How much of an impact do cybercrimes have on the U.S. economy? Retired U.S. Army Lt. Gen. Ron Burgess and former U.S. Defense Intelligence Agency Director presented some daunting numbers this week at the Auburn University Bank Directors’ College, hosted by the Raymond J. Harbert College of Business.
“In 2011, $12.5 billion didn’t go where it was supposed to go,” Burgess, now the senior counsel for Auburn’s national security programs, cyber programs and military affairs, told more than 70 bankers at the Auburn University Hotel and Dixon Conference Center. “By 2012, that number grew to $14 billion. The numbers aren’t in for 2013, but they will be north of that.”
According to the Bureau of Economic Analysis, the U.S. Gross Domestic Product in 2012 was $15.54 trillion. Then factor in the “missing money.”
“That means one-fifteenth of the Gross Domestic Product went out the side door,” Burgess told bankers. “And that makes it a national security issue.”
Where did this money go?
“Bad people,” Burgess answered. “Drug lords. Criminal gangs. The black market. Terrorists. Areas that are not part of a good, sound economy. The world is connected by fiber-optic cable. It’s difficult to catch people who mask themselves. If there is a brighter bulb in the socket, they’ll find a way to get by. It’s ‘my geek is smarter than your geek.’”
International policy, Burgess said, is an issue that must be resolved.
“If we have two aircraft in the air and one locks on its targeting radar, that is considered to be a hostile act and you have a right to self-defense,” he explained. “What is the equal in cyberspace? We don’t have any policy for cyber warfare. We get tied up in civil liberties.”
Burgess asked bankers how much access would they want to allow “Big Brother” (government) to their computer systems and noted that Mike McConnell, former Director of the National Security Agency (1992-1996) once said it’s going to take a “cyber Pearl Harbor” to awaken the nation.
“We’re not moving as fast as we need to,” Burgess added.
Burgess was just one of many speakers to address bankers at the seminar, which concluded Friday, Feb. 21. Banking CEOs and senior officers also learned about regulatory changes, fiduciary responsibility and industry trends from a blend of speakers from academic, corporate, professional and regulatory backgrounds.
Harbert College Lowder Eminent Professor in Finance, James Barth, was a panelist Friday morning for the discussion “Regulatory and Competitive Threats to Community Banks” and discussed the potential effects of shadow banking and its impact on community banks.
Lowder Professor of Finance John Jahera served as the session moderator, and introduced Burgess Thursday evening.