TBR News October 19, 2014

Oct 19 2014

The Voice of the White House


Washington, D.C. October 17, 2014: “Now that the Crimean adventure is over, the media is rushing to the Ebola business, squawking and clucking like drunken chickens. A strict quarantine is needed but given the rank inefficiency of the government, will never happen. Ebola is not as bad as smallpox but it does prove Malthus’ point about over-population and food supplies. Ebola, the rising sea levels,

Putin, oil and rabid Islamists are now up front and one reading MSN gets to find out how much celebs weigh and the fact that a two year old boy in Florida ate a ten foot long snake or that two jaywalkers were apprehended in Bad Seepage, Ohio. Facts are indeed to be found on the Internet but not on Zero Hedge. There are many reliable news sites, Reuters being one of the best, and they nestle cheek by jowl with nut sites proclaiming the emergence of the Loch Ness monster in Lake Erie. I will put up a list of what I personally consider legitimate news sites in a later column.” 

Americans face post-foreclosure hell as wages garnished, assets seized

October 14, 2014

by Michelle Conlin


            NEW YORK   – Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.

Using a legal tool known as a “deficiency judgment,” lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way.

But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and even, in some cases, bought new homes.

“Just because they don’t have the money to pay the entire mortgage, doesn’t mean they don’t have enough for a deficiency judgment,” said Florida foreclosure defense attorney Michael Wayslik.


Advocates for the banks say that the former homeowners ought to pay what they owe. Consumer advocates counter that deficiency judgments blast those who have just recovered from financial collapse back into debt — and that the banks bear culpability because they made the unsustainable loans in the first place.




Borrowers are usually astonished to find out they still owe thousands of dollars on homes they haven’t thought about for years.

In 2008, bank teller Danell Huthsing broke up with her boyfriend and moved out of the concrete bungalow they shared in Jacksonville, Florida. Her name was on the mortgage even after she moved out, and when her boyfriend defaulted on the loan, her name was on the foreclosure papers, too.

She moved to St. Louis, Missouri, where she managed to amass $20,000 of savings and restore her previously stellar credit score in her job as a service worker at an Amtrak station. 

But on July 5, a process server showed up on her doorstep with a lawsuit demanding $91,000 for the portion of her mortgage that was still unpaid after the home was foreclosed and sold. If she loses, the debt collector that filed the suit can freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off 2005 Honda Accord.

“For seven years you think you’re good to go, that you’ve put this behind you,” said Huthsing, who cleared her savings out of the bank and stowed the money in a safe to protect it from getting seized. “Then wham, you get slapped to the floor again.”

Bankruptcy is one way out for consumers in this rub. But it has serious drawbacks: it can trash a consumer’s credit report for up to ten years, making it difficult to get credit cards, car loans or home financing. Oftentimes, borrowers will instead go on a repayment plan or simply settle the suits — without questioning the filings or hiring a lawyer — in exchange for paying a lower amount.

Though court officials and attorneys in foreclosure-ravaged regions like Florida, Ohio and Illinois all say the cases are surging, no one keeps official tabs on the number nationally. “Statistically, this is a real difficult task to get a handle on,” said Geoff Walsh, an attorney with the National Consumer Law Center. 

Officials in individual counties say that the cases, while virtually zero a year or two ago, now number in the hundreds in each county. Thirty-eight states, along with the District of Columbia, allow financial institutions recourse to claw back these funds.

“I’ve definitely noticed a huge uptick,” said Cook County, Illinois homeowner attorney Sandra Emerson. “They didn’t include language in court motions to pursue these. Now, they do.”




Three of the biggest mortgage lenders, Bank of America, Citigroup, (C.N) JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co. (WFC.N), all say that they typically don’t pursue deficiency judgments, though they reserve the right to do so. “We may pursue them on a case-by-case basis looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower and the type of hardship,” said Wells Fargo spokesman Tom Goyda. The banks would not comment on why they avoid deficiency judgments.

Perhaps the most aggressive among the debt pursuers is Fannie Mae. Of the 595,128 foreclosures Fannie Mae was involved in – either through owning or guaranteeing the loans – from January 2010 through June 2012, it referred 293,134 to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

It is unclear how many of the loans that get sent to debt collectors actually get deficiency judgments, but the IG urged the FHFA to direct Fannie Mae, along with Freddie Mac, to pursue more of them from the people who could repay them.

It appears as if Fannie Mae is doing just that. In Florida alone in the past year, for example, at least 10,000 lawsuits have been filed — representing hundreds of millions of dollars of payments, according to Jacksonville, Florida-based attorney Chip Parker.

Parker is about to file a class action lawsuit against the Dallas-based debt collection company, Dyck O’Neal, which is working to recoup the money on behalf of Fannie Mae. The class action will allege that Dyck O’Neal violated fair debt collection practices by suing people in the state of Florida who actually lived out of state. Dyck O’Neal declined to comment.

In Lee County, Florida, for example, Dyck O’Neal only filed four foreclosure-related deficiency judgment cases last year. So far this year, it has filed 360 in the county, which has more than 650,000 residents and includes Ft. Myers. The insurer the Mortgage Guaranty Insurance Company has also filed about 1,000 cases this past year in Florida alone.

