Exclusive: National Security Agency helps banks battle hackers (Reuters)

WASHINGTON (Reuters) – The National Security Agency, a secretive arm of the U.S. military, has begun providing Wall Street banks with intelligence on foreign hackers, a sign of growing U.S. fears of financial sabotage.

The assistance from the agency that conducts electronic spying overseas is part of an effort by American banks and other financial firms to get help from the U.S. military and private defense contractors to fend off cyber attacks, according to interviews with U.S. officials, security experts and defense industry executives.

The Federal Bureau of Investigation has also warned banks of particular threats amid concerns that hackers could potentially exploit security vulnerabilities to wreak havoc across global markets and cause economic mayhem.

While government and private sector security sources are reluctant to discuss specific lines of investigations, they paint worst-case scenarios of hackers ensconcing themselves inside a bank's network to disable trading systems for stocks, bonds and currencies, trigger flash crashes, initiate large transfers of funds or turn off all ATM machines.

It is unclear if hackers have ever been close to producing anything as dire, but the FBI says it has already helped banks avert several major cyber attacks by helping identify network vulnerabilities.

NSA Director Keith Alexander, who runs the U.S. military's cyber operations, told Reuters the agency is currently talking to financial firms about sharing electronic information on malicious software, possibly by expanding a pilot program through which it offers similar data to the defense industry. He did not provide further details on his agency's collaboration with banks.

Alexander said industry and government were making progress in protecting computer networks, but "tremendous vulnerabilities" remained. The four-star Army general noted companies that have suffered damage from hackers, such as Google Inc, Lockheed Martin Corp and Nasdaq OMX Group, had among the best security systems in the world.

"If they're getting exploited, what about the rest? We have to change that paradigm," Alexander said.

NSA, which has long been charged with protecting classified government networks from attack, is already working with Nasdaq to beef up its defenses after hackers infiltrated its computer systems last year and installed malicious software that allowed them to spy on the directors of publicly held companies. A Nasdaq spokesman confirmed the investigation into the attack continues, but declined to give further details.

OFFICIALS WORRIED

Hackers have targeted Wall Street investment banks for more than a decade, but recent attacks have been more sophisticated, coordinated and deliberate.

That makes security experts suspect the hackers were backed by countries such as China, and fueled concerns that cyber terrorists might someday use malware to wipe out crucial data and cripple networks across the financial sector.

China has repeatedly said it does not condone hacking, but experts say the evidence continues to mount against Beijing. In June, Google blamed China for an attempt to steal the passwords of hundreds of email account holders, the second major breach the Internet giant has blamed on the Chinese.

Earlier this year, security firm McAfee said hackers working in China broke into the computer systems of five global oil and gas companies to steal bidding plans and other critical proprietary information.

"We know adversaries have full unfettered access to certain networks," Shawn Henry, executive assistant director of the FBI, said without identifying the adversaries.

"Once there, they have the ability to destroy data," he said in an interview. "We see that as a credible threat to all sectors, but specifically the financial services sector."

The FBI has helped banks avert several potential attacks by alerting them to vulnerabilities in their computer networks, and by flagging possible hackers before they struck, he said.

Security experts interviewed by Reuters declined to identify any banks that may have data compromised, citing promises of confidentiality to clients, colleagues and employers that they would not to discuss the matter publicly.

Representatives of Wall Street's biggest banks including Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc and JPMorgan Chase & Co either declined to discuss security issues or were not available to comment.

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Battle for Afghanistan's Gambir Jungle: What was it all for? (The Christian Science Monitor)

Kunar, Afghanistan – [To read the previous installment of this series, please click here.]

Down in the Gambir Jungle on the morning of Monday, June 27, the stricken 1st Platoon at last had the relief it had needed for two days. But as the sun rose on the ridgeline more than 3,000 feet above the 1st, Havoc Company was facing a new onslaught.

The Taliban came at Havoc like "a bunch of guys coming to a street fight – with a whole bunch of different types of weapons," says Pfc. John Litwinczuk.

Then the rounds started hitting. "Our sandbags got shot up, a round hit a rock right in front of my face," he adds.

IN PICTURES: Battling the Afghan insurgency

The insurgent forces a€“ a mix of foreign and local fighters a€“ continued to advance to the point that Litwinczuk could hear them change their rifle magazines or moan when they were shot. "That was one thing I remember," he says.

The US commanders on the ground were worried.

