Department of Homeland Security Daily Open Source Infrastructure Report

Thursday, June 18, 2009

Complete DHS Daily Report for June 18, 2009

Daily Report

Top Stories

 According to the Associated Press, the number of Nebraska cattle herds quarantined because of bovine tuberculosis concerns has jumped to 42, and authorities warned the disease may have already spread to Colorado and South Dakota. (See item 22)

22. June 17, Associated Press – (National) Bovine TB quarantine expands to 42 Nebraska herds. The number of Nebraska cattle herds quarantined because of bovine tuberculosis concerns has jumped to 42 and two other states were warned the disease may have already spread there. The quarantine, which includes roughly 15,000 Nebraska cattle, is likely to continue growing in the weeks ahead, Nebraska agriculture director said, because investigators are still tracking down all the animals that may have had contact with the infected herd over the last two years. The director said the 10 herds added to the quarantine on June 16 included cattle bought from restricted herds before the quarantine was imposed. And Colorado and South Dakota officials have been alerted because animals from quarantined herds were sold to cattle producers in those two states. Ten Nebraska counties now have quarantined herds, up from five last week. The outcome of that investigation could create a significant disadvantage for Nebraska’s roughly $10 billion cattle industry. Meanwhile, Texas officials quarantined a West Texas dairy herd and slaughtered several cattle that tested positive for tuberculosis. They have not yet identified the source. Also, the Kentucky State veterinarian has imposed restrictions on certain livestock entering Kentucky from Nebraska and Texas as a result of outbreaks of tuberculosis in cattle in those states. Source:

 The Associated Press reports that emergency crews’ response to the massive coal ash spill last year at the Kingston coal-fired plant in Tennessee was hampered by TVA’s failure to adopt Homeland Security’s National Incident Management System protocols for emergency communications, the public utility’s internal auditors said on Monday. (See item 40)

40. June 17, Associated Press – (Alabama; Tennessee) Report cites emergency communications, media errors, delayed victim response after ash spill. Emergency crews’ response to a massive coal ash spill last year was hampered by the Tennessee Valley Authority’s (TVA) failure to adopt emergency communication procedures recommended by the Federal Government, the public utility’s internal auditors said late June 16. The report by the TVA’s Inspector General’s Office also faulted the utility for making inaccurate statements to the media and a claims process that delayed reparations to victims. “TVA management generally agreed with the report and plans to take actions in regards to the recommendations,” the deputy inspector wrote. The utility’s managers disagreed with how the report described inaccurate statements to the media. The inspector general sharply criticized the agency’s 11 coal-fired power plants for failing to adopt Homeland Security’s National Incident Management System protocols for emergency communications, which are used by TVA’s nuclear and hydroelectric stations. Emergency responders with other agencies complained that TVA managers were “speaking a different language” in the key hours after the spill because they were unfamiliar with the protocol’s terms and concepts. Some TVA managers were even scrambling to look up terms on the Internet before consultants were finally hired to straighten things out at a cost of $510,000, the auditors said. The communications breakdown caused delays in getting environmental data about the ash, in assessing the stability of the remaining dike and in distributing health and safety information to the public, including a 12-hour delay in lifting an evacuation order. TVA misstatements to the media included initial reports that the spill was less than half its actual size. There were inconsistent statements on whether the Kingston dike failure was connected to earlier leaks. Source:,0,4300469.story See also:


Banking and Finance Sector

11. June 17, Wall Street Journal – (National) Obama wants SEC, CFTC to police derivatives. The Securities and Exchange Commission and Commodity Futures Trading Commission should get “clear, unimpeded authority to police and prevent fraud” in the derivatives markets, according to a new U.S. Presidential Administration proposal. The Administration also wants new record-keeping and reporting requirements on all over-the-counter derivatives as part of its proposed revamp of financial regulators. “All OTC derivatives markets, including CDS (credit default swaps) markets, should be subject to comprehensive regulation that addresses relevant public policy objectives,” according to a near-final draft of the regulator plan. The proposal, obtained on June 16, was being circulated through Washington ahead of the U.S. President’s announcement of a major proposed rewrite of U.S. financial regulations. Many of the proposals would require Congress to act, so significant changes are likely. The U.S. President’s proposal touches on regulation of banking, securities, mortgages and other financial products. For derivatives, the plan describes core principles, such as “preventing activities in those markets from posing risk to the financial system.” It also seeks to promote the efficiency and transparency while preventing market manipulation, fraud, and other market abuses. The plan also seeks to ensure “that OTC derivatives are not marketed inappropriately to unsophisticated parties.” It calls for ensuring the SEC and CFTC “have clear, unimpeded authority to police and prevent fraud, market manipulation, and other market abuses involving all OTC derivatives.” Source:

12. June 17, Financial Times – (National) Banks cut FDIC guarantee ties. JPMorgan Chase and Morgan Stanley will no longer issue government-guaranteed bonds in an effort to sever their financial ties to the U.S. authorities and show investors they can fund themselves without Washington’s help. In separate statements, the two banks said on June 16 they did not expect to have to sell short-term bonds backed by banking regulator, the Federal Deposit Insurance Corporation. The announcements by the two banks, which could be followed by Goldman Sachs and the other institutions that passed the government’s recent stress tests, make it likely the debt guarantee plan will not be extended beyond its October deadline. The move by JPMorgan and Morgan Stanley underline the gap between banks that have freed themselves from government aid and rivals such as Citigroup, Bank of America and Wells Fargo that still owe money to the authorities. Source:

