js-2327: Deputy Assistant Secretary for Critical Infrastructure Protection <script type="text/javascript"> var wmNotice = "UNT Web Archive - External links, forms, and search boxes may not function within this collection. Url: http://treasury.gov/press/releases/js2327.htm time: 22:51:32 Jan 09, 2009"; var wmHideNotice = "hide"; var contextRoot = "https://webarchive.library.unt.edu/eot2008/"; </script> <script type="text/javascript" src="https://webarchive.library.unt.edu/eot2008/js/disclaim.js"></script> <br>D. Scott Parsons Prepared Remarks <br> America’s Community Bankers <br> 2005 National Operations, Security & Technology Conference <br><br> Orlando, Florida

FROM THE OFFICE OF PUBLIC AFFAIRS

March 21, 2005
js-2327

Deputy Assistant Secretary for Critical Infrastructure Protection
D. Scott Parsons Prepared Remarks
America’s Community Bankers
2005 National Operations, Security & Technology Conference

Orlando, Florida

Thank you, it's a pleasure and honor to be here today representing the Bush Administration and the Treasury. I appreciate the opportunity to talk about the important role that community banks have in protecting the financial critical infrastructure.

One of the hallmarks of the Administration is the effort to strengthen our country, and that effort has been productive. Our economy is strong today and growing stronger. Last month, 262,000 new jobs were created. There are more people working in America than ever before in our nation's history. And economic growth is healthy; the Bureau of Economic Analysis last month reported a 3.8 percent increase in the gross domestic product for the fourth quarter of 2004.

The President has led the effort to protect our country against those who wish to do us harm by strengthening our borders, reforming our intelligence programs, and creating the Department of Homeland Security. He strengthened and improved the quality of education. And the President is working to strengthen retirement.

I want to spend just a moment on this because the President has made Social Security reform a priority in his second term agenda. The Social Security system is a pay-as-you-go system, which means that the payroll taxes paid by today's workers support benefits paid to today's seniors. In 1950, there were 16 workers to support every one beneficiary. Today, that number has dropped to 3.3 workers, and by the time today's young workers turn 65, there will only be 2 workers to support each beneficiary. In 2008, the baby boomer generation will begin to retire, and the number of retirees will continue to rise rapidly.

Americans are also getting older - by 2035, 20 percent of all Americans will be over the age of 65. And people are living longer - life expectancy has hit a high of 78 years. These demographic shifts have created significant challenges for Social Security and threaten its solvency.

According to the 2004 Social Security Trustees Report, the cost of doing nothing to fix the system has reached $10.4 trillion - that's twice the combined wages and salaries of every working American last year. In 2018, Social Security will begin to pay out more than it takes in. The shortfalls will grow larger with each passing year until the system is bankrupt in 2042.

The President believes this is a problem that has to be addressed now so that our children, and future generations, will not have to face these same fiscal challenges down the road. The President has put forth some basic principles for Social Security reform.

There will be no benefit changes for those born before 1950. Social Security will not change for those 55 or older.
The President has ruled out an increase in tax rates. We will not jeopardize the economic strength of our nation by raising payroll tax rates. The Social Security payroll tax, which was once 2 percent, is now 12.4 percent - that's $1 out of every $8 we earn.
Another principle is fairness. We must ensure that lower-income Americans get the help they need to have dignity and peace of mind in their retirement. Reform should maintain the progressivity of the system.
The President has also called for the establishment of personal retirement accounts. This will allow younger workers to build a nest-egg for retirement that the government cannot take away. Personal accounts offer a chance to receive a higher rate of return from sound, long-term investing beyond anything the current system can deliver. The accounts would be voluntary and offer workers various low-cost options similar to those available through the retirement system available to federal workers.

With this framework guiding us, the Administration looks forward to working with Congress to fix Social Security once and for all for future generations. I believe that a fair examination of the President's ideas will demonstrate that they will be good for all Americans and will ensure the strength of the Social Security system for future generations.

