Fed: Here’s the Greatest Source of Economic Turmoil
On Tuesday, Dennis Lockhart, the president of the Atlanta Federal Reserve, warned that financial stability was at risk, citing cyber attacks and underfunded pensions as the likely culprits.
In a conference in Germany, Lockhart noted that small, unexpected economies could be the source of much more profound economic turmoil on a systemic level. Potential weakness showing in the U.S. payments industry, as it continues to advance and fragment, could also leave it vulnerable to cyber attacks which could also create systemic-level problems.
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U.S. Secretary of Defense Leon Panetta, too, warned of the dangers of cyber attacks. A rash of attacks aimed at the banking industry occurred in September and were attributed to Irani hackers, potentially coming as a rebuke for recent U.S. sanctions. Threats range from hackers temporarily halting services up to crippling attacks that could cause real-world, non-cyber damage.
On a lighter note, Lockhart spoke about the risks of the underfunded pensions, but believes that they will be a problem that grows over time and won’t pose immediate, sudden problems. His stance on cyber attacks is also lighter than Panetta’s, saying that they should be considered a constant risk, but that they are unlikely to have deep, long-lasting impacts.
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