March 29, 2024

New Chief at Consumer Bureau Promises Vigorous Agenda

The director, Richard Cordray, who was appointed to the post Wednesday by President Obama, encouraged consumers to contact the agency with their stories and complaints about banks, payday lenders and other financial institutions that they feel have sold deceptive products or engaged in abusive behavior.

“The consumer bureau will make clear that there are real consequences to breaking the law,” Mr. Cordray, who had been in charge of enforcement at the agency, said in remarks prepared for a speech at the Brookings Institution.

“We have given informants and whistle-blowers direct access to us,” he said. “We took over a number of investigations from other agencies in July, and we are pursuing some investigations jointly with them.  We have also started our own investigations. Some may be resolved through cooperative efforts to correct problems. Others may require enforcement actions to stop illegal behavior.”

Mr. Cordray was nominated by President Obama last year, but Senate Republicans blocked his nomination from coming to the floor for a vote. Opponents in Congress and in the banking and business sectors have said that the agency has too much power and autonomy and lacks adequate financial oversight and review of its regulatory actions.

The agency will focus in particular on the so-called nonbank financial companies — money transfer agencies, credit bureaus and private mortgage lenders, for example — that previously have fallen outside the authority of most bank regulators and consumer protection agencies.

Although the consumer agency was given authority over those types of companies in the Dodd-Frank Act, the regulatory overhaul passed in the wake of the financial crisis, those powers could not take effect until the bureau had a director.

“Today, we are launching the bureau’s program for supervising nonbanks,” Mr. Cordray said. “Many provide valuable services to customers who lack access to other forms of credit.  And they are big markets.  Nearly 20 million American households use payday lenders and pay roughly $7.4 billion in fees every year. 

“Many subprime loans during the housing bubble were made by nonbank mortgage brokers,” he added. “Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them.  But we must establish clear standards of conduct so that all financial providers play by the rules.”

Mr. Cordray asked consumers to contact the agency directly through its Web site, consumerfinance.gov. “Our team is taking complaints about credit cards and mortgages, with other products to be added as we move forward,” he said. “Our work will support the honest businesses in financial markets against those who deceive consumers or otherwise break the law.”

The public appearance by Mr. Cordray, who has kept a low profile since being nominated to the post, was arranged quickly after the announcement Wednesday of Mr. Cordray’s appointment, which was made without Senate approval under the constitutional provision for making appointments when lawmakers are in recess.

The event was meant to allow him to show that the agency intends to move promptly and aggressively, in the hope that getting public support could quell some of the criticism from members of Congress, according to people involved in the arrangements.

Several members of Congress vowed on Wednesday to try to overturn the appointment, and one House subcommittee summoned Mr. Cordray to a hearing on Capitol Hill to discuss his agency and how he intends to manage it.

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A Hacker Tells All

While he excelled at infiltrating computer systems from a keyboard and had a sharp memory for numbers, “Ghost in the Wires” (written with William L. Simon) really showcases another of Mitnick’s skills: social engineering, or what he describes as “the casual or calculated manipulation of people to influence them to do things they would not ordinarily do.” By doing his research and impersonating authority figures over the phone or by e-mail, Mitnick found he could persuade just about anybody — programmers, technicians, even the nice lady at the Social Security Administration — to give him the things he wanted, like passwords, computer chips and personal information about F.B.I. informants on his tail. “People, as I had learned at a very young age, are just too trusting,” he writes.

It’s this element to his story that makes “Ghost in the Wires” read like a contemporary über-geeky thriller. Many of today’s computer viruses and identity-­theft scams — and even the recent phone-­hacking scandals of certain newspapers — depend on social engineering mixed with a misuse of technology to dupe the unsuspecting. In that regard, Mitnick’s memoir also serves as a wake-up call for anyone trying to keep personal information private. (Out of prison since 2000, Mitnick now works as a security ­consultant.)

Kevin Mitnick grew up as an only child of divorced parents, moving frequently in the Los Angeles area. He was something of a loner, and his early pursuits included studying magic tricks and ham radio. When he was 12, the revelation that he could ride the local bus system free with a $15 punch and books of half-used blank transfer tickets fished out of a Dumpster behind the bus depot gave him a sense of what he could do (legal or otherwise) if he put his mind to it. Even if one is unfamiliar with Mitnick’s life story, it’s kind of obvious where he’s heading here, and it’s far beyond the bus routes around San Bernardino County.

In high school, Mitnick developed an obsession with the inner workings of the telephone company’s switches and circuits, a hobby known as “phone phreaking” (and one that was shared by the future Apple founders, Steve Jobs and Steve Wozniak, in their own formative years).

By the time he was 17, in 1981, Mitnick was happily spending his time on things like persuading a Pacific Telephone employee to give him Lucille Ball’s home number and burrowing into different corporate computer systems. It was also at the age of 17 that he had his first run-in with the authorities for his activities. Thus began a nearly 20-year cat-and-mouse game with law enforcement that makes up much of the book.

Driven by curiosity and compulsion (“There’s always something that’s more challenging and fun to hack”), Mitnick spent most of his young adulthood pilfering proprietary code from technology companies like Sun Microsystems and Novell, partly so he could look for bugs and security holes to use to his advantage, and partly for the thrill of the hunt. He also spent plenty of time making free calls on his hacked cellphone and going to the gym. As the authorities began to close in on him in 1992, he created several false identities, and went on the run until he was finally nailed in February 1995.

When not recounting his clever exploits, Mitnick devotes chunks of the book to defiantly rebutting myths that became attached to him — for example, that he had hacked into government computer systems. (He does, however, admit to eavesdropping on the National Security Agency’s telephone calls.)

With its caper ’n’ chase pacing, “Ghost in the Wires” is fairly entertaining, although the prose can veer into pulpy melodrama: “I had to move now. I had to get a new identity now. I had to get the hell out of my apartment now!”

Like many memoirists, Mitnick clearly relishes the chance to have his say all these years later. He mocks some of the more incredible accusations leveled at him by the authorities: that he had repeatedly turned off the phone service of the actress Kristy McNichol, and that he could “whistle into a telephone and launch a nuclear missile from Norad.” (Mitnick surmises that the federal prosecutor who made the latter claim probably mixed him up with Matthew Broderick’s youthful computer enthusiast in the 1983 cold-war thriller “WarGames.”)

Mitnick’s sense of humor is evident as he recounts his adventures. When his ingenious combination of a radio scanner and software alerted him to F.B.I. agents’ cellphones in the area, he cheekily had a box of doughnuts waiting for them when they raided his apartment.

For those interested in computer history, “Ghost in the Wires” is a nostalgia trip to the quaint old days before hacking (and hackers) turned so malicious and financially motivated. Unlike computer criminals today, Mitnick ignored the credit card numbers he stumbled across in his pursuit of code. He writes: “Anyone who loves to play chess knows that it’s enough to defeat your opponent. You don’t have to loot his kingdom or seize his assets to make it worthwhile.” He summed up his personal motive to the former Wall Street trader Ivan Boesky when they were both in prison: “I didn’t do it for the money; I did it for the ­entertainment.”

J. D. Biersdorfer is the production editor of the Book Review and writes the QA computer column for The Times.

Article source: http://feeds.nytimes.com/click.phdo?i=373bf47d18f2d96767ebaabcc884cb27