Critical Infrastructure Protection

In addition to the strength of our Social Security system, the President and Secretary Snow are concerned, as you are, with protecting the resilience and strength of our economy and financial system. At the Department of Treasury, we develop and implement policies that enhance the resilience of the economy, minimize economic damage, speed economic recovery from any adverse circumstance, and promote the protection of our critical financial infrastructure. Our process is to first identify the systemically critical infrastructures, assess vulnerabilities within those infrastructures, remediate the vulnerabilities, and measure the results. My office is responsible for protecting the critical infrastructure of the financial services sector.

America's Community Bankers are an important part of the financial infrastructure. The economy relies upon the strength and resilience of the financial system. Secretary Snow has said that "the financial system is the engine of our economy." A key insight into the strategy to protect our critical infrastructures is that the private sector owns over 90 percent of that infrastructure, and protecting the infrastructure is best accomplished through a public/private partnership. The government and the financial services sector are working together to protect our nation's critical infrastructure on both the physical and cyber front.

On the physical front, we face threats from terrorists whose objective is to create devastation, measured in the loss of lives and the destruction of property. Their techniques include the use of car bombs and homicide bombers. On the cyber front, we face threats from hackers and identity thieves who want to disrupt systems and steal from our customers and citizens.

Recently, their have been several well publicized incidents that involve the theft personal information. It is important that financial institutions continue to safeguard their customer's assets and their personal information, such as their Social Security numbers. I believe that the financial sector does a good job in this area. But I encourage you to continue to work to increase your protections, because the thieves who want to steal this information are sophisticated, adaptive, and in many cases organized. Our challenge is to work together to address these threats and make our institutions stronger. With the old adage that a chain is only as strong as its weakest link, our goal is to protect all financial institutions.

Our strategy to protect our infrastructure is built on two pillars. We have a public sector pillar, known as the Financial and Banking Information Infrastructure Committee (FBIIC), which is comprised of the federal and state financial regulators and chaired by Treasury. We also have created a private sector pillar, the Financial Services Sector Coordinating Council (FSSCC) that is comprised of the leading financial industry trade associations and financial institutions. Treasury appoints the chair of the FSSCC, and we work closely together to form policies that advance preparedness and protection. Information sharing between the government and private sector channels is the cornerstone of our strategy. Generating accurate and timely information about threats to our physical and cyber infrastructure and then sharing that information are essential outcomes of this communication. One mechanism for disseminating vital threat information is the Financial Services Information Sharing and Analysis Center (FS-ISAC). We've invested to improve the ISAC, and if you aren't already a member, I encourage you to join.

Four principles guided our actions in the aftermath of September 11 and they continue to guide our actions today. These principles form the bedrock of our collaboration with the financial sector. While we have a strong regulatory regime in place that ensures the safety and soundness of financial institutions, I believe that protecting critical infrastructure is really a risk management problem, and that there is no "one size fits all solution" to be achieved through additional regulation.

The first principle is the protection of people. We depend on people - tellers, technicians, loan officers - to operate the financial system and to see the system through during times of stress. Indeed, it was the commitment of these professionals to their institutions, customers, and colleagues that helped the financial system recover from the September 11 attacks.

The second principle is maintaining confidence in the nation's financial system. We rely on financial services, such as those provided by thousands of community banks, to process our paychecks, buy groceries, purchase a house, finance our children's education, or save for retirement. We must ensure that consumers trust in the financial system. And this in turn produces confidence.

The third principle is to ensure that the financial system remains accessible and helps keep America "open for business." When a disaster strikes, investors rely on markets to price the impact of the disruption on assets. The longer markets are closed, the longer investors must go without knowing the effects of the disaster. This uncertainty can itself be harmful to the economy, compounding the impact of any disruption. Opening financial institutions quickly reduces uncertainty, enabling us to moderate the effect of the disruption and hasten recovery.

Fourth, we encourage decentralized decision-making and swift, responsible action by the private sector. In general, financial institutions should engage in problem-solving and make appropriate decisions without waiting for guidance from Washington. The private sector owns and operates the majority of the financial systems, and therefore knows best how to mend these systems after a disruption.

As government and private industry share more and better information, financial institutions become better prepared to estimate the risks they bear and better equipped to effectively reduce the likelihood of a disruption through strategic investments. Furthermore, as more institutions enhance security and reliability, the incentive increases for competitors to invest in innovative solutions as well. In some firms, it may shift infrastructure protection from a corporate liability to an asset. Finally, an industry that responsibly protects itself reduces the need for the government to impose costly, inflexible, and potentially ineffective regulation.