"By the second day, I was asking [troops], 'Can you hold your line?' " says Havoc Company commander Capt. Christopher Bluhm, who has served two previous deployments. "I was concerned that [the insurgents] were going to push through."

RECOMMENDED: Will US exit strategy work in Afghanistan? Brutal valley emerges as test.

As June 27 wore on, though, something else became obvious on the ridgeline where Havoc sat: The Americans were weathering the storm.

The same was true for 1st Platoon down in the mud-walled kulats of the Gambir Jungle. US sharpshooters began to get their bearings, picking out targets. "Then they were losing guys and not us anymore," says Lovelace of the 1st.

With the arrival of the 3rd Platoon in Gambir on June 27, the battle-weary 1st Platoon was at last set to leave.

Nightfall again brought a freedom that day did not, and platoon members worked their way to the landing zone where they would be picked up, grasping at tree roots along the way to keep from sliding down the steep face of loose dirt and gravel.

Two days later, at nightfall on June 29, commanders told Havoc Company troops to break down their fighting positions. They had held the line and could now return to base.

The soldiers slashed sandbags with their knives so insurgents couldn't make use of them and kicked away stone walls they had built.

In the rain, they began to descend to the landing zone, tripping and falling down a steep descent through thick underbrush. They waited for evacuation until, as the rain increased, they got the news: The exfiltration had been called off because of the weather. They would not be departing that night.

Commanders, concerned about leaving troops vulnerable on fishbowl-shaped low ground, ordered them back up the hill to cobble together the fighting positions they had just destroyed. "We were crawling on all fours," says Litwinczuk.

At 3 a.m., Havoc Company troops started rebuilding, piecing together the shredded sandbags. "We were furious – at least that's what was driving me," Litwinczuk adds. "That night felt the coldest to me."

Some 24 hours later, soldiers made the same trip to a landing site, finally boarding helicopters that would take them back to their base.

The battle's tallyIn the weeks after Operation Hammer Down, a commander's assessment rendered a bulleted verdict:

Approximately 124 enemies killed in action and 51 wounded.

Enemy operations in the Pech and Watapur valleys disrupted.

Foreign-fighter training camps reduced.

Enemy lines of communication severely disrupted.

In the end, a fresh unit that had been flown in pushed into the Gambir training camps. Senior US military officials say the battle made a considerable difference.

"They were able to not just make a statement, but I think the effect of that has tremendously affected the whole entire district of Watapur," says Col. Richard Kim, commander of the 3rd Brigade, 25th Infantry Division, which included the troops in Operation Hammer Down.

But sitting in an isolated outpost in the Pech River Valley, soldiers from B Company's 1st and 3rd Platoons wrestle with the losses of the mission – and question what they accomplished in seven days of hard fighting.

"Our whole objective was to clear out a training camp," says Sgt. Paul Robertson of the 1st Platoon.

"And we failed," interjects a soldier, who had been standing nearby, listening to the others tell the story.

"I think we inadvertently did clear that camp out," says another with soldierly humor. "It was like, 'Training camp dismissed, guys – sink or swim.' "

For Sgt. Ridge Kaaekuahiwi of the 1st Platoon, the frustration comes from a fear that the dynamic did not change – that it was all for nothing.

"When you really get down to it, we're not winning any fight," he says. "We're just fighting fighters."

One month after the mission, an intelligence report on the Gambir Jungle indicated "increased Al Qaeda and Pakistani presence" in area training camps – "an effort," it noted, "to resupply after Operation Hammer Down."

The battle for the Gambir Jungle:

Part 1, Tuesday: Soldiers' tales of an epic battle

Part 2, Wednesday: Into the 'Valley of Death'

Part 3, Thursday: First Platoon's 'last stand'

Part 4, Friday: A race against daybreak

Part 5, Saturday: What was it all for?

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Battle for Afghanistan's Gambir Jungle: Into the 'Valley of Death' (The Christian Science Monitor)

Kunar, Afghanistan – [To read the first installment of this series, please click here.]

By late June, the US troops of Operation Hammer Down were ready to go, and they had terrorist training camps of the Pech River Valley in their sights.

The Pech Valley is the face of the war in eastern Afghanistan: remote, treacherous, and home to the legendary veterans of the battles against Soviet occupation in the 1980s. It has been called the "Valley of Death."

