Security of On-Line Banking Studied
Hyman, Julie, The Washington Times (Washington, DC)
Congressional investigators said yesterday that the 6 million Americans who bank on line may be getting convenience at the expense of security.
According to the General Accounting Office, 44 percent of banks, thrifts and credit unions it surveyed have not enacted strict enough measures to keep their computer systems safe from hackers.
The report was released at a hearing of the House banking subcommittee on monetary policy. Lawmakers shied away from suggesting regulation as a solution to on-line banking security, but said both banks and consumers must address the risks.
"We don't want to overregulate the activity to the point that we unduly dampen it or retard its growth," said Rep. Spencer Bachus, Alabama Republican. "At the same time, the public has the right to safety and soundness in Internet banking, so we can't walk away from it."
Consumers who bank over the Internet use Web sites to transfer money between accounts, pay bills, check account or investment balances and apply for loans.
The GAO report concluded that Internet banking is by nature riskier than conventional banking. Its review of banking regulators' examinations of 81 financial institutions found that 35 of them, about 44 percent, hadn't taken all the risk-limiting steps regulators have said are needed.
Mr. Bachus said Internet banking is projected to grow 20 to 25 percent by 2004, making it necessary to be vigilant about hackers.
"All the banking representatives agreed that we need to prosecute [hackers who break into on-line accounts] and we need to publicize it."
He noted that the hearing was just the first stage in a congressional look at on-line banking that could help increase Internet security before consumer use explodes. …