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The New Compliance World Order: Is Big Brother Dictating IT Policy Now?

Marla Singer's picture




A little bird filled us in recently on an interesting meeting at one of what we might once have called "bulge bracket" banks.  In short, if you are working in a large financial institution in the United States you are likely to see some version of the "New Compliance World Order" soon.

The central premise of the IT strategy described to Zero Hedge is total, centralized control of all the informational assets of the firm.  Translated: All documents, files, databases, spreadsheets and the like will reside on a central server and be accessible only by logging into the server and pulling documents as they are needed.  Personal hard drives?  Gone.  Jump drives?  Prohibited/disabled on client machines.  To quote the attendee quoting another attendee at the meeting "You aren't going to have a C: drive anymore."  Rumor has it that EMC Documentum will be the vendor of choice.  This isn't new stuff, only the scale is unique.  Many of the more paranoid hedge funds use similar technology today.  But big banks?  That's a pretty big project.

Why bother?

Apparently, this is coming directly from the government.  The Treasury was mentioned specifically (though legal eagles may wonder about that).  Why?  One can only guess, but the off-the-cuff, whispered, outside-in-the-hall comment of one outside consultant present at the discussions may shed some light on the topic.

"This bank leaks like a sieve."

Certainly there are many reasons to centralize control over intellectual property.  This seems, however, a bit excessive.  It would, however, have the side-effect of clamping down on legitimate information leakage quite a bit.  Having said that, it could very well have a deleterious effect on whistle blowing.  And this is the "dual-use" paradox of technology like this.  It makes the kinds of crimes Sergey Aleynikov is accused of harder to bring off, but it also squelches would-be whistle blowers.  After all, from the perspective of the bank, the only difference between a whistle blower and an IP thief is the nature (civil v. criminal) of the legal actions after the incident.

There are, obviously, practical implications as well.

Who hasn't occasionally violated (often with the tacit acquiescence of one's superiors) employer policies on taking confidential material home over the weekend?  Those days might be over.  (As an aside, Zero Hedge Capital is going long late-night car service vendors and janitorial firms that service the big banks).

What happens when there is an internal network outage?  All work in the firm ceases, and a 15 year veteran of IT slips into cardiac arrest?  We are skeptical of centralized information processing.  An errant backhoe (or late-night cleaning crew) can do quite a lot of damage if you are depending on a few lines into a centralized server.  We thought the network computer model was dead long ago (and not just because Larry Ellison is a total asshole).

Think your bank is small enough to be immune?  Maybe not.  Word is, if you want SPIC insurance, you're a Documentum user.

(Is it ironic or sad that Deutsch Atkins, as I type this, is advertising whistle blower and wrongful termination services on Bloomberg radio?)




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Thu, 07/09/2009 - 16:15 | Link to Comment chumbawamba
chumbawamba's picture

The streets will flow with the blood of the Infidels.

 

I am Chumbawamba.

Thu, 07/09/2009 - 18:19 | Link to Comment Project Mayhem
Project Mayhem's picture

This is the best site on the whole wide internets

Thu, 07/09/2009 - 16:23 | Link to Comment Anonymous
Thu, 07/09/2009 - 18:11 | Link to Comment Arco
Arco's picture

This is really not a "big brother" thing at all. I used this at JP back in my investment banking days (no I'm not unemployed--yet). It makes a lot of business sense for the following reason:

  • limits leaks which can cause problems with regulators, insider trading, client confidentiality, etc. when working on deals.
  • decreases costs. It's extremely easy to move people around when you can log into a Documentum from anywhere, you'd be surprised how expensive this is--think 277 park to 383 madison--also you don't have to purchase everyone a laptop (which is a downside for business travel).
  • allows different groups to share files. for example, if you're doing a capital markets deal with a company in london from ny, before, you had to email crap back and forth every time a "saved-up" version was created, now, the whole team (globally) has access to the files immediately. the time benefit is enormous, teams can work virtually 27/7 and you never have to worry about email space again when working on a group that's on a different server.