The region is a magnet for Taliban fighters who have sanctuary across the border in Pakistan, as well as home to local sympathizers who offer training camp space in their backyards to foreign fighters, according to US intelligence assessments. The camps bring money and prestige to organizers and their clans.

IN PICTURES: Battling the Afghan insurgency

Operation Hammer Down was to target the training camps in one of the Pech's adjoining valleys – the Watapur, which includes the pine forests and cave networks of what US commanders nickname the "Gambir Jungle." B Company of the 2nd Battalion, 3rd Brigade, 25th Infantry Division got the call.

In the Gambir Jungle, Sunday, June 25 arrived with B Company's 1st Platoon on the verge of its target. According to the 1st Platoon's global-positioning systems, the soldiers were 400 yards from Gambir – a village of mud huts, called kulats, surrounded by training camps.

First Platoon had been dropped off on a high ridgeline by helicopter just before midnight on June 24 and had taken eight hours to reach this point, each man carrying at least 60 pounds of gear down the rutted, steep slope.

RECOMMENDED: Will US exit strategy work in Afghanistan? Brutal valley emerges as test.

"You can't just stroll down the mountain," says Sgt. Elwyn Lovelace of the 1st Platoon. "You're trying not to fall or roll down the mountain."

As day broke, the platoon was poised on the edge of a gulch too deep to climb down and too wide to leap across. But it wasn't long before some Afghan National Army soldiers with the US forces found a natural land bridge.

As the US troops crossed it, a firefight began – one that would last four days.

In the first 30 hours on the ground in Gambir, nearly half of the roughly 40 men in 1st Platoon would be wounded, and three would be killed, including its commander.

By the end, the 1st would be "down to 15 guys," a soldier says. "We were what they call 'combat ineffective.' "

The initial firefight, however, was brief and, some thought, final. Troops had located the enemy in a nearby cave and the shooting had stopped.

But then the attacks began in earnest. Never before had Lovelace wondered, "Am I going to make it back today?" Yet in the hours to come, he says, it was a question he would ask himself repeatedly.

Some insurgent forces were shooting from beneath earth-colored blankets that masked their heat signatures from US Apache gunships. Others had begun to flank US forces in a classic L-shaped ambush, maneuvering up around the platoon.

Their fire was effective and devastatingly accurate. "Most of the guys who got shot got shot in the neck, face...," says Spc. Derrick Dickerson of 1st Platoon, his voice trailing off.

As the ambush of June 25 wore on, the toll on the 1st mounted. A company commander on the mission broke his ankle and had to be flown out. An Afghan Army soldier had been shot in the neck, and two other American soldiers had been shot in the neck and lip. And when the commander of the 1st Platoon, 1st Lt. Dmitri Del Castillo, went to higher ground to organize a medical evacuation, he was shot in the neck, too.

"Everybody's yelling, 'The LT is down!' " Dickerson says of the fatal shot. "It all happened so fast."

Nearby, in the gulch that first stopped the Americans' progress, another leader in the platoon, Staff Sgt. Nigel Kelly, was trying to load the body of an Afghan interpreter who had been killed onto a sling when he was shot in the hip.

Dickerson and a few fellow soldiers urged Kelly to move down with them into the gulch. Once there, however, they were stuck as they waited for a medevac. One helicopter tried to land but was chased away by rocket-propelled grenade fire. US attack aircraft couldn't fire on insurgents for fear of hitting their own soldiers, who were dangerously close. Despite the seriousness of Kelly's injuries, the only option was to wait.

"We couldn't move up that hill because we had no cover," says Dickerson. "We played dead and waited until dark, because that was the only option."

Dark was more than three hours away.

Battle for the Gambir Jungle:

Part 1, Tuesday: Soldiers' tales of an epic battle

Part 2, Wednesday: Into the 'Valley of Death'

Part 3, Thursday: First Platoon's 'last stand'

Part 4, Friday: A race against daybreak

Part 5, Saturday: What was it all for?

Get daily or weekly updates from CSMonitor.com delivered to your inbox. Sign up today.

View the original article here

Tea party takes its turn in debt battle (AP)

WASHINGTON – The White House weighed in with a veto threat Monday against a tea party-backed plan to let the government borrow another $2.4 trillion, a measure conditioned on big and immediate spending cuts and adoption by Congress of a constitutional amendment to balance the federal budget.

At the same time, President Barack Obama said the two sides are "making progress" after a series of back-channel conversations with Republicans like House Speaker John Boehner of Ohio and Majority Leader Eric Cantor of Virginia, with whom Obama met on Sunday morning.