Andrew Wilson, a spokesman for Fannie Mae, said the finance giant is focusing on “strategic defaulters:” those who could have paid their mortgages but did not. Fannie Mae analyzes borrowers’ ability to repay based on their open credit lines, assets, income, expenses, credit history, mortgages and properties, according to the 2013 IG report.  “Fannie Mae and the taxpayers suffered a loss. We’re focusing on people who had the ability to make a payment but decided not to do so,” said Wilson.

Freddie Mac spokesman Brad German said the decision to pursue deficiency judgments for any particular loan is made on a “case-by-case basis.”


The FHFA declined to comment.


But homeowner-defense lawyers point out that separating strategic defaulters from those who were in real distress can be tricky. If a distressed borrower suddenly manages to improve their financial position – by, for example, getting a better-paying job – they can be classified as a strategic defaulter.

Dyck O’Neal works with most national lenders and servicing companies to collect on charged-off residential real estate. It purchases foreclosure debts outright, often for pennies on the dollar, and also performs collections on a contingency basis on behalf of entities like Fannie Mae. “The debt collectors tend to be much more aggressive than the lenders had been,” the National Consumer Law Center’s Walsh said.

A big reason for the new surge in deficiency claims, attorneys say, is that states like Florida have recently enacted laws limiting the time financial institutions have to sue for the debt after a foreclosure. In Florida, for example, financial institutions now only have a year after a foreclosure sale to sue — down from five.

Once financial institutions secure a judgment, they can sometimes have years to collect on the claim. In Maryland, for example, they have as long as 36 years to chase people down for the debt. Financial institutions can charge post-judgment interest of an estimated 4.75 percent a year on the remaining balance until the statute of limitation runs out, which can drive people deeper into debt. 

“This is monumentally unfair and damaging to the economy,” said Ira Rheingold, the executive director of the National Association of Consumer Advocates. “It prevents people from moving forward with their lives.”

Software developer Doug Weinberg was just getting back on his feet when he got served in July with a $61,000 deficiency judgment on his old condo in Miami’s Biscayne Bay. Weinberg thought the ordeal was over after Bank of America, which rejected Weinberg’s short sale offers, foreclosed in 2009.

“It’s a curse,” said Weinberg. “It’s still haunting me. It just doesn’t go away.”


(Reporting by Michelle Conlin in New York; Editing by Dan Wilchins and Martin Howell)



How the ‘safest place on the internet’ tracks its users

Whisper app that was intended to be a safe haven for anonymity is exploiting a vast library of texts, photographs and, in many cases, the location of their authors – from Guantánamo to the White House


October 16 2014

by Dominic Rushe and Paul Lewis

The Guardian

In an elegant warehouse-style building on Venice Beach known locally as “the fortress”, Michael Heyward, a tech entrepreneur, was struggling to control the remote-controlled drone hovering above the heads of his employees.

The 27-year-old son of Andy Heyward, one of cartoon character Inspector Gadget’s co-creators, giggled as the drone came crashing down to the floor, narrowly missing the head of a female developer.

Outside the building, once owned by Hollywood royalty Anjelica Huston, skateboarders, surfers, tourists and the homeless mingled in the Californian sun. It was just another day on Silicon Beach – a name the local tech crowd loathe, but one that has come to define a new generation of savvy, young firms sprouting up in Los Angeles, challenging the tech giants of San Francisco.

One of the hottest new kids on the block is Whisper, the company Heyward co-founded, which is part of a new wave of Venice Beach-based social media companies that have grown up in Facebook’s shadow. Snapchat is next door; Tinder, the dating app, is round the corner.

Whisper’s selling point is anonymity. It describes itself in the app store as “the first completely anonymous social network”.

For Heyward the established social media networks – Facebook and Twitter – have created a dilemma. People can no longer speak honestly; they self-censor for fear of being judged by their peers, colleagues and family, or portray only idealised version of their lives.

Whisper is a platform for the truth, however ugly.

A quick look at the app proves the point. “I push great guys away because I’m terrified they will leave like my dad did. I hate him for causing this,” reads one message you would be unlikely to see on Facebook. “That moment when ur mum tells u she hates u because ur gay 17/M/gay,” reads another.

Hate speech, real names, pornography, drug dealing and other offences are all sifted out of the app. Some 40,000 people mentioning suicidal tendencies have been automatically referred to a suicide hotline. Whisper has set up a nonprofit, Your Voice, to help raise awareness of mental health issues.

Whisper now hosts more than 2.5m messages every day, an outpouring of intimate confessions made on a platform Heyward has described as the “safest place on the internet”.

But Whisper has a secret.

The Guardian was given access to the company’s back-end system – the tool they use to sift through the millions of messages posted via the app each week – and spoke at length with the company’s staff to explore the possibility of an expanded partnership.

Whisper’s internal practices appeared at odds with Heyward’s public declarations, some of the company’s terms of service and, in all probability, the expectations of users who are downloading the app in growing numbers on the assumption it will give them a cloak of invisibility.

The company denies this, pointing to its policy of not collecting information – such as user names, phone numbers or addresses – that would easily identify them. “Whisper does not collect nor store any personal identifiable information from users therefore their privacy and anonymity are always protected,” the company said in a statement.But four days after Whisper learned the Guardian planned to make public its internal practices, the company quietly rewrote its terms of service and introduced a new privacy policy.

