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Internal security stepped up after Assange announces plans for ‘megaleak’ about a large bank.
Heading into the new year, a big question looms for Bank of America: What’s next in the WikiLeaks saga?
Julian Assange, the anti-secrecy organization’s founder, has said he is preparing a “megaleak” about a large bank, leading to speculation the Charlotte bank is the target. On Monday, he told the Times of London that he had enough information to make the bosses of a major bank resign.
Meanwhile, Bank of America has cut off payments intended for WikiLeaks, spurring the group to tell customers to stop doing business with the bank. Other financial institutions that have foiled payments have faced cyberspace attacks from WikiLeaks supporters, but so far the bank doesn’t appear to be suffering ill effects.
Analysts say it’s possible WikiLeaks could stir up new trouble for the nation’s biggest bank, perhaps exposing more problems in the mortgage arena or reviving questions about its Merrill Lynch acquisition. It’s also possible the revelations cause little harm or that WikiLeaks bypasses the bank altogether.
Bert Ely, a Virginia-based banking consultant, said he suspects all major financial institutions are girding for the group’s next move.
“We don’t know it’s Bank of America,” he said. “It could be one of a number of banks.”
In recent months, WikiLeaks has gained notoriety for exposing Pentagon and State Department secrets and for Assange’s fight against sexual assault charges in Sweden. In November, he told Forbes magazine that his group planned a bank leak in early 2011. That drew attention to a 2009 article in which Assange said WikiLeaks had obtained a Bank of America executive’s hard drive.
Bank of America has said it has no evidence that WikiLeaks has company data but it has said little else on the subject. In a speech earlier this month, chief marketing officer Anne Finucane hinted Bank of America was steeled for any possible revelations, partly because it already has endured intense investigations of its 2008 Merrill deal.
“We have been out there pretty much 24/7, whether those of us who run communications like it or not, and we have learned not only to react, but deal with this as a given,” Finucane told a Boston audience.
A Bank of America employee told the Observer that it appeared the bank had stepped up security internally recently, taking steps to block access to websites such as Gmail on company laptops. The bank declined to comment on security procedures.
Analysts say they’re watching for the next development, which could cause new problems for a company still trying to recover from the financial crisis. When speculation surfaced on Nov. 30 that Bank of America could be WikiLeaks’ next target, the bank’s shares plunged more than 3 percent to $10.95. But since that drop-off, the bank’s shares have climbed nearly 15 percent to $12.98 at Tuesday’s close.
Jefferson Harralson, a bank analyst with Keefe, Bruyette & Woods, said WikiLeaks’ revelations are unlikely to highlight a new problem but could add more color around topics already in the news. The bank’s mortgage unit, bulked up by the 2008 Countrywide Financial acquisition, has been the biggest trouble spot lately. The most costly issue is requests by investors to buy back billions in soured mortgage loans originated and sold off by Countrywide during the housing bubble.
“The soft underbelly (for Bank of America) would be the mortgage crisis,” Harralson said.
Still, analysts already are braced for huge losses tied to mortgage loan repurchase requests. Harralson estimates the bank could spend $35 billion over five years buying back mortgages, although he suspects the amount could end up being less.
Ely, the banking consultant, said WikiLeaks could reveal information on a range of issues, from executives’ actions during the Merrill Lynch acquisition to who is using the company jet. One of the more damaging disclosures would be evidence of securities law violations, such as the manipulation of earnings or the failure to disclose material information to investors, he said.
“That can trigger lawsuits from shareholders and bring out the class-action bar,” he said.
The New York Times on Tuesday reported that regulators also are worried that WikiLeaks revelations could show failings by the agencies charged with overseeing the banking industry. Earlier this month, however, Federal Deposit Insurance Corp. chairman Sheila Bair downplayed concerns about a leak. “I have a hard time understanding what would be so provocative,” she said after a speech. “So I would just ignore it, I really would.”
On Friday, Bank of America said it cut off payments to WikiLeaks because it had “reasonable belief that WikiLeaks may be engaged in activities that are, among other things, inconsistent with our internal policies for processing payments.” A bank spokesman declined to answer further questions.
Analysts said the bank could have a number of reasons for making the move, including pressure from the government, a desire to separate itself from possible criminal activities or revenge for obtaining its internal information.
Through its Twitter handle, WikiLeaks has encouraged Bank of America customers to close their accounts. The bank’s website doesn’t appear to be suffering from cyberspace attacks. Rich Mogull, analyst and chief executive at security research firm Securosis, said WikiLeaks supporters would need “massive resources” to dent the bank’s formidable defenses.
“Bank of America is always under attack,” Mogull said. “It’s one of the biggest targets on the Internet.”
In case of any leaks, Harralson said Bank of America is likely preparing its legal response, although that could be difficult against an “ephemeral” organization like WikiLeaks. “You can examine your legal options,” he said, “but it’s a hard organization to pin down.”
Read more: http://www.charlotteobserver.com/2010/12/21/1926976/cloud-of-suspense-surrounds-bank.html#ixzz18tDr1BH4