Monday, March 30, 2009

60 Minutes on the Conficker Worm Threat: Transcript (3-29-09)

How serious a threat is the Conficker Worm. Or just computer hackers in general. Read the 60 Minutes transcript.

The Internet is infected. Malicious computer hackers have been creating more and more weapons that they plant on the Internet. They call their weapons viruses and worms - they're creepy, crawly toxic software that contaminate our computers without our ever knowing it. You can be infected by simply visiting your favorite Web site, or just by leaving your computer on, overnight while you're asleep.

And the problem is growing, exponentially. Last year the number of infections tripled. And an entire industry of computer security professionals is in a race to keep the hackers from their goal, which is usually to steal your money.

One of the most dangerous threats ever, a computer worm known as "Conficker," is spreading through the Internet right now. By some estimates, 10 million computers have been infected worldwide.
CNET Conficker FAQ
At Symantec, the company that makes Norton anti-virus software, engineers have been tracking Conficker since last November as it worms its way across the globe.

"This map is showing a visual representation of where all of the known infections of Conficker are across the world," explained Steve Trilling, a Symantec vice president who says the worm is now living on millions of computers, mainly in corporations.

So far, the bad guys who created it haven't triggered Conficker. It's just sitting out there like a sleeper cell.

"Imagine a network of spies that has infiltrated a country. And every day, all of the spies are calling in for their instructions on what to do next," Trilling explained.

Asked what the worm is being asked to do, Trilling told Stahl, "That's the interesting thing. The only thing the worm is being asked to do is to ask for further instructions."

For several months, Trilling says the worm has just been sitting there, awaiting instructions.

It's that ominous, because once the hackers issue instructions, Conficker could turn menacing in an instant.

With one click, the worm's creator can instruct it to suck sensitive data, like bank passwords and account numbers, out of millions of computers, or launch a massive spam attack to clog up the works.

The newest targets of worms are social networking sites. Trilling demonstrated to Stahl how it might work.

Looking at a real Facebook page, Trilling explained, "We added your friend and colleague Morley Safer, you can see down there on the left."

He says a worm can crack into a Facebook account, like Morley's, and send a message to anyone on his friends list.

It's a message a friend or colleague, like Stahl, would be sure to open since it comes from a trusted friend. Stahl took the bait and clicked on what looked like Morley's video link.

"Something looks a little off," Trilling remarked. "You're already infected."

As Trilling demonstrated on a second screen, the hacker "owned" Stahl's online movements. "From here on out, everything you do, gonna show up on the hacker's machine," he explained.

So when Stahl typed her username and password into a bank Web site, it appeared instantaneously on the hacker’s screen, along with her bank account details.

"Every single keystroke you hit, in fact, if you make a mistake and hit a backspace, that shows up in the window," Trilling explained.

The hacker then followed her around, as she browsed the Internet from CBS News to

"So, if I buy something, they’re gonna have my credit card," Stahl remarked.

"Everything you type in, your address, your credit card, it’s all gonna show up in that window," Trilling warned.

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Obama Statement on the Auto Industry: Transcript (3-30-09)

Read the full transcript. Excerpt below:

One of the challenges we've confronted from the beginning of this administration is what to do with the state of the struggling auto industry. In recent months, my Auto Task Force has been reviewing requests by General Motors and Chrysler for additional government assistance, as well as plans developed by each of these companies to restructure, to modernize, and to make themselves more competitive. Our evaluation is now complete. But before I lay out what needs to be done going forward, I want to say a few words about where we are and what led us to this point.

It will come as no surprise that some Americans who have suffered most during this recession have been those in the auto industry and those working for companies that support it. Over the past year, our auto industry has shed over 400,000 jobs, not only at plants that produce cars, but at the businesses that produce the parts that go into them and the dealers that sell and repair them. More than one in 10 Michigan residents is out of work -- the most of any state. And towns and cities across the great Midwest have watched unemployment climb higher than it's been in decades.

The pain being felt in places that rely on our auto industry is not the fault of our workers; they labor tirelessly and desperately want to see their companies succeed. It's not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it's a failure of leadership -- from Washington to Detroit -- that led our auto companies to this point.

Year after year, decade after decade, we've seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we've reached the end of that road. And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our problems head-on and do what's necessary to solve them.

We cannot, and must not, and we will not let our auto industry simply vanish. This industry is like no other -- it's an emblem of the American spirit; a once and future symbol of America's success. It's what helped build the middle class and sustained it throughout the 20th century. It's a source of deep pride for the generations of American workers whose hard work and imagination led to some of the finest cars the world has ever known. It's a pillar of our economy that has held up the dreams of millions of our people. And we cannot continue to excuse poor decisions. We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. These companies -- and this industry -- must ultimately stand on their own, not as wards of the state.

And that's why the federal government provided General Motors and Chrysler with emergency loans to prevent their sudden collapse at the end of last year -- only on the condition that they would develop plans to restructure. In keeping with that agreement, each company has submitted a plan to restructure. But after careful analysis, we've determined that neither goes far enough to warrant the substantial new investments that these companies are requesting.

And so today I'm announcing that my administration will offer GM and Chrysler a limited additional period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional taxpayer dollars. During this period they must produce plans that would give the American people confidence in their long-term prospects for success.

