The Director: A Novel (46 page)

The central banks, suddenly unable to reconcile their sums and balance accounts, tried desperately to get in touch with the BIS by electronic message, then by phone. But the VOIP telephone system also went dead; it relied on digital routing that could be corrupted by whoever held the “root” authority of the systems administrator. Bloomberg terminals continued for the first several minutes to send BIS data and allow messaging, but these, too, soon went down.

Junot’s team attacked the BIS backup facilities at the data center simultaneously with the main attack. These backups were essentially vast databases, organized with computer rules that weren’t very different from the rules about columns and rows that were used in normal Excel data tables and spreadsheets. As the rules were changed, the integrity of the backup data tables dissolved. The reserve data was no longer internally consistent, nor did it match the first-level data in the system itself.

Junot delivered a final payload that had been prepared by Morris and attached to an .exe file that could be pushed through one of the backdoors. It included a special piece of code that automatically transferred a specified percentage amount from the transactions of the Bank of England into the accounts of the central banks of its former colonies in Africa. In the code was inserted a string, easy enough to find later, that identified this piece of malware as “
imperialismtax
.”

“Nothing but net,” said Mike Rubin to Ed Junot when they were done. That was a bit of NSA jargon, the slogan of the Data Network Technologies group, in addition to basketball slang. It meant the same thing: Clean, in and out.

The burp in the financial markets began about ten minutes after the attack. It started with broker-dealers who were conducting trades or swaps with the BIS trading desk. A dozen or so were in the middle of taking orders to buy or sell securities when the chat room on the screen went black, the message system crashed and the electronic addresses for BIS traders came up blank. The broker-dealers tried for several minutes to establish contact with their BIS clients and, when that failed, they began lighting up the global grid with increasingly anxious queries about what was happening at the Bank for International Settlements.

The dealers messaged their biggest clients first: the major money center banks; the biggest hedge funds and private equity funds. Nobody knew what was going on, but uncertainty in a major financial institution is a “sell” signal, no matter what the reason. By 12:15 Basel time, Bloomberg and Reuters had both moved bulletins saying that the Bank for International Settlements computer system had failed. The selling started within five minutes after the initial crash at noon, but once the Bloomberg and Reuters stories moved, they triggered a global cascade of fear and major selling on all exchanges and markets that were open.

By 12:20, the German DAX index was down 6 percent; the French CAC 40 was down 9 percent. The FTSE in Britain was off just 4 percent, but selling pressure was building. After-hours markets in Asia that traded derivatives showed a fall in futures prices for the Nikkei average in Japan and the Hang Seng in Hong Kong; these futures were falling even faster than the European averages. U.S. markets had several hours before they opened, but futures trading for NYSE and NASDAQ stocks was also sharply negative. The only markets that didn’t seem affected were those of the poorer emerging economies of the Third World. There, for reasons the market analysts couldn’t understand, there was buying pressure, rather than selling.

At 12:40, after two phone calls with a bewildered BIS management in Basel, the European Central Bank joined the Bank of England in requesting that market authorities suspend trading on all European exchanges until the discrepancies at the BIS could be reconciled. The suspension was expected to be brief, until the BIS’s backup systems could take over and begin clearing and reconciling trades again.

The Federal Reserve, in a statement issued at 12:40 Basel time, said that although U.S. markets weren’t yet directly affected, the Fed was prepared to extend liquidity to European central banks in unlimited supply until the BIS problems were resolved.

Regulators and central banks still had about three hours before the real crunch time arrived with the 9:30 a.m. opening of the New York Stock Exchange and NASDAQ.

The president was called at 6:30 a.m. by the Treasury secretary, Anthony Glass. He reported a major computer attack on the Bank for International Settlements, of unknown origins. He explained that the chairman of the Federal Reserve was preparing to issue a statement aimed at stabilizing the markets, and that he was talking with the governors of the Bank of England and the European Central Bank about further steps. A coordinated rescue plan of some kind would have to be devised before the 9:30 a.m. NYSE opening bell.