Furnished with an extremely simple password, we were given access to the company’s vast library of texts and photographs and, in most cases, the location of their authors. The company’s developers have created a back-end analytics tool to conduct more refined searches of the database, the most powerful of which pinpoints location.

Whisper’s in-house mapping tool identifies users who have posted from Guantánamo Bay, Cuba, using their GPS data. Occasionally, the company uses IP address location data to establish the rough location of some users who have opted out the app’s geolocation services. Photograph: Guardian

The location information is “salted” – accurate to within a 500-metre radius of a phone, Whisper says – and staff work on the basis that they can identify a user’s street, or neighbourhood, but not usually their home unless they live in a rural area.

But that still allows Whisper to use its mapping tool to trawl for all the users in one place.

There were postings from Guantánamo Bay, Cuba, the US naval facility on Diego Garcia, in the Indian Ocean, the National Security Agency in Maryland and the CIA at Langley, Virginia.

Many of the messages were banal expressions of boredom, or solicitations for sex; some hinted, however vaguely, at potential abuses of power.

On top of a picture of a whip, a user who appeared to be inside the Pentagon posted: “I love being a sadist and breaking women.” A user inside Nevada’s Creech air force base, the remote military compound where US military drones are controlled, posted the phrase “Allah Ahkbar” over a picture of a grenade.

There were 12 Whispers seemingly posted from within of grounds of the White House. One message, superimposed over a picture of President Barack Obama, said: “I’m so glad this app is anonymous. The press would have a field day if they knew some of the stuff I post on here.”

A Whisper user posted this message from the vicinity of the White House. The red dots indicate Whisper messages sent from that location. Potentially identifying information has been redacted by the Guardian. Photograph: Guardian

Of course, just because the user posted from inside the White House, does not mean they work in the West Wing. They could be secret service agent, a cleaner, a journalist or one the hundreds of visitors given temporary access to the presidential residence each week.

But while Whisper stresses it does not collect information that immediately identifies a user, geographical information, stored over time, leaves a digital footprint of clues to a person’s true identity.

To the public, Whisper postings are disconnected from each other. Users do not have a history of messages that can be looked up and inspected by other users.

But Whisper’s in-house tools do offer that power of investigation. The company’s staff are trawling through past messages – even those the user believes they have deleted – inspecting the precise date, time and approximate location of each message.

Whisper insisted in its statement to the Guardian that it “does not follow or track users”.

The location of users who have turned off Whisper’s geolocation service is not automatically uploaded onto the company’s mapping tool. However the rough location of those users is retrieved, on demand, for a news unit headed by the company’s editor-in-chief, Neetzan Zimmerman.

The company stressed in the statement that this data, based on a phone’s IP address, is a “very coarse and unreliable source of location information”.

Whisper’s interest in delving into the prior movements of users is rooted in the company’s emerging business model. Striving to build awareness for an app that’s in fierce competition with rivals Secret, Yik Yak and now another proposed anonymous message service from Facebook, it is curating and promoting interesting content.

Whisper hired Zimmerman, a former editor at Gawker who specialised in viral content, to lead a concerted push to promote the messages appearing on its app. The company does not see itself as a news organisation as such, but Zimmerman is tasked with turning some of the juiciest confessions appearing on the app into page views and publicity.

But there is a problem. If users are anonymous, how can Whisper know if they are telling the truth?

Hence, the company’s desire to dig into the background of certain users. Location, Whisper has discovered, gives a strong hint of who a user might actually be.

If a user claims to be in the US marines, for example, Whisper will track their movements to see if they’ve spent time on a military base. If a user claims to be a college student, Whisper will track their whereabouts to see if they are based on a college campus.

Those who have opted into geolocation services are easiest to track. For the estimated 20% of users who have opted out of geolocation services, Whisper turns instead to their IP data. These constitute a sizeable portion of users being targeted for special attention by Whisper.

In a widely read Buzzfeed article drawing on 23 Whisper postings about assault in the military, for example, five came from people who had disabled their geolocation services. The article said Whisper had “vetted every account using our back-end tools and filtered out any we thought might be bogus claims” but did not specify how that was done.

The five users who had explicitly opted out of geolocation services, but were featured in the article anyway, included one who said she was gang raped after having an abortion in the army, and another who said they had been were drugged and raped by two marines.

“Whisper does not request or store any personally identifiable information from users, therefore there is never a breach of anonymity,” the company statement said. “From time to time, when a user makes a claim of a newsworthy nature, we review the user’s past activity to help determine veracity.”

Zimmerman acknowledges there are complex ethical issues that the tech start-up is still grappling with internally. Like Heyward, he can sound almost evangelical about Whisper’s potential to fulfill a public good.

Both see the company as a potentially trusted haven for whistleblowers, a safe place for people to air their most private thoughts.

But a look behind the curtain at Whisper raises difficult questions about the burden of responsibility the company acknowledges it is shouldering.

“Anonymity is a very powerful tool,” Heyward told a Bloomberg reporter in March. “There’s a Spider-Man quote that says with great power comes great responsibility. It is a famous one. We view anonymity very much in the same way.”



Worrying for Saudi, U.S. oil output cuts could take a while

October15, 2014

by Edward McAllister


            NEW YORK -Saudi Arabia effectively started a global oil price war this month aimed at quickly denting U.S. oil output. Slowing a U.S. drilling boom, however, could take more than a year.