There are countless other benefits which i don't care to spend time explaining but long story short: this has NOTHING to do with regulators, or "big brothers." this is just good proactive business sense. sorry guys...

Thu, 07/09/2009 - 18:22 | Link to Comment Marla Singer
Marla Singer's picture

Except that it's the Treasury pushing it on TARP banks....

Thu, 07/09/2009 - 18:26 | Link to Comment Arco
Arco's picture

That's an interesting point, i've never thought of that. It was directly after the bear acquisition (the one where the fed gave JP $29bn for) that JP did receive these documentum machines.... hmmm. You do spike my interest marla.

Thu, 07/09/2009 - 18:35 | Link to Comment Marla Singer
Marla Singer's picture

That's why I'm here.

Thu, 07/09/2009 - 19:31 | Link to Comment Anonymous
Fri, 07/10/2009 - 12:14 | Link to Comment Anonymous
Sat, 07/11/2009 - 12:59 | Link to Comment Anonymous
Thu, 07/09/2009 - 19:27 | Link to Comment Bob Dobbs
Bob Dobbs's picture

Some time ago, like when I was a student, all of the computers were in the "cloud."  The PC thing really didn't start until the early eighties.  Back then a Sysadmin/Root user was a fearsome persona.

Thu, 07/09/2009 - 16:26 | Link to Comment Anonymous
Thu, 07/09/2009 - 16:29 | Link to Comment Bubby BankenStein
Bubby BankenStein's picture

The devil is in the details.

Implementing major changes like will most likely increase risk in the short run due to operational / procedural / training issues.  This stuff is easier said than done.

Anyone who has inclination to breach security will be more motivated to do the deed sooner than later.  Could get interesting.

Thu, 07/09/2009 - 16:36 | Link to Comment channel_zero
channel_zero's picture

As an IT guy, I'm quite happy to see the "c drive" not be used for document storage.  It's a logistical mess.

And it won't stop leaks.  It will *look* better, but that's about it.

It seems to me once the document is checked out, there's very little that can stop it from propagating on the Internets.

As long as they'll hire me to babysit a Documentum installation, this works for me.

 

 

Thu, 07/09/2009 - 16:37 | Link to Comment perfectlyGoodWh...
perfectlyGoodWhiteBoy's picture

If anything, these banks will save boatloads in future legal costs.  Tracking stuff through personal harddrives, etc, was a wonderful revenue generator.

Thu, 07/09/2009 - 16:48 | Link to Comment Bob
Bob's picture

Looks like the news of the past couple weeks was just prep work by the gubmint??

Thu, 07/09/2009 - 16:54 | Link to Comment PenGun
PenGun's picture

 "dd is your friend". Linus Torvalds

Thu, 07/09/2009 - 21:19 | Link to Comment Bob Dobbs
Bob Dobbs's picture
dd if=/dev/sda | hexdump -C | head |echo "GS, this is for you."
Thu, 07/09/2009 - 17:13 | Link to Comment Anonymous
Thu, 07/09/2009 - 19:24 | Link to Comment Anonymous
Thu, 07/09/2009 - 20:00 | Link to Comment Marla Singer
Marla Singer's picture

When the Treasury shows up and tells you how to store your data and how to control access, where's the conspiracy?  It's overt.

Fri, 07/10/2009 - 00:48 | Link to Comment Anonymous
Fri, 07/10/2009 - 08:12 | Link to Comment Anonymous
Thu, 07/09/2009 - 17:21 | Link to Comment Bubby BankenStein
Bubby BankenStein's picture

Big Brother will be watching.

Just like 1984, your screen will be a TeleScreen with monitored video and audio surveillance a standard feature.  Try to evade it, You Are Fired!

Welcome to the brave new world of Total Information Awareness.

Warning, do not stick a Post It note over the camera.  The Human Rights Police will come get you.

Thu, 07/09/2009 - 20:48 | Link to Comment Arm
Arm's picture

I started using the Post-it trick a month back.  Scary that they can turn on my camera at any time...