“Do whatever it takes,” the president told his Treasury secretary. He left it to Glass to decide how this hortatory statement should be carried out. Timothy O’Keefe, the national security adviser, called Glass five minutes later to say the president wanted an American-led rescue plan, if it came to that.

The BIS, the central bank of central banks, was all but inoperative for more than an hour. When the computer system finally went back up, the logic bombs and other malware festering in the system caused it to crash once again, and for the rest of that day and into the next, all of its Treasury, trading and clearing functions were unstable. The world’s leading computer security experts were on airplanes by late that afternoon, flying to Zurich and then to Basel to help with the forensics.

The investigation would come later. The immediate issue was how to halt the decline in most global financial markets, which had accelerated after the European Central Bank and Bank of England statements halting trading. The interruption had simply increased selling pressure in other markets that weren’t included in the suspension. Those markets received such intense order flow that they weren’t able to handle normal processing and clearing. At 1:15 the Dubai Financial Market and NASDAQ Dubai both suspended trading.

Television and print reporters began to gather outside the BIS headquarters around 12:30; their satellite trucks were visible outside the main building on Nauenstrasse and also the secondary offices, where the IT staff was based, at Aeschenplatz. The doors were locked, and no BIS spokesman was prepared to issue any statement at a time when the nature and origins of the computer crash were still unclear. The lack of official comment fed rumor and speculation by reporters, who were talking to their sources at commercial banks in Zurich and London and passing along what amounted to gossip.

Bloomberg tried to enforce some discipline in separating fact and rumor. But since there was no hard fact to report, the news media coverage served to increase market anxiety without offering any path or timetable for resolution.

Financial crises always converge on Washington. If the center holds, then the periphery begins to relax and order returns—with U.S. dominance reinforced. Indeed, if someone had been worried about the waning power of the United States, and had wanted to give the creaky post-1945 order a shot of hormones, that someone would have welcomed the opportunity to piggyback on the crisis caused by a bizarre team of hackers whose identities were at first unknown to the world.

The process of recovery began even as the crisis was still a jumble of inchoate signals and crashing systems. At 1:15 p.m. Basel time, and 7:15 a.m. in Washington, the chairman of the Federal Reserve, Michael Vander, met in the Situation Room at the White House with Treasury Secretary Glass. Teleconference lines were opened with the heads of the European Central Bank and the Bank of England.

The meeting had just started when a large figure walked into the room, carrying a cup of tea that he had brought from the Navy Mess, along with a powdered sugar donut. Unlike most of the dour faces in the room, he had a placid, almost genial demeanor. Despite the early morning hour, he was dressed immaculately in a three-piece gray flannel suit. He was humming a tune from the musical
Sweeney Todd
, the story of a malevolent barber who bakes the flesh of his victims into meat pies.

The well-dressed gentleman who was humming this incongruous tune was the director of National Intelligence, Cyril Hoffman.

“What a dangerous world we live in,” whispered Hoffman to the national security adviser, Timothy O’Keefe, who had also just arrived. Hoffman was smiling.

“Where’s Director Weber?” asked Glass, the Treasury secretary. “We could use his financial brain this morning, in addition to the spook stuff.”

“Weber is under protection. We have a report that his automobile has been disabled. Security is taking care of it. We’ll keep him safe.”

“Indeed,” said O’Keefe. He nodded for the Treasury secretary to begin.

“We see two possibilities,” began Glass. “The first is a rescue plan led by the United States and supported by all sixty central banks that are members of the BIS. That group would include China, Russia, India, Turkey, Brazil, Saudi Arabia and so on down the list until you get to Bosnia and Herzegovina. The advantages are obvious. This list includes every financial power of any consequence in the system.”

“What . . . are . . . the . . . uh . . . disadvantages?” asked Michael Vander, the Fed chairman. He had a disconcerting habit of pausing between almost every word, as if summoning an extra volt of brainpower.

“It might take too long. It’s almost eight a.m. now. The New York markets open in ninety minutes. Unless we have something ready to go, we’re going to have to follow Europe and suspend trading.”

Hoffman cleared his throat. He leaned toward the conference table so that his vest was touching the mahogany. He was wearing a jeweled tie pin that morning in the shape of a rooster.