Many observers expect a downward spiral of global oil prices to rapidly dampen shale oil drilling in the United States, slow production growth and help bolster prices. Small producers vulnerable to sudden price moves may have to slow spending, fast reducing the amount of oil gushing to market.

But even as drillers consider cutting budgets for 2015, output may continue to grow through next year and possibly into 2016, according to experts and industry insiders.

Existing wells that are drilled but not yet fracked will keep output surging for months, they said. Many drillers have long-term rig contracts and are loathe to pay costly penalties for dropping equipment they could need soon after. Most have hedged next year’s production at much higher prices, and are racing to lock in 2016, protecting their revenues even if the free-fall in oil markets continues.

At stake is not just the fate of a U.S. drilling frenzy that has transformed the North American energy picture and powered the U.S. economy, but the shape of the global market as OPEC leader Saudi Arabia hopes to claw share from U.S. producers.


Saudi Arabia has privately told the oil market that it is willing to allow prices to slide as low as $80 for a year or two, in a move seen aimed at U.S. producers. Kuwait and Iran have since said that they have no plan to cut production. That is putting pressure on companies like Continental Resources and EOG Resources whose share prices are unraveling.

A four-month rout in oil markets that has knocked Brent crude to $85 a barrel, its lowest level in four years, poses the first major challenge to the U.S. shale sector since it emerged four years ago and sent oil output to its highest in a generation.

Much depends on how the industry responds to an unfamiliar environment of lower prices. The shale revolution has been driven by hundreds of disparate U.S. companies drilling thousands of new wells.

“It is like turning an aircraft carrier – you can’t do it on a dime,” said Roland Burns, chief financial officer of Comstock Resources in Frisco, Texas, which has operations concentrated in Texas, Louisiana and Mississippi.




Until now, the small- and medium-sized companies driving the oil boom have rarely looked beyond drilling and drilling more.

Oil rigs in North America hit an all time high of 1,609 last week, up 17 percent from a year ago, according to a weekly survey by oil service firm Baker Hughes. U.S. output is the highest in 30 years, thanks to output from newly-tapped and prolific shale formations.

To be sure, many producers who are now preparing their capital budgets for next year are likely to consider scaling back. Some have seen their share prices tank on concerns they may be over-spending in a low-price year.

Wells Fargo analysts this week said they expect U.S. exploration and production spending to be flat next year versus 2014. Due to the rapid 70 percent decline rate in shale oil wells after the first year, flat spending would cut shale production growth to just 200,000 barrels per day. U.S. oil output has surged by 1 million bpd in each of the past three years.

Comstock Resources may cut its five oil-drilling rigs down to three next year, Burns told Reuters. Magnum Hunter Resources, an oil and gas producer with acreage in some of the major U.S. shale plays, divested some of its oil assets earlier this year, fearing a decline.

“There is no question that lower prices will affect the oil business. You will see a change in direction by some companies,” Chief Executive Gary Evans told Reuters.




But even if spending declines, some say, it will take time for that to translate into a substantial slow-down in output.

A backlog of oil wells that have been drilled but yet to come online could keep output steady. In North Dakota, where crude from the Bakken formation is now below $80 a barrel, there were about 630 wells waiting to be hydraulically fracked at the end of July, a backlog of at least three months.

“It is not as though oil goes to $75 and everyone just panics,” said Mark Hanson, an energy analyst at Morningstar. Prices would have to remain below $75 a barrel for a prolonged period before drilling slows. Some plays are profitable as low as $50 a barrel, he said, let alone $80.

Many companies have also already locked in their 2015 hedges at higher prices that will make next year’s output profitable, according to company presentations.

Some nervous producers are now moving gradually to sell 2016 too, even with prices for that year having tumbled from $89 to $81 a barrel in three weeks, according to Andy Lebow, senior vice president at brokers Jefferies LLC.


Genscape analysts expect the oil rig count to fall by 300 by the end of 2015, but even that would only slow oil production growth to some 600,000 bpd, according to their models. That’s nearly enough to meet the increase in global demand this year.


(Reporting By Edward McAllister; additonal reporting by Jessica Resnick-Ault and Sam Adams; editing by Jonathan Leff and Peter Henderson)



4 Northern California faults primed for big quakes

October 15 2014

by Ellen Knickmeyer 


SAN FRANCISCO (AP) — Three fault segments running beneath Northern California and its roughly 15 million people are overdue for a major earthquake, including one section that lies near the dams and canals that supply much of the state’s water, according to a geological study published Monday.

The three fault segments and one other in the region are loaded with enough tension to produce quakes of magnitude 6.8 or greater, according to a geological study published Monday.

They include the little-known Green Valley fault, which lies near key dams and aqueducts northeast of San Francisco. Underestimated by geologists until now, the fault running between the cities of Napa and Fairfield is primed for a magnitude-7.1 quake, according to researchers from the U.S. Geological Survey and San Francisco State University.

The water supplies of the San Francisco Bay Area, Southern California and the farm-rich Central Valley depend on the man-made water system that links to the Sacramento and San Joaquin rivers, noted James Lienkaemper, the U.S. Geological Survey geologist who was lead author of the study. The Green Valley fault is last believed to have ruptured sometime in the 1600s.