Geithner, McCain on Meet the Press: Transcript (3-29-09)

John McCain refused to get on the Palin bandwagon. Read the transcript. Excerpt below:

MR. GREGORY: All right, we've defined our terms a little bit, now let's talk about the big news this week, your plan to help save the banks. The bank stabilization plan. We've come up with an example here and we'll role-play a little bit, because I think this is the easiest way to explain this. So here's how a transaction would work. Bank USA, we're calling it, has a loan, a toxic asset, and it's valued on their books for $100 million. And it's for sale, right? So there's going to be an auction here and investors like me could come in, and I'm going to come in and I've got--my highest bid is for $70 million, OK? That's the price for the $100 million loan that I'm actually going to pay. Now, here's how the transaction actually works, right? I'm the investor, I put in $5 million. You, the Treasury Department--you're really the taxpayer--put in $5 million, and then the government in the form of the FDIC is going to provide 60 million at very good terms, going to guarantee that loan. So the government's on a hook for a lot of this. That's called leverage, right? How does it work and what's the upside?

SEC'Y GEITHNER: David, let me just step back for one second. Part of what's, what's causing this problem in our financial system is banks made a bunch of bad loans, many of them backed by real estate; residential, commercial real estate. Those loans are now sitting on the books of the financial system and they're taking up room, preventing banks from extending new credit on the scale they need. And we have two choices in this context. We can leave it as it is, hope banks will earn their way out of this process over time, and I am certain that will create the risk of a deeper, longer recession. Again, the classic lesson in financial crises, if governments wait to act, they wait too late and that means more damage to the economy, higher deficit in the future, greater cost to the taxpayer. We're not prepared to take that approach.

Another approach many people advocate is that the government itself come in...


SEC'Y GEITHNER: ...and buy these assets, take on all the risk itself. The government would set a price for the assets and bear all the losses and all the costs in that context. Our judgment is that would be much more expensive for the taxpayer, create much greater risk for the taxpayer, and we're not prepared to take that approach.

MR. GREGORY: And the point in our model, if we can just put that slide up again, where you see investor puts in five million, Treasury puts in five million, the FDIC guarantees it at $60 million in terms of providing the loan. There's upside there. In other words, if the value of that loan goes up, the taxpayer wins, the investor wins.

SEC'Y GEITHNER: Right. The investors are taking risk. Their money is at risk and at stake. They're the ones that set the price for which this transactions will take place. So using their self-interest to get the price better, better than what the government would do in that context.


SEC'Y GEITHNER: We're using their expertise to help manage these assets. And the--and as you said, the taxpayer will share in the upside. This is a relatively conservative structure. It's not very different from when your family buys a house. It's a more conservative structure than a bank typically operates. But the key thing is it allows the government to work with the private investor to help get through this crisis.


SEC'Y GEITHNER: That we don't want the government taking on all the risk and all the losses.


SEC'Y GEITHNER: We need to work with the private sector to help get this, get this recovery going again.

MR. GREGORY: All right, but here's the key point. The investor presumably is on board because, you know, they stand to gain a lot. The government wants to get all of these toxic assets off the banks' balance sheets. It's been estimated between $1.5 and $3 trillion of bad stuff out there. But will the banks participate? And here's my question based on our example. Hundred million dollar loan, but the auction price is $70 million. Well, if you're the bank and you say, "Hey, wait a minute. This is really worth $90 million or $80 million. I'm not going to sell that for $70 million and take that loss on my books." Are you going make them sell?

SEC'Y GEITHNER: Banks already hold reserves against that $100 million. So the gap is not between 100 and 70, for example, it's a narrower gap. Now, banks are going to have an incentive because they want to raise, go raise private capital from the markets. And it's going to be easier for them to do that if they can show their investors a cleaner balance sheet. And that'll help improve the incentive for banks to participate.

MR. GREGORY: But you can't make them sell, can you?

SEC'Y GEITHNER: Well, you can make it compelling and economic for them to sell. And again, if you think about the markets today, if you had to sell your house tomorrow, in a market where no one can get a mortgage, then the price you would get if you sold in that market would be a tiny fraction of its basic value in a more normal. And our markets are not working today. People, in effect, in these securities markets, can't raise financing. And there is a very good case in that context for the government to provide financing on appropriate terms to help provide a market for these assets. And by doing that, we're going to make it more likely that interest rates come down and, and the financial system has the capacity to provide the credit, the oxygen.

[...]MR. GREGORY: Do you think that the banks will need more government money, and would you be willing to support that?

SEN. McCAIN: I would not unless I certainly saw a way that it would not be used the--as the first TARP money was. I think that's the general opinion throughout the Congress on both sides of the aisle. There's got to be more transparency. You didn't ask him, but the secretary of Treasury I understand will not reveal is how much money is left in TARP 1. Don't you think the American people should know that? There--we still don't have the transparency and oversight.

One other thing we need, we do need a select committee in Congress to look at what happened so people can--this train hit them without any knowledge. They still don't know what happened. Why did it happen? So then they would have some more confidence on, in what actions we might take in the future to prevent it from happening again.

MR. GREGORY: And what is your take on the anger, the populist anger in the country? Do you think it's justified, or do you think it's been overblown? Has the president showed leadership in standing up to it?

SEN. McCAIN: I think the president was trying to walk a careful line between reflecting public anger--which is all justified. It's all justified, ranging from the extreme of Madoff to just outright greed and people who knew better. So I think he was trying to walk a fine line between rechanneling and reflecting anger, at the same time not bashing people that are innocent. I think that, that what we need to do here is understand, too, that sometimes Congress overreacts. I share all that anger. My constituents share that anger. It's, it's real, it's palpable and it's justified. But bills of attainder, basically going back and taxing people for what they've already by contract earned or are going to earn, I think is a dangerous course of action as well.