Fed's examination of the cloud; lawmakers seek meeting with CapOne, Amazon

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Receiving Wide Coverage ...

Under their noses
The Federal Reserve examined an Amazon.com facility in Virginia in April at around the same time a former Amazon employee hacked into Capital One’s data that was stored in Amazon’s cloud. “The federal examiners who visited Amazon are the same ones who regulate Capital One. It doesn’t appear they were aware of the giant hack.”

The examination, which was headed up by the Fed’s Richmond branch, was “the first of what is expected to be ongoing oversight of giant cloud providers that have become repositories of sensitive banking information.” It “brings to the fore the question of where banks end and where the vendors that power them begin.”

Separately, Republicans on the House Oversight Committee have launched an inquiry into the Capital One-Amazon data breach, “a sign of mounting political scrutiny of the companies’ cyber security practices.” The lawmakers sent letters to the CEOs of the two companies, requesting a “staff-level briefing” with the two firms within the next two weeks.

The letter to Capital One CEO Richard Fairbank “demanded more details on the scope and nature of the breach, as well as the bank’s response.” The letter to Amazon CEO Jeff Bezos asked for information on “the current status of [Amazon Web Services] security protocols in place to ensure the security of sensitive personal and government data.”

Wall Street Journal

Accounting failure
The U.K.’s Financial Reporting Council fined KPMG and one of its partners £5.05 million ($6.1 million) for failings in preparing regulatory reports for two of Bank of New York Mellon’s London-based entities. The accounting firm and KPMG partner Richard Hinton “admitted misconduct in preparing and submitting reports on BNY Mellon’s compliance with regulatory requirements in 2011.”

Financial Times

Bearing the burden
The European Central Bank’s stimulus measures, including negative interest rates and massive bond buying, are “slowly strangling eurozone lenders.” The ECB’s recent indications of a new round of stimulus “has prompted a broader worry: that by hobbling the banking sector the ECB might blunt the overall benefit to the economy of rate cuts.”

Washington Post

Raw deal
The Federal Trade Commission is being criticized by privacy and consumer advocacy groups for telling consumers that they won’t get anything close to $125 each from the Equifax data breach settlement if they choose cash over 10 years of free credit monitoring. “The high demand, critics said, is actually an argument to pursue a higher settlement.”

The FTC said it viewed the credit-monitoring option “as the primary source of relief for affected consumers” and was the “best source of future protection from identity theft. The option to obtain reimbursement for alternative credit monitoring, as set forth originally in the class-action settlement, was never intended to be a cash payout for all affected consumers.”

Quotable

“We have proactively engaged in discussions with lawmakers and elected officials since the arrest of the perpetrator of this cyber incident on Monday and will continue to do so.” — A Capital One spokesperson commenting on an inquiry from Republican members of the House Oversight Committee on the data breach.

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