FROM THE OFFICE OF PUBLIC AFFAIRS

August 10, 2004
JS-1850

Remarks of
Wayne A. Abernathy
Assistant Secretary of the Treasury for Financial Institutions
before the Outreach Meeting of the
Financial and Banking Information Infrastructure Committee
and the
Financial Services Sector Coordinating Council
Orlando, Florida
Relentless in Protecting the Symbols and Sinews of Freedom

So far as I can remember, the first bank I ever set foot in was the Deerfield Beach Bank, in the northeast corner of Broward County. While not much taller than the bank counter, that is where I opened up my passbook savings account. And that was where I would go to check for pennies as I began my first coin collection. As a young child, I learned that banks are about savings, the future, and personal service. I have never forgotten that lesson, and through the years I have tended to do my banking with the banks that remembered that lesson the best.

The other lesson I learned as a lad was a lesson of freedom, and how financial services companies facilitate my freedom. Today we are engaged in a new war, with a vicious enemy. This enemy is hidden. He strikes from behind, from disguise, from ambush. He knows no mercy, acknowledges no shame. His target is neither our land nor our wealth. His target is nothing less than our very way of life. It is who we are and how we live that the terrorist seeks to destroy.

Remember, and make no mistake: it is not precisely America--or the United States of America--that the terrorists are fighting. They target what America represents, what made America what it is. They target freedom. Were we to surrender our freedoms, that might be one way to stop the terrorism. They say that terrorists do not thrive in police states, that they prey upon free and open societies. But if we close our society and surrender our freedoms, then the terrorist wins, because it is our freedom--and what freedom does to people--what people do with freedom, free hearts, free minds--this is what the terrorist hates.

President Bush has given to us in this Administration our mission--a mission to be conducting working with the people of this nation--the mission is to vanquish terrorism without surrendering our freedom, to draw upon the power of our freedom to fight and defeat terrorism. The oft quoted and seldom read Alexis de Tocqueville saw a great genius in Americans to associate, to come together freely to achieve important goals. That is the task before us today.

As we have been reminded yet again in recent days, pitiless people have their sights set on the symbols and sinews of freedom. Those symbols and sinews include the systems, the relationships, the arrangements, and the institutions that enable people to associate freely here in this nation and from here throughout the world. The haters of freedom despise free markets, free enterprise, and they are targeting the financial institutions that support those free markets.

Today I salute and congratulate you and your colleagues in the financial services industries, you who know that you are in the terrorists' sites, and yet are determined to go on with your important business, knowing that it is your business that helps millions of others all over the country go on with their business. We will not be cowed, we will not be intimidated, but instead we will respond to threats with renewed effort and determination.

We are assembled here today, as others have in other financial centers around the country, and as others will yet assemble elsewhere, to say that we will not let the terrorists, we will not let the enemies of freedom, we will not let them destroy or disrupt our financial commerce, we will not let them interfere with our ability to save, to invest, to borrow, to insure against life's dangers.

With planning, preparation, and prudence, we can deny the terrorists the prize they seek. They want to make you stop. They want to make you close up shop. They want to make you fear to innovate, to invest, to create new opportunities, new products, new jobs. I firmly believe that if we are prepared, we need not fear.

I am a good news man. I look for the good news, and I usually find it. There is a good news story here, several stories. First of all, our war against the terrorists continues to progress and bring successes. While the terrorists are plotting, they now know that they have to look over their shoulder, because we are coming after them. We are more relentless than they are. We are finding them, we are exposing their plots. In exposing their plots, we are increasing the chance of frustrating their plots.

Second, because of work done already, our financial systems are stronger and more resilient than ever before. Behind each financial system, each financial service, you are likely to find an alternative system or service, waiting to be called upon. Whether the challenge is a hurricane, a software foul up, or a terrorist attack, when it threatens there is an alternative, often several alternatives, ready for use.

Today, in New York, in northern New Jersey, in Washington the financial sector is at a higher level of alert, we are on watch, on our guard, and back up systems and programs are at the ready. But we are on our guard not just there, but here in Florida, too. The information recently revealed tells us for certain that terrorists are looking at our financial services companies, and we must be careful not to conclude that because we have exposed one plot that there is not another. We must not think that because we are not named in one exposed plot, that we are free from risk. We ask you to look at the exposed patterns and look at your efforts. Ask whether you are taking adequate precautions, are your back up arrangements in order? And look around you. Notice the unusual, the out of place, and share and compare. Today we will discuss some tools to help you do that.