Fri, 07/10/2009 - 00:49 | Link to Comment Anonymous
Thu, 07/09/2009 - 17:40 | Link to Comment Anonymous
Thu, 07/09/2009 - 17:43 | Link to Comment Bob
Bob's picture

The lawyer commerical may be neirther ironic nor sad--could be prophetic. 

Thu, 07/09/2009 - 17:47 | Link to Comment EQ
EQ's picture

this, quite frankly, is how all companies should be run.  the only spooky piece about this is the size of the gargantuan companies involved.  it's purely based on operational management as is pointed out often above.  first of all, no hard drive, no distributed desktop support staff.  second, backups and recovery of all data can be automated without human intervention if desired.  thirdly, don't have to buy pcs.  one gets the idea.  you can go on all day with the cost of ownership benefits.  i have friends selling this stuff to all of corporate america and it isn't conspiratorial. 

Thu, 07/09/2009 - 17:48 | Link to Comment bonddude
bonddude's picture

GOONNNNNGGGG

Herrow. Good to see you going to owwaa pleferred modow. It rill be mucha a easiaaa to see rut re need to with dis new modow. Tank you wunning dogs.

BWAHHHhahahahahahaha

Thu, 07/09/2009 - 18:36 | Link to Comment Marla Singer
Marla Singer's picture

Ok, I don't often laugh at comments.  You are messing up the DMA.

Thu, 07/09/2009 - 17:58 | Link to Comment quant-this
quant-this's picture

We do this in our three portfolio companies. We consider everything done on our computers our property. We did this because one of our sales managers erased a ton of information from his hard drive when we fired him. I finally understood why it was that when you left or got fired from a trading position, you were escorted to your desk and watched carefully as you collected your stuff.

Thu, 07/09/2009 - 19:13 | Link to Comment Anonymous
Thu, 07/09/2009 - 19:38 | Link to Comment DFTT
DFTT's picture

Maybe someone will show Madoff a bid for his A/S400

Thu, 07/09/2009 - 19:42 | Link to Comment Anonymous
Thu, 07/09/2009 - 20:01 | Link to Comment Marla Singer
Marla Singer's picture

Fact: Treasury is requiring particular information technology setups in TARP banks.

 

Draw your own conclusions Agent Skinner.

Thu, 07/09/2009 - 22:42 | Link to Comment Ben_the_Bald
Ben_the_Bald's picture

Is it fact or hearsay? And when you say particular information technology, where are the specifics documented? The architecture doesn't need to be private information as it's a massive change that will require tons of communication. In fact when companies finally get around to implement those changes, they would no longer be in TARP, or would have folded in bankruptcy.

 

Though I can see why someone long on EMC Corp. might like "requirements" like this one.

Thu, 07/09/2009 - 20:17 | Link to Comment Anonymous
Fri, 07/10/2009 - 19:00 | Link to Comment Anonymous
Thu, 07/09/2009 - 20:05 | Link to Comment relax
relax's picture

read hayek's the road to serfdom, tyranny cometh


 

Thu, 07/09/2009 - 20:12 | Link to Comment Anonymous
Thu, 07/09/2009 - 20:20 | Link to Comment Marla Singer
Marla Singer's picture

I'm not really concerned that the Treasury is somehow going to be snooping on data, but:

1.  The government should not be in the business of technology consulting.

2.  This is a taking.  Mandating particular expenditures on IT that has no legally mandated purpose is basically a tax.

3.  What motivation could the government really have here?  Is there some serious finding of Congress that gives us reason to believe information theft of the kind this sort of thing would prevent is causing these banks multi-million dollar losses?  Fine.  Where's the finding. Can I read it?

As for the other noise, its noise.  If you see conspiracy theories in these basic concerns, just ignore my posts hereonout.

Thu, 07/09/2009 - 20:17 | Link to Comment Gilgamesh
Gilgamesh's picture

On a related note, the "most transparent administration ever" is continuing on it's roll.  This new policy is probably just to save trees and document theft.  Now, this is how you save the economy and the environment at the same time:

 

'Put nothing in writing,' Browner told auto execs on secret White House CAFE talks; Sensenbrenner wants investigation

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Put...