“A word, Mr. Secretary, if I might. Off-line, please.”

The feed to the video monitors was temporarily muted. The British and European guests suddenly found themselves looking at a test pattern and listening to static.

“An important disadvantage with Option A is the problem of attribution,” Hoffman admonished the group.

“I don’t follow that,” said Glass.

“Plainly put, the question is: Who done it? We don’t know at this point, but I have an initial report from Admiral Schumer at the NSA that the malware in the BIS attack had a Chinese signature.”

“That’s worrisome,” said Glass. He looked toward O’Keefe, who nodded assent.

“Quite,” said Hoffman. “And one word more, Mr. Secretary. A number of the countries on the BIS list of partners would give us security concerns.”

Hoffman handed the secretary a list of the top sixty partners, on which he had circled China, India and France. Glass gave the paper to O’Keefe, and then to the Fed chairman.

“What about Russia?” asked Glass. “Shouldn’t they be on the bad-guys list?”

“I think not,” said Hoffman. “They give us heartburn, but I don’t think they pose any cyber-threat to financial markets.”

Glass shrugged. “You’re the intelligence expert,” he said.

“Speaking
strictly
from an intelligence standpoint,” said Hoffman, “I would be happiest if the United States was acting on its own. We could get support from reliable friends, Britain, Germany, perhaps even Russia for a little breadth. That way: No baggage, no haggling, no hands in the till. But obviously, the decision is up to you gentlemen.”

“So is that Plan B?” broke in the Fed chairman. He was looking at the clock on the wall, and then at his watch, for emphasis. “Plan A seems to be in . . . uh . . . liquidation, and the markets are quite, quite . . . volatile.”

Everyone looked at Glass. The Treasury secretary took a drink of coffee, made a nervous cough and announced the policy he thought the president had wanted from the beginning.

“Plan B is us, a U.S. rescue. Are we comfortable with that? We would propose temporary American aid and governance, backed by some sort of committee that includes Britain Germany, Russia, whatever.”

Glass looked to the Fed chairman and O’Keefe, who both nodded. Hoffman had the palms of his hands together on the table, as if in prayer. He nodded, too.

“You might call the Russian Embassy,” said Hoffman. “Tell them we’d like them on board on this one.”

Everyone nodded or shrugged. They wanted to get moving. A Treasury aide scurried off to call the Russian economic attaché, who, as Hoffman well knew, was a representative of the SVR.

“Turn the teleconference monitor back on,” said Glass. The screens came alive again, from London and Frankfurt.

“We want to propose an American rescue, backed by a financial coalition of the willing.” Glass looked at his watch. “We propose to launch it in another hour, at nine a.m., Washington time. The Fed and the Treasury would guarantee liquidity, and we would convene a transitional supervisory structure for governance of the bank. We’ll bring in some partners: I suggest the British, Germans and Russians, for a start.”

“What does ‘governance’ mean, in legal terms?” asked the chancellor of the exchequer on the screen. He had been a barrister before taking his post in the cabinet.

“Governance means that we run it until we hand it back to the BIS board. The bank will have to go into some version of receivership, at least briefly. The receivers will have responsibility for auditing the books, certifying the reliability of the computer systems, overseeing the investigation of what happened.”

The chancellor nodded. “Under the circumstances, I think that’s the best we can do. Do you have the paperwork ready?”

“Most of it,” said Glass. “The NSC staff has been working on this since six.”

Glass turned toward the Frankfurt monitor. “What does Europe think?” he asked.

“The ECB has no authority to take a position, independent of the EU member nations,” said the European Central Bank representative apologetically. “But we are glad that Germany will be included in the transitional governance structure.”

“Well then, I think we have a deal,” said the British minister, taking his teacup and dipping it toward the video camera.

The governor of the Bank of England, a distinguished economic historian from Oxford who had said very little during this discussion of law and policy, now spoke up. She had a smile that was like a Roman circus mask. She was famous, other than as the first woman governor of the bank, as a biographer of John Maynard Keynes.