The study shows the state “needs to consider more seriously” the earthquake risk in that area, Lienkaemper said by phone.

All four vulnerable fault segments belong to the San Andreas fault system, the geological dividing line that marks where the western half of California shifts northwest and away from the rest of North America at about 2 inches a year.

The other fault sections that have built up enough tension for a temblor with a magnitude of 6.8 or greater are the northern Calaveras and Hayward faults in the east San Francisco Bay Area and the Rodgers Creek fault to the north, scientists concluded in a study published in the Bulletin of the Seismological Society of America.

Geologists reached their conclusions partly through regular data readings that geologists and San Francisco State University geology students began in 1979 along fault lines. The tracking now features annual readings at 80 monitoring sites at 29 sections of faults in northern California.

The surveys measure fault creep, movements of fractions of inches that slowly release strain on some faults. When no fault creep is recorded, a fault is considered locked, and stress builds until an earthquake unlocks it.

Roughly two-thirds of the 1,250 miles that comprise the five major branches of the San Andreas fault feature fault creep, the study concludes.

Northern California recorded its biggest earthquake of a quarter-century Aug. 24, when a magnitude-6.0 quake hit Napa, north of San Francisco. Seismologists estimate seven quakes of 7.3 magnitude or more have hit California just since the 1800s, most of them when the state’s population was a fraction of what it is now.


Drop Dropbox? Concern after alleged 7-million account hack

October 14, 2014



 The passwords of nearly 7 million Dropbox accounts have been seized through third-party services and 400 directly leaked on Pastebin, with promises of more leaks following bitcoin donations. Dropbox denies a hack.

The leaker described the 400 as a “first teaser…just to get things going” and followed with: “More Bitcoin = more accounts published on Pastebin. As more BTC is donated, More pastebin pastes will appear.”


It remains unclear how the details were obtained; the hackers claim ownership of details from 6,937,081 different accounts – claims that cannot in any way be verified.

Dropbox, denies that a hack has taken place.

“Dropbox has not been hacked. These usernames and passwords were unfortunately stolen from other services and used in attempts to log in to Dropbox accounts,” it said.

“We’d previously detected these attacks and the vast majority of the passwords posted have been expired for some time now. All other remaining passwords have expired as well.”

Dropbox said in a statement to ‘The Next Web’, however, that it performed “password resets” when it uncovered ‘suspicious activity’ on particular accounts a few months ago.

Former NSA contractor Edward Snowden lashed out at Dropbox on Sunday, accusing it of being “hostile to privacy”. He urged web users to abandon unencrypted communication and adjust privacy settings to prevent governments from spying on them in increasingly intrusive ways.

Snowden advised web users to “get rid” of Dropbox. Such services only insist on encrypting user data during transfer and when being stored on the servers. Other services he recommends instead, such as SpiderOak, encrypt information while it’s on your computer as well.

“We’re talking about dropping programs that are hostile to privacy,” Snowden said.

The response from Dropbox appears a familiar one, after Snapchat released a similar statement blaming a third party for a mass picture leak on Sunday of some 100,000 photographs from the service, among which was thought to be child porn.

The content captured after some users opted to use a third-party website called SnapSaved.com, which lets users save incoming messages after handing over their login details to the site.



Putin: If Ukraine siphons gas from pipeline, Russia will reduce Europe supplies

October 16, 2014



Moscow will reduce gas supplies if Kiev starts siphoning deliveries destined for Europe, said Russia’s President Vladimir Putin during a visit to Serbia.

“There are large transit risks. If we see that our Ukrainian partners start illegally taking our gas from the export pipeline as it was in 2008, we will equally reduce the amount of supply as happened in 2008,” warned Putin on Thursday at a news conference in Belgrade, stressing he was “hopeful” it would not come to that.

However, the Russian president pledged that Moscow will supply enough gas to Europe this winter.

“I can tell you for sure, and I am saying with absolute responsibility, there will be no crisis in Europe due to the fault of Russian participants in energy cooperation,” Putin stressed.

“Russia has always been a reliable supplier, we have enough resources.”

Given the threat of gas disruption, the South Stream project starts looking increasingly attractive and “beneficial for European consumers,” Putin said. The issues connected with the delay of the construction of South Stream are “of a political character” only, he added.

“In this case politics hurt the economy for sure, causing damage to a certain extent, even reducing the competitive advantages of the European economy in comparison with other regions of the world.”

Putin requested support from his European partners, saying Russia couldn’t “unilaterally construct a pipeline system worth billions of dollars if our partners are still thinking whether to develop the project or not.”

The Russian leader said there was a big debate during the construction of the Nord Stream pipeline along the bottom of the Baltic Sea. However now, when the project is finished, “everyone is happy and saying ‘thank you’,” as the pipeline “turned out to be very helpful,” he added.

The South Stream gas pipeline is a transport grid that will deliver gas to South and Central Europe via the Black Sea and the Balkans instead of through unreliable Ukraine. The project started in 2002, with first deliveries due in 2016, and it is expected to be fully operational in 2018.

The EU anti-monopoly legislation called the Third Energy Package has been a stumbling block in the South Stream negotiations. Amongst other stipulations, the Third Energy Package requires half the capacity of the pipeline built with Russian money be made available to independent suppliers, for example the transit of Caspian gas to Europe independently from Russia.