Thu, 07/09/2009 - 20:56 | Link to Comment Anonymous
Thu, 07/09/2009 - 21:04 | Link to Comment Anonymous
Fri, 07/10/2009 - 08:19 | Link to Comment Anonymous
Thu, 07/09/2009 - 21:37 | Link to Comment Anonymous
Thu, 07/09/2009 - 21:41 | Link to Comment Anonymous
Thu, 07/09/2009 - 22:57 | Link to Comment Anonymous
Thu, 07/09/2009 - 23:20 | Link to Comment FischerBlack
FischerBlack's picture

I personally welcome this new initiative to seal our financial institutions from leaks and prying eyes. The harder they work to hermetically-seal their secrets, the more valuable those secrets will be, and the more people will want them. That makes for good television.

But this does make me wonder if perhaps the denial of service hack attacks of late are simply part of a much larger story that isn't seeing the light of day -- perhaps a 'national security' kind of story? If there's one thing we've learned this century, it's that there is no activity so reprehensible that it can't be justified with reference to national security.

And the really scary thing is, most of the time, as soon as they trot out those two words, everyone just begs to be fucked.

 

"Well, sure it's uncomfortable, but a dick in the ass sure does make us all feel safer now , doesn't it, dear?"

 

 

 

Fri, 07/10/2009 - 02:37 | Link to Comment zeropointfield (not verified)
Fri, 07/10/2009 - 03:24 | Link to Comment Anonymous
Fri, 07/10/2009 - 08:07 | Link to Comment Anonymous
Fri, 07/10/2009 - 08:32 | Link to Comment Anonymous
Fri, 07/10/2009 - 17:35 | Link to Comment E Thomas St.
E Thomas St.'s picture

I'm amused that banks don't do all of this already. In fact, I bet most of them do at some level already. At my job, we've implimented a lot of centralized processing because it is so much more efficient for a team working together and for the work to be audited immedietly.

The world of IT is about enabling choices for the users within the organization. There is always going to be pushback against the idea of centralized computing based on ignorance, pride and paranoia, but there are some legit problems with it from a technology perspective. Sometimes they can be expensive problems or very time intensive and deep planning problems, and often result in bickering between CTOs and CIOs.

For the concerns mentioned though;

1. If you want to work from home, log in to the VPN. If it's on paper you should have it scanned, stored and sent back to Iron Mountain before sundown.

2. If the internal network goes down or a backhoe cuts fiber have a fucking backup plan that's more extensive than your current plan. In either case mentioned, most people would still be unable to do a lot of work because they're already networked to a domain anyway.

3. Every Database, Excel File, Everything that is business related SHOULD reside on a central server. The issue here is where you want to put out the fire; When a local computer fails and takes an hour to recover, reimage, reinstall and release or when a server fails and you take a half an hour to recover, reimage, reinstall and release (thanks to the inherent advantages of server data replication recovering a server is fast now)

4. As for whistle blowing, if the company expects employees to get any work done, then they'll never truly be able to lock down everything. There are both financial and efficiency limits on how much you can restrict the ability of employees to diseminate information if you're letting them see it in the first place. Now that I think about it, if a job could be performed without anyone needing to make a judgement call and retaining the information that led to that decision it could be handled by technology.

 

Now the whole aspect of the government pushing it is absurd. Some banks are not going to be able to impliment any of this without money and changing the organizational structure of their business. Does anyone really believe banks want to change that?

Fri, 07/10/2009 - 19:01 | Link to Comment Anonymous
Fri, 07/10/2009 - 19:03 | Link to Comment Anonymous
Fri, 07/10/2009 - 19:15 | Link to Comment Marla Singer
Marla Singer's picture

Then why push a centralized system?

(I don't have a bluetooth headset.  Makes me look like more of a Star Trek fan that I am willing to admit I am).

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