Boehner called the veto threat "unfortunate," and in a statement Monday said Obama's threat "should make clear that the issue is not congressional inaction, but rather the President's unwillingness to cut spending and restrain the future growth of our government."

"If we are going to raise the debt limit and avoid default, the White House must be willing to demonstrate more courage than we have seen to date," Boehner said.

A Boehner aide said the "cut, cap and balance" plan is still "the best path forward" and declined to characterize the hush-hush talks with Obama. Another spokesman, Brendan Buck, said "there is nothing to report in terms of an agreement or progress."

The House set to pass the plan on Tuesday but it's sure to stall in the Senate, where majority Democrats say it would lead to decimating budget cuts and make it harder to pass tax increases on the wealthy. The White House weighed in Monday, calling the bill an "empty political statement" that President Barack Obama would veto.

And even if the scheme could pass, there's no way Congress will adopt a balanced budget amendment, which requires a two-thirds vote in both House and Senate.

Tea party lawmakers are insisting on the effort to try to put their stamp on the debate over the so-called debt limit, and GOP leaders — lacking other ideas that might win a majority in the Republican dominated House — were quick to give their OK at a spirited closed-door meeting on Friday.

Major rating agencies such as Moody's and Standard and Poor's have signaled they're poised to lower the nation's coveted Triple-A credit ratings if no agreement is reached on the nation's debt.

On Monday, Moody's issued a report suggesting that the U.S. could eliminate the threat to its credit rating by removing the legal limit on the debt.

Tuesday's House vote on the cut, cap and balance plan comes after more than a week of White House talks with congressional leaders failed to produce a breakthrough. The tally will be held exactly two weeks before an Aug. 2 deadline to avoid a potentially devastating default on U.S. obligations like payments to bondholders and senior citizens receiving Social Security.

The plan doesn't actually include any spending cuts; rather, it endorses a spending cap on agency operating budgets for next year that the House is already working toward. The new plan promises to cut $35 billion more from so-called mandatory programs like farm subsidies, food stamps and Medicaid, the health program for the poor and disabled, but doesn't say where they would fall.

In a statement, the White House warned that such an approach could force significant cuts in education, research, Medicare and Social Security, and "put at risk the retirement security for tens of millions of Americans."

After the House exercise and a failed Senate vote on a balanced budget amendment to the Constitution, Plan B appears to be to have the Senate vote to give Obama sweeping power to order increases in the debt limit totaling $2.5 trillion over the coming year without approval by lawmakers.

The hope appears to be that after trying it their way, enough House Republicans will be able to stomach the emerging Senate plan to allow it to pass, though it's plain there will have to be plenty of Democrats voting for it as well to make up for dozens of unyielding lawmakers unwilling to abandon their tea party promises.

For their part, Senate Republicans are demanding a vote this week on a balanced budget constitutional amendment, though they have zero chance of winning the required 67 votes in a chamber where they control just 47.

Public opinion polls show that voters like the idea of a balanced budget, but the government faces such massive budget gaps — it now borrows more than 40 cents of every dollar it spends — that the cuts required to eliminate the deficit were too draconian for even the GOP-dominated House to endorse balancing the budget anytime soon. The House Republican budget still leaves deficits in the $400 billion range after 10 years.

The immediate issue is allowing the government to continue to borrow from investors and foreign countries like China to pay its bills — which include a $23 billion batch of Social Security payments set to go

The report Moody's issued Monday said the need for the U.S. to raise its debt limit by enacting legislation creates the possibility of default that wouldn't exist otherwise. Removing the legal limit on the debt would eliminate the risk that threatens the government's credit rating, the report said. "We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," said the Moody's report.

With the deadline just over two weeks away and with a recent round of White House talks failing to generate a breakthrough, Sen. Mitch McConnell, R-Ky., the cagey leader of his party in the Senate, has proposed a plan that would allow Obama to automatically win a large enough increase in the debt to keep the government afloat until 2013 unless both House and Senate override him by veto-proof margins.

McConnell's plan has political advantages but has come under assault from many conservatives eager to take advantage of the current opportunity to use the need to lift the debt ceiling to force deficit cuts now. But Republicans refuse to consider any tax revenue increases demanded by Obama and Democrats to balance any budget package, and Democrats won't go along with significant cuts to benefits programs like Medicare and Medicaid unless tax increases on the wealthy are a part of the package.

