The House Committee on Science, Space and Technology plans to grill Federal Deposit Insurance Corporation Chairman Martin Gruenberg on Thursday over new audit reports that criticize the regulator regarding recent major data breaches, including a leak of bank resolution plans last September.
The hearing comes less than a week after the FDIC’s Office of Inspector General issued two reports covering the weaknesses identified by the agency’s recent breaches, its recommendations, and the FDIC’s plans to fix the problems. Fred Gibson, the agency’s interim inspector general, will also testify about his reports before the committee.
The first audit report covers the identified weaknesses in the FDIC’s controls that are designed to limit the possibility of an unauthorized release of sensitive bank resolution plans, the living wills mandated by the Dodd-Frank Act. In September 2015 one former FDIC employee copied three bank resolution plans onto a USB drive prior to leaving their job at the FDIC and then tried to use them to leverage a new job with the banks. The report said the FDIC’s lack of an insider threat program was a contributing factor in this incident.
Another incident occurred this past April when The Wall Street Journal published names of some of the banks whose living wills were rejected, prior to the regulators announcement of their decisions on the submissions. Spokespersons for the Fed’s OIG and the FDIC said their respective investigations into that most recent incident are still pending.
Spokespersons for the FDIC OIG, Fed OIG and the FDIC declined comment on the results of the audit and the upcoming hearing.
In a press release issued Friday, the committee chairman Lamar Smith, Republican of Texas, criticized the FDIC for misleading Congress in the past about the information security breaches. “The FDIC misrepresented key facts in the incident, including whether the former employee was adversarial and whether the employee downloaded information inadvertently.”
Oversight Subcommittee Chairman Barry Loudermilk, a Republican from Georgia, said in the press release he plans to continue “a thorough oversight of the FDIC, and work with my colleagues to shed light on their culture of mismanagement within the walls of the FDIC, holding agency officials accountable.” He said the agency is failing to live up to its mission of maintaining public confidence in the nation’s financial system as a result of its “long history of cybersecurity incidents.”
Despite the enormous challenge the FDIC faces in keeping its data safe, the agency has been operating without a confirmed inspector general for more than 1,000 days, since September 2013. Fred Gibson, the former deputy IG, fills the interim spot and his job remains open.
Jay Lerner, the current chief of staff and senior counsel at the Department of Justice’s Office of Inspector General, was nominated for the FDIC IG position nearly 600 days ago and then re-nominated in January 2015. His candidacy has previously been approved by two Senate Committees – Senate Banking and Homeland Security & Governmental Affairs. A spokesman for Senate Majority Leader Mitch McConnell, Republican from Kentucky, told MarketWatch he had no scheduling announcement or guidance on a vote on the FDIC IG nominee.
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