finance the American Dream: buying a house, financing their children’s education, and investing in a secure retirement. We must ensure that people continue to have confidence in their financial institutions.

 That brings me to the second principle: confidence. Confidence in the reliability of financial institutions to clear checks, execute transactions, and satisfy insurance obligations helps the system weather significant disruption from evolving threats. By relying on the system, Americans can make business decisions for the future and conduct necessary business in the present.

 Third, we must ensure that the financial system remains accessible and open for business when the safety of the employees permits. During times of disaster, investors depend on markets to price the impact of the disruption on assets. The longer markets are closed, the longer investors must go without knowing what the impact will be. This uncertainty can itself be harmful to the economy, compounding the impact of any disruption. The sooner we can eliminate this uncertainty, the more we can mitigate the impact and speed recovery. 

 Fourth, we want to promote responsible decision-making and problem-solving within the private sector. Financial institutions should make the appropriate decisions without waiting for guidance from Washington. After all, it is you who own and operate the majority of the systems. And it is you who have the expertise on how to fix them. We will help when needed, but we intend for you to find the necessary solutions.

 With these principles in mind our strategy is clear. The President himself established this strategy when he called for close and voluntary relationships between the government and the private sector to protect our critical physical and cyber infrastructure. As the President wrote, “the success of our protection efforts will require close cooperation between government and the private sector at all levels.”

 One successful manifestation of this strategy is the Financial Services Information Sharing and Analysis Center (FS/ISAC). The FS/ISAC has emerged as a leader in information sharing for the financial sector, allowing authorized users to submit reports on security threats and solutions. Earlier this year, for example, the FS/ISAC was instrumental in alerting its members to the existence of the Internet worm called “Slammer.”  We believe that the FS/ISAC’s efforts helped minimize the worm’s impact on the U.S. financial system.

Next month, the Treasury Department will help launch a next-generation FS/ISAC. This next-generation FS/ISAC will integrate physical and cyber threat information, allow members to tailor the alerts they receive, provide a secure medium for collaboration, and enable the financial sector to coordinate their responses in real time. Treasury is pleased to be making a significant investment in one-time upgrades in the technology that supports the FS/ISAC. I hope that all of you will consider joining the FS/ISAC as members.

I would like to close with the words of President George W. Bush. As he wrote in the National Strategy for the Physical Protection of Critical Infrastructure, “[t]he terrorist enemy that we face is highly determined, patient, and adaptive. In confronting this threat, protecting our critical infrastructures and key assets represents an enormous challenge. We must remain united in our resolve, tenacious in our approach, and harmonious in our actions to overcome this challenge and secure the foundations of our Nation and way of life.”

I would like to thank Chairman Powell and the hard-working professionals at the FDIC for organizing this conference. And thank you all for attending.