The four principles - protecting people, maintaining confidence, maintaining access to financial institutions, and promoting de-centralized decision-making and responsibility - shape our policies to enhance the resilience of the U.S. economy. I thank you for your time and attention today.

-30-



	FROM THE OFFICE OF PUBLIC AFFAIRS March 21, 2005 js-2327 Deputy Assistant Secretary for Critical Infrastructure Protection D. Scott Parsons Prepared Remarks America’s Community Bankers 2005 National Operations, Security & Technology Conference Orlando, Florida Thank you, it's a pleasure and honor to be here today representing the Bush Administration and the Treasury. I appreciate the opportunity to talk about the important role that community banks have in protecting the financial critical infrastructure. One of the hallmarks of the Administration is the effort to strengthen our country, and that effort has been productive. Our economy is strong today and growing stronger. Last month, 262,000 new jobs were created. There are more people working in America than ever before in our nation's history. And economic growth is healthy; the Bureau of Economic Analysis last month reported a 3.8 percent increase in the gross domestic product for the fourth quarter of 2004. The President has led the effort to protect our country against those who wish to do us harm by strengthening our borders, reforming our intelligence programs, and creating the Department of Homeland Security. He strengthened and improved the quality of education. And the President is working to strengthen retirement. I want to spend just a moment on this because the President has made Social Security reform a priority in his second term agenda. The Social Security system is a pay-as-you-go system, which means that the payroll taxes paid by today's workers support benefits paid to today's seniors. In 1950, there were 16 workers to support every one beneficiary. Today, that number has dropped to 3.3 workers, and by the time today's young workers turn 65, there will only be 2 workers to support each beneficiary. In 2008, the baby boomer generation will begin to retire, and the number of retirees will continue to rise rapidly. Americans are also getting older - by 2035, 20 percent of all Americans will be over the age of 65. And people are living longer - life expectancy has hit a high of 78 years. These demographic shifts have created significant challenges for Social Security and threaten its solvency. According to the 2004 Social Security Trustees Report, the cost of doing nothing to fix the system has reached $10.4 trillion - that's twice the combined wages and salaries of every working American last year. In 2018, Social Security will begin to pay out more than it takes in. The shortfalls will grow larger with each passing year until the system is bankrupt in 2042. The President believes this is a problem that has to be addressed now so that our children, and future generations, will not have to face these same fiscal challenges down the road. The President has put forth some basic principles for Social Security reform. There will be no benefit changes for those born before 1950. Social Security will not change for those 55 or older. The President has ruled out an increase in tax rates. We will not jeopardize the economic strength of our nation by raising payroll tax rates. The Social Security payroll tax, which was once 2 percent, is now 12.4 percent - that's $1 out of every $8 we earn. Another principle is fairness. We must ensure that lower-income Americans get the help they need to have dignity and peace of mind in their retirement. Reform should maintain the progressivity of the system. The President has also called for the establishment of personal retirement accounts. This will allow younger workers to build a nest-egg for retirement that the government cannot take away. Personal accounts offer a chance to receive a higher rate of return from sound, long-term investing beyond anything the current system can deliver. The accounts would be voluntary and offer workers various low-cost options similar to those available through the retirement system available to federal workers. With this framework guiding us, the Administration looks forward to working with Congress to fix Social Security once and for all for future generations. I believe that a fair examination of the President's ideas will demonstrate that they will be good for all Americans and will ensure the strength of the Social Security system for future generations. Critical Infrastructure Protection In addition to the strength of our Social Security system, the President and Secretary Snow are concerned, as you are, with protecting the resilience and strength of our economy and financial system. At the Department of Treasury, we develop and implement policies that enhance the resilience of the economy, minimize economic damage, speed economic recovery from any adverse circumstance, and promote the protection of our critical financial infrastructure. Our process is to first identify the systemically critical infrastructures, assess vulnerabilities within those infrastructures, remediate the vulnerabilities, and measure the results. My office is responsible for protecting the critical infrastructure of the financial services sector. America's Community Bankers are an important part of the financial infrastructure. The economy relies upon the strength and resilience of the financial system. Secretary Snow has said that "the financial system is the engine of our economy." A key insight into the strategy to protect our critical infrastructures is that the