13. June 16, Bloomberg – (Illinois) Lake Shore’s Baker indicted in $300 million fraud. The managing director of the collapsed Chicago hedge fund Lake Shore Asset Management Ltd. was indicted by a U.S. grand jury for allegedly operating a $300 million fraud. The 27-count indictment was unsealed June 15, the Chicago U.S. Attorney said in a statement on June 16. While an arrest warrant has been issued for the defendant, his whereabouts are unknown, the prosecutor said. The U.S. Commodity Futures Trading Commission last year accused the defendant in a civil-enforcement lawsuit of having defrauded at least 700 investors by hiding trading losses. The CFTC won court orders barring Lake Shore from commodities trading. “The defendant misrepresented and caused to be misrepresented that Lake Shore had a long history of trading success,” when in reality it had lost about $38 million between 2002 and 2007, according to the indictment. Source:

14. June 15, Reuters – (National) U.S. credit card defaults rise to record in May. U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America Corp’s lending portfolio, in another sign that consumers remain under severe stress. Delinquency rates, an indicator of future credit losses, fell across the industry, but analysts said the decline was due to a seasonal trend, as consumers used tax refunds to pay back debts, and they expect delinquencies to go up again in coming months. “I find it hard to believe that it is really a trend. You need to see stabilization in unemployment before you see anything else,” said an analyst at Stifel Nicolaus. “It is too early to see some kind of improvement.” Bank of America Corp, the largest U.S. bank, said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April. The bank is paying the price of expanding rapidly in recent years and of holding one of the highest concentrations of subprime borrowers among the top card issuers, analysts said. In addition, American Express Co, which accounts for nearly a quarter of credit and charge card sales volume in the United States, said its default rate rose to 10.4 percent from 9.90, according to a regulatory filing based on the performance of credit card loans that were securitized. Citigroup, the largest issuer of MasterCard branded credit cards, reported credit card chargeoffs rose to 10.50 percent in May from 10.21 percent in April. Source:

Information Technology

33. June 17, MX Logic – (International) Cligs URL shortener hacked to redirect 2.2 million links. Hackers managed to hijack some 2.2 million links posted through the URL shortening service Cligs, redirecting the links to a single page on, a website of the OC Register. The hack occurred sometime on June 15, Cligs, the fourth-most popular URL shortening service, said on the company’s blog. The hackers were able to exploit a security flaw in the company’s URL editing software to change the web addresses of the links. The company said on June 17 that it is moving to a new platform and 97 percent of the affected URLs were backed up and restorable. “I have identified the hole and disabled all cligs editing for now and I am restoring the URLs back to their original destination states,” the company blog said on June 16. Cligs also said the hackers were not able to hijack user accounts and passwords are encrypted on the site. Although the hacker did not redirect the URLs to a malicious site, web security experts said the attack demonstrates how URL shorteners could be used by cybercriminals to direct users to malicious sites for phishing or to spread malware. Source:

34. June 16, San Francisco Chronicle – (International) Sophisticated online crime ring detected. Security researchers have uncovered a sophisticated online network for buying and selling access to infected PCs, raising concerns that businesses, governments and even home computer users are growing ever more vulnerable to cybercrime. Called GoldenCashWorld, the network acts as a one-stop shop for people who seek to acquire, sell or trade infected computers and Web sites. Infected PCs can be used to send spam or collect documents and personal information or inject new Web sites with malicious code that can in turn be passed on to fresh PCs. The network also includes tools for creating malicious code and stolen credentials for about 100,000 Web sites. Although it appears to be in Russia, about 40 percent of the computers compromised through the network belong to individuals or companies in the United States. “This is the most advanced network we have found,” said the chief technology officer of Finjan, a venture-funded security company based in San Jose that found the network two months ago. “They are trying to combine all the elements together and enable more people to participate in this crime.” Other security researchers said that they were not surprised by Finjan’s discovery, which the company announced on June 16. Source:


Communications Sector

35. June 16, IDG News Service – (National) FCC chair nominee: broadband deployment a major priority. Rolling out broadband to rural and other areas that lack service will be a major priority for the U.S. Federal Communications Commission, the man nominated to be chairman of the agency said on June 16. The FCC, tasked by the U.S. Congress with creating a national broadband plan, will focus on making broadband available and affordable to U.S. residents, said the nominee to become chairman of the FCC. Congress, in requiring a national broadband plan in a huge economic stimulus package passed earlier this year, recognized that “we as a country are not where we need to be, with respect to our communications infrastructure,” said the nominee, who was a tech adviser to the U.S. President’s presidential campaign and a former special counsel at the FCC. “We should have, I believe, a communications infrastructure that is world-leading, a 21st-century infrastructure that generates economic growth, opportunity, prosperity.” The economic stimulus package provides $7.2 billion for broadband deployment in both unserved and “underserved” areas. Source:

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