This morning I would like to share with you four principles that should guide our preparations. They should also guide us in our response to calamity, whether manmade calamities or the calamities of nature. I presented these principles to Congress last year, when I explained how well they had worked at the time of the Detroit to New York power black out of last summer.

I recently shared these with members of my family. I could tell that they were not impressed. When I asked them why, they told me in effect that these points were rather obvious. They had me there. I offer in defense the words of Calvin Coolidge, who once said,

These are the four principles. They are presented in order of importance, and I confess that they are obvious. I would add, though, that in times of stress and challenge, the obvious does not always seem so obvious. These points are even more important than they are obvious:

First, and most important, we must remember in all that we do to protect our financial infrastructure, that it is always about people. It is the people that make our financial institutions work, people that designed the systems, people that make them successful, people that innovate to keep them fresh and dynamic, and it is people whom they are designed to serve, people who rely upon financial services for so many aspects of their daily lives. Our first consideration in planning and action must be, how does it affect people.

Second, because it is about people, it is about confidence. Our financial institutions operate on confidence, but they also promote confidence. In fact, confidence is what our financial institutions must provide, confidence that financial transactions will be carried out, that checks will clear, that bills will be paid, that investments will be made, that insurance promises will be kept. The confidence provided by financial institutions and their services play a big part in helping to cope with the trauma of disaster. With good reason, earned by experience, the world places great confidence in American financial institutions. In our planning and in our action, what are we doing to promote confidence?

Third, essential to that confidence is open markets, financial institutions open for business, doing their business, allowing Americans everywhere to engage in their business, even during--especially during--times of stress. It is important for financial institutions and markets to continue to operate as close to business-as-usual as possible. During times of stress, investors need to price the effects of that stress on assets. The longer they are prevented from pricing the impact, the more anxiety builds and the worse the consequences will be when markets eventually re-open. What do we need to do, in planning and action, to keep our markets open?

The fourth guiding principle is responsibility. Each bank, every insurance company, every single financial institution has a responsibility to its customers. Every regulator has a responsibility to the financial institutions that it supervises. That responsibility applies both as we prepare for disruptions and as we weather them. In the event of a disorder in the payments system, for example, we want the payments systems experts to fix it. We do not want them to wait for guidance from Washington. Just fix it. The experts who are on the ground and in the field are the best to determine what steps should be taken to protect employees and customers. We will help where we can and where we need to, but we leave the responsibility with the financial institutions and the regulators that are closest to the problems to find the solutions. Initiative and ingenuity are the most powerful tools to deal with any disruption, and we must give full room for their exercise. All of us must shoulder our responsibility.

People, confidence, open markets, and responsibility are the four keys, the fundamental principles that guide us. They guide our preparations, and they guide our response. They were tested by that unexpected drill last summer when the lights went out from Detroit to New York, and they worked well. People did not lose money from their accounts, there was no panic, financial markets opened and operated, and there were no calls to Washington from financial leaders asking what to do. They have been tested often since, most recently this past week. Each test shows us better prepared, and outlines where more work needs to be done.

So, there is more work for all of us to do. Your presence and participation here today demonstrate your willingness to roll up your sleeves and do the work.

I was taught that the most important part of prayer is what you do after you get up off of your knees. If today's meetings are to have lasting effect, it will come from what you do when you leave these meetings. Work with your colleagues, consult, share best ideas. We are ready to lend a hand, to assist you in your efforts, all in keeping with the four obvious and absolutely essential principles I have outlined today.

A few weeks ago, I addressed a meeting of financial services leaders in Richmond, Virginia. I brought my youngest son with me that day. He is about the age when I walked into a bank for the first time. He reminds me, he and his generation remind us all, that it is the future, a future of freedom, free markets, free enterprise, free minds and free homes, that we are preserving, that we are building. There are people in the world who hate all of that, who would destroy it if they could, but we won't let them. As Americans have done in the past, we today will stop them. Thank you for letting me join with you in that effort.