private sector owns over 90 percent of that infrastructure, and protecting the infrastructure is best accomplished through a public/private partnership. The government and the financial services sector are working together to protect our nation's critical infrastructure on both the physical and cyber front. On the physical front, we face threats from terrorists whose objective is to create devastation, measured in the loss of lives and the destruction of property. Their techniques include the use of car bombs and homicide bombers. On the cyber front, we face threats from hackers and identity thieves who want to disrupt systems and steal from our customers and citizens. Recently, their have been several well publicized incidents that involve the theft personal information. It is important that financial institutions continue to safeguard their customer's assets and their personal information, such as their Social Security numbers. I believe that the financial sector does a good job in this area. But I encourage you to continue to work to increase your protections, because the thieves who want to steal this information are sophisticated, adaptive, and in many cases organized. Our challenge is to work together to address these threats and make our institutions stronger. With the old adage that a chain is only as strong as its weakest link, our goal is to protect all financial institutions. Our strategy to protect our infrastructure is built on two pillars. We have a public sector pillar, known as the Financial and Banking Information Infrastructure Committee (FBIIC), which is comprised of the federal and state financial regulators and chaired by Treasury. We also have created a private sector pillar, the Financial Services Sector Coordinating Council (FSSCC) that is comprised of the leading financial industry trade associations and financial institutions. Treasury appoints the chair of the FSSCC, and we work closely together to form policies that advance preparedness and protection. Information sharing between the government and private sector channels is the cornerstone of our strategy. Generating accurate and timely information about threats to our physical and cyber infrastructure and then sharing that information are essential outcomes of this communication. One mechanism for disseminating vital threat information is the Financial Services Information Sharing and Analysis Center (FS-ISAC). We've invested to improve the ISAC, and if you aren't already a member, I encourage you to join. Four principles guided our actions in the aftermath of September 11 and they continue to guide our actions today. These principles form the bedrock of our collaboration with the financial sector. While we have a strong regulatory regime in place that ensures the safety and soundness of financial institutions, I believe that protecting critical infrastructure is really a risk management problem, and that there is no "one size fits all solution" to be achieved through additional regulation. The first principle is the protection of people. We depend on people - tellers, technicians, loan officers - to operate the financial system and to see the system through during times of stress. Indeed, it was the commitment of these professionals to their institutions, customers, and colleagues that helped the financial system recover from the September 11 attacks. The second principle is maintaining confidence in the nation's financial system. We rely on financial services, such as those provided by thousands of community banks, to process our paychecks, buy groceries, purchase a house, finance our children's education, or save for retirement. We must ensure that consumers trust in the financial system. And this in turn produces confidence. The third principle is to ensure that the financial system remains accessible and helps keep America "open for business." When a disaster strikes, investors rely on markets to price the impact of the disruption on assets. The longer markets are closed, the longer investors must go without knowing the effects of the disaster. This uncertainty can itself be harmful to the economy, compounding the impact of any disruption. Opening financial institutions quickly reduces uncertainty, enabling us to moderate the effect of the disruption and hasten recovery. Fourth, we encourage decentralized decision-making and swift, responsible action by the private sector. In general, financial institutions should engage in problem-solving and make appropriate decisions without waiting for guidance from Washington. The private sector owns and operates the majority of the financial systems, and therefore knows best how to mend these systems after a disruption. As government and private industry share more and better information, financial institutions become better prepared to estimate the risks they bear and better equipped to effectively reduce the likelihood of a disruption through strategic investments. Furthermore, as more institutions enhance security and reliability, the incentive increases for competitors to invest in innovative solutions as well. In some firms, it may shift infrastructure protection from a corporate liability to an asset. Finally, an industry that responsibly protects itself reduces the need for the government to impose costly, inflexible, and potentially ineffective regulation. The four principles - protecting people, maintaining confidence, maintaining access to financial institutions, and promoting de-centralized decision-making and responsibility - shape our policies to enhance the resilience of the U.S. economy. I thank you for your time and attention today. -30-