That leaves lawmakers well short of the $2 trillion-plus in deficit cuts required to offset a debt increase that's big enough to solve the problem through next year's elections.

Majority Leader Harry Reid, D-Nev. wants to add a plan to create yet another deficit panel, comprised entirely of lawmakers and evenly divided between the two parties, that would try to break the deadlock by the end of the year.

It's also expected that a package of spending cuts, perhaps in the $1.5 trillion range over the coming decade, would be attached to the McConnell-Reid measure, perhaps in the House.

__

Associated Press writers Erica Werner and Ben Feller contributed to this story.

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Senate cancels recess as budget battle heats up (Reuters)

WASHINGTON (Reuters) – Democrats stepped up their attack in a budget battle with Republicans on Thursday as the Senate canceled its July 4 recess and a top lawmaker accused Republicans of deliberately sabotaging the economic recovery.

With time running short before a possible default in early August, Senate Democratic Leader Harry Reid said he would hold the chamber in session next week to work on a budget deal that would allow the country to keep paying all its bills.

July 4 is the Independence Day holiday.

One day after President Barack Obama compared Senate Republicans to lazy schoolchildren, the Senate's top Republican, Mitch McConnell, said Obama should come to Capitol Hill as soon as possible to discuss what could pass Congress.

"The president says he wants us to get working. I can't think of a better way than to have him come right over today. We're waiting," McConnell said on the Senate floor.

There was no immediate response from the White House. Obama, who has challenged Congress to stay in town until a deal is reached, was scheduled to leave in the afternoon for an election fund-raiser in Philadelphia.

Obama and lawmakers have ratcheted up their rhetoric after budget talks collapsed last week. Republicans say tax increases cannot be part of the deal, and Democrats have ruled out cuts to healthcare benefits. But both sides have some wiggle room. A face-saving deal could close a few tax breaks and restructure health programs in a way that would not trim benefits.

Democrats said they were awaiting a response from House of Representatives Speaker John Boehner, the top Republican in Congress, over the general elements that would be possible.

Boehner aides said there was no firm offer on the table.

RACEHORSES, YACHTS AND JETS

Democrats took to the Senate floor to blast tax breaks for racehorses, yachts and corporate jets that benefit the wealthy. Democrats want to end $400 billion worth of these breaks.

The debate is getting increasingly personal. Democratic Senator Jeff Merkley called the racehorse tax break the "bluegrass boondoggle" in a slap at McConnell, whose home state of Kentucky is famous for horse racing.

"Giving Triple Crown treatment to millionaires while workers are put out to pasture, that's not right and it's not the American way," Merkley said, referring to thoroughbred racing's Triple Crown series of races.

Senator Charles Schumer, a member of the Senate Democratic leadership, said Republicans are pushing steep spending cuts and blocking job-creation efforts in order to pin the sluggish economy on Obama in the November 2012 elections.

"Republicans aren't just opposing the president any more," Schumer said at the Economic Policy Institute, a liberal think tank. "They are opposing the economic recovery itself."

Schumer said Democrats will advance a range of job-creation measures over the next six months. These will have a tough time becoming law but could put Republicans in an uncomfortable spot as the unemployment rate remains stuck at 9.1 percent and the 2012 election cycle heats up.

Those proposals, such as increased construction spending and an extended payroll tax break, could carry a price tag of hundreds of billions of dollars. That runs counter to the focus of the budget talks, where negotiators aim to reduce stubborn budget deficits by roughly $2 trillion over 10 years.

The deficit reduction measures would make it less politically painful for lawmakers to raise the $14.3 trillion debt ceiling before August 2, when the Treasury Department has warned it will run out of money to pay the country's bills.

Budget deficits in recent years have hovered near their highest levels relative to the size of the economy since World War Two. Experts warn that the United States could face a Greek-style crisis if it does not slow the growth of its debt.

The deficit for the current fiscal year, which ends September 30, is projected to hit $1.4 trillion.

McConnell said any deal that includes tax increases will not pass Congress, but other Republicans could be more flexible. Most in the Senate have voted to end a tax break for ethanol providers, and some have been working on a bipartisan deal that would include a range of revenue hikes.

Schumer said Democrats could back changes to the Medicare and Medicaid government health insurance programs that would not trim benefits. Compromise is also possible on military cuts, he said.

(Additional reporting by Deborah Charles and Thomas Ferraro; Editing by Will Dunham)

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