Russia insists the South Stream project should be exempt from this anti-monopoly legislation, with Gazprom being the sole owner of the infrastructure and gas supplier to Europe.

On Thursday a series of meetings are to kick off in Milan, and the gas issue will be on the table, said Putin.

“Our partners – European, Ukrainian – are in contact with us. I hope they will be able to agree and put an end to all the debates,” Putin said after meeting Serbian officials in Belgrade.

Serbian Prime Minister Aleksandar Vucic said that Serbia and Russia are partners with an “even better relationship in store.”

He stressed that Serbia “won’t ever impose sanctions against Russia,” even though the country is following the European course.

“Nobody can order Serbia to ruin its relations with the Russian Federation,” he added.





Notes on the air war

October15, 2014

by Brian M Downing

Asia Times

            The air war over Germany in World War II lasted five years and its effectiveness is debated to this day. Nonetheless, after five weeks of airstrikes, many analysts and politicians are already judging the air campaign against the Islamist State to be a failure.

his may be in large part to events around the Kurdish town of Kobane, where airpower has thus far failed to stop an IS drive. However, the defenders of Kobane are a small group of untrained, lightly armed villagers, fighting in a small enclave distant from the main Kurdish regions in Syria and Iraq. All but the staunchest and less-informed advocates of airpower think that it can succeed without effective ground troops. Meanwhile, to the east, Kurdish fighters have made some advances against IS with the help of air support.



The US has relied on drone aircraft to identify targets for fighter aircraft and occasionally to deliver ordnance. In Afghanistan, drones have been used not only to kill Taliban and al-Qaeda leaders but also in support of Afghan army troops now fighting audaciously large Taliban attacks.

Despite an increased reliance on drones in US military thinking, there is a shortage of drones in Syria and Iraq. Too many are allocated to Afghanistan, Yemen, and Somalia. Accordingly, the curtailment of IS’s movement of troops and equipment has been disappointing.

One remedy would be the insertion of (more?) special forces teams along and behind IS lines to help identify targets. Though Washington isn’t eager to increase a ground presence, it may feel the need to. A second option is to bring in more drones. Fighting in Afghanistan, the chief theater of drone operations, is highly seasonal, with Taliban offensives beginning in the late spring and ending in the middle of autumn. This will soon allow a shift of resources to the war against IS, perhaps based from facilities in Saudi Arabia. (The Prince Sultan Air Base just south if Riyadh has quietly become a US drone facility for operations in Yemen.)

After so many errors in recent years, the US would like to rehabilitate the image of drone warfare. Defending Kurds and others from IS onslaughts would be quite helpful for the program in which the Pentagon has invested so heavily in recent years.


Anti-aircraft measures

Syria will object, if only halfheartedly, to the violation of its airspace or to any future shift of power to rebel forces. However, Damascus will have little objection to the degrading of IS troops and equipment, and protests of airspace violation are unlikely to lead to military action.

The US would welcome Syrian fighter attacks and missile launches as it will provide a justification to destroy President Bashar al-Assad’s air force, which has been critical to rolling back rebel forces over the last two years. Without his fighter aircraft, Assad’s forces would themselves be pushed back.

Portable missile systems (MANPADS), such as the US Stinger missile, pose another danger. IS may obtain them from one or more sources. A Syrian arsenal near Aleppo was overrun and a number of Russian SA-18s fell into rebel hands. Other SA-18s from Colonel Muammar Gaddafi’s expansive arsenals are thought to be circulating in the Middle East and parts of Africa. Furthermore, the Saudis promised to deliver Chinese FN-6s to rebel forces as a countermeasure to Syrian helicopters which drop barrel bombs.

Such weapons will be ineffective against aircraft which operate at higher elevations, as do many Western aircraft dropping precision weapons, though they may be of some use against American Apache helicopters now being used.

Bold headlines and Hollywood films have conferred legends on MANPADS, however a Pentagon study of the Russian-Afghan War found no evidence of increased Russian aircraft losses once the Stinger missiles were given to mujahideen bands. It wasn’t Charlie Wilson’s war.


Effects on ground operations

Air power against troop concentrations can be devastating, but it more typically leads to soldiers’ digging in deeper to limit the effects of shrapnel and concussion, and to the dispersal of troops. In the case of IS, air strikes will also lead to using civilians as shields.

Sustained artillery fire and airstrikes can be unnerving, especially for less experienced troops. Veterans from many wars have described them as their most terrifying experiences. Troops cannot meaningfully return fire as in engagements with ground forces; they must endure powerful concussive forces, immediately followed by a momentary vacuum that violently pulls air from the lungs. However, the ordeal contributes to unit cohesion among survivors as they know they have taken the most enemy power can bring to bear, and lived through it.

Troops arrayed against IS – Kurds and Iraqi troops – have been buoyed by the presence of fighters overhead. They know that IS troop concentrations can be identified and struck, largely with impunity and from a comfortable distance. Unfortunately, airpower diminishes the willingness of less-than-aggressive troops to close with the enemy: better to remain in fortified positions and let the fighter pilots do the work.

An obvious tactic is to use ground forces to force IS troop concentrations and resupply convoys, then attacking them from the air. Unfortunately, there is presently no IS foe willing or able to do mount such operations.

Commanders of the Western air campaign will never run out of targets; they will constantly identify new ones, thereby justifying their program – and protracting the inertia of Iraqi ground forces. A long air campaign will also allow Iraqi politicians, Sunni tribal authorities, and Kurdish leaders to put off political arrangements needed to launch a ground offensive against IS.


A long campaign

With no prospect of immediate success in the war against IS offered by the headiest general or politician, the US will be able to gauge the capacities of allied air forces, Arab and Western. The IS offensive of June revealed, in frightening detail, just how inept and unprofessional Iraqi forces are, leaving many analysts to wonder, though perhaps not for terribly long, about the competence of Saudi and other regional militaries.

Similar concerns exist over allied air forces in NATO, especially after their showing in the 2011 campaign against Gaddafi’s troops. That relatively brief effort placed severe strains on participating militaries, even though it took place just to Europe’s south. US then secretary of defense Robert Gates, unable to withhold his ire, publicly rebuked key NATO powers. NATO’s competence will be watched attentively in the newly assertive Russia as well.

In the absence of deployments of Western ground troops, the IS war will not meet with significant opposition in Western capitals. Human losses are unlikely to be high and financial costs will be manageable, possibly even offset by the Sunni princes, as they were in the First Gulf War.

Middle Eastern publics will be more important. The Western air campaign resonates with longstanding narratives of European and American designs to humiliate, manipulate, and control the Middle East. Civilian deaths from airstrikes are already coming out. There will be more.

A protracted war will not necessarily benefit IS. Forces reliant on zeal and audacity, knowing nothing but conquest and victory, may not respond well to months of stagnation and constant attrition. IS commanders, then, may be goaded on to a bold though rash effort to maintain momentum and morale.


Brian M Downing is a political-military analyst, author of The Military Revolution and Political Change and The Paths of Glory: Social Change in America from the Great War to Vietnam, and co-author with Danny Rittman of The Samson Heuristic. He can be reached at brianmdowning@gmail.com.


 The Dark Market for Personal Data

October 16, 2014

by Frank Pasquale 

New York Times

             BALTIMORE — The reputation business is exploding. Having eroded privacy for decades, shady, poorly regulated data miners, brokers and resellers have now taken creepy classification to a whole new level. They have created lists of victims of sexual assault, and lists of people with sexually transmitted diseases. Lists of people who have Alzheimer’s, dementia and AIDS. Lists of the impotent and the depressed.

There are lists of “impulse buyers.” Lists of suckers: gullible consumers who have shown that they are susceptible to “vulnerability-based marketing.” And lists of those deemed commercially undesirable because they live in or near trailer parks or nursing homes. Not to mention lists of people who have been accused of wrongdoing, even if they were not charged or convicted.

Typically sold at a few cents per name, the lists don’t have to be particularly reliable to attract eager buyers — mostly marketers, but also, increasingly, financial institutions vetting customers to guard against fraud, and employers screening potential hires.

There are three problems with these lists. First, they are often inaccurate. For example, as The Washington Post reported, an Arkansas woman found her credit history and job prospects wrecked after she was mistakenly listed as a methamphetamine dealer. It took her years to clear her name and find a job.

Second, even when the information is accurate, many of the lists have no business being in the hands of retailers, bosses or banks. Having a medical condition, or having been a victim of a crime, is simply not relevant to most employment or credit decisions.

Third, people aren’t told they are on these lists, so they have no opportunity to correct bad information. The Arkansas woman found out about the inaccurate report only when she was denied a job. She was one of the rare ones.

“Data-driven” hiring practices are under increasing scrutiny, because the data may be a proxy for race, class or disability. For example, in 2011, CVS settled a charge of disability discrimination after a job applicant challenged a personality test that probed mental health issues. But if an employer were to secretly use lists based on inferences about mental health, it would be nearly impossible for an affected applicant to find out what was going on. Secrecy is discrimination’s best friend: Unknown unfairness can never be detected, let alone corrected.

These problems can’t be solved with existing law. The Federal Trade Commission has strained to understand personal data markets — a $156-billion-a-year industry — and it can’t find out where the data brokers get their information, and whom they sell it to. Hiding behind a veil of trade secrecy, most refuse to divulge this vital information.

The market in personal information offers little incentive for accuracy; it matters little to list-buyers whether every entry is accurate — they need only a certain threshold percentage of “hits” to improve their targeting. But to individuals wrongly included on derogatory lists, the harm to their reputation is great.

The World Privacy Forum, a research and advocacy organization, estimates that there are about 4,000 data brokers. They range from giants like Acxiom, a publicly traded company that helps marketers target consumer segments, to boutiques like Paramount Lists, which has compiled lists of addicts and debtors. Companies like these vacuum up data from just about any source imaginable: consumer health websites, payday lenders, online surveys, warranty registrations, Internet sweepstakes, loyalty-card data from retailers, charities’ donor lists, magazine subscription lists, and information from public records.

            It’s unrealistic to expect individuals to inquire, broker by broker, about their files. Instead, we need to require brokers to make targeted disclosures to consumers. Uncovering problems in Big Data (or decision models based on that data) should not be a burden we expect individuals to solve on their own.

Privacy protections in other areas of the law can and should be extended to cover consumer data. The Health Insurance Portability and Accountability Act, or Hipaa, obliges doctors and hospitals to give patients access to their records. The Fair Credit Reporting Act gives loan and job applicants, among others, a right to access, correct and annotate files maintained by credit reporting agencies.

            It is time to modernize these laws by applying them to all companies that peddle sensitive personal information. If the laws cover only a narrow range of entities, they may as well be dead letters. For example, protections in Hipaa don’t govern the “health profiles” that are compiled and traded by data brokers, which can learn a great deal about our health even without access to medical records.

Congress should require data brokers to register with the Federal Trade Commission, and allow individuals to request immediate notification once they have been placed on lists that contain sensitive data. Reputable data brokers will want to respond to good-faith complaints, to make their lists more accurate. Plaintiffs’ lawyers could use defamation law to hold recalcitrant firms accountable.

We need regulation to help consumers recognize the perils of the new information landscape without being overwhelmed with data. The right to be notified about the use of one’s data and the right to challenge and correct errors is fundamental. Without these protections, we’ll continue to be judged by a big-data Star Chamber of unaccountable decision makers using questionable sources.


Frank Pasquale, a professor of law at the University of Maryland, is the author of the forthcoming book “The Black Box Society: The Secret Algorithms That Control Money and Information.”



James B. Comey


Federal Bureau of Investigation

Brookings Institution

Washington, D.C.


October 16, 2014


Remarks as delivered.


Good morning. It’s an honor to be here.

I have been on the job as FBI Director for one year and one month. I like to express my tenure in terms of months, and I joke that I have eight years and 11 months to go, as if I’m incarcerated. But the truth is, I love this job, and I wake up every day excited to be part of the FBI.

Over the past year, I have confirmed what I long believed—that the FBI is filled with amazing people, doing an amazing array of things around the world, and doing them well. I have also confirmed what I have long known: that a commitment to the rule of law and civil liberties is at the core of the FBI. It is the organization’s spine.

But we confront serious threats—threats that are changing every day. So I want to make sure I have every lawful tool available to keep you safe from those threats.

An Opportunity to Begin a National Conversation

I wanted to meet with you to talk in a serious way about the impact of emerging technology on public safety. And within that context, I think it’s important to talk about the work we do in the FBI, and what we need to do the job you have entrusted us to do.

There are a lot of misconceptions in the public eye about what we in the government collect and the capabilities we have for collecting information.

My job is to explain and clarify where I can with regard to the work of the FBI. But at the same time, I want to get a better handle on your thoughts, because those of us in law enforcement can’t do what we need to do without your trust and your support. We have no monopoly on wisdom.

My goal today isn’t to tell people what to do. My goal is to urge our fellow citizens to participate in a conversation as a country about where we are, and where we want to be, with respect to the authority of law enforcement.

The Challenge of Going Dark

Technology has forever changed the world we live in. We’re online, in one way or another, all day long. Our phones and computers have become reflections of our personalities, our interests, and our identities. They hold much that is important to us.

And with that comes a desire to protect our privacy and our data—you want to share your lives with the people you choose. I sure do. But the FBI has a sworn duty to keep every American safe from crime and terrorism, and technology has become the tool of choice for some very dangerous people.

Unfortunately, the law hasn’t kept pace with technology, and this disconnect has created a significant public safety problem. We call it “Going Dark,” and what it means is this: Those charged with protecting our people aren’t always able to access the evidence we need to prosecute crime and prevent terrorism even with lawful authority. We have the legal authority to intercept and access communications and information pursuant to court order, but we often lack the technical ability to do so.

We face two overlapping challenges. The first concerns real-time court-ordered interception of what we call “data in motion,” such as phone calls, e-mail, and live chat sessions. The second challenge concerns court-ordered access to data stored on our devices, such as e-mail, text messages, photos, and videos—or what we call “data at rest.” And both real-time communication and stored data are increasingly encrypted.

Let’s talk about court-ordered interception first, and then we’ll talk about challenges posed by different means of encryption.

In the past, conducting electronic surveillance was more straightforward. We identified a target phone being used by a bad guy, with a single carrier. We obtained a court order for a wiretap, and, under the supervision of a judge, we collected the evidence we needed for prosecution.

Today, there are countless providers, countless networks, and countless means of communicating. We have laptops, smartphones, and tablets. We take them to work and to school, from the soccer field to Starbucks, over many networks, using any number of apps. And so do those conspiring to harm us. They use the same devices, the same networks, and the same apps to make plans, to target victims, and to cover up what they’re doing. And that makes it tough for us to keep up.

If a suspected criminal is in his car, and he switches from cellular coverage to Wi-Fi, we may be out of luck. If he switches from one app to another, or from cellular voice service to a voice or messaging app, we may lose him. We may not have the capability to quickly switch lawful surveillance between devices, methods, and networks. The bad guys know this; they’re taking advantage of it every day.

In the wake of the Snowden disclosures, the prevailing view is that the government is sweeping up all of our communications. That is not true. And unfortunately, the idea that the government has access to all communications at all times has extended—unfairly—to the investigations of law enforcement agencies that obtain individual warrants, approved by judges, to intercept the communications of suspected criminals.

Some believe that the FBI has these phenomenal capabilities to access any information at any time—that we can get what we want, when we want it, by flipping some sort of switch. It may be true in the movies or on TV. It is simply not the case in real life.

It frustrates me, because I want people to understand that law enforcement needs to be able to access communications and information to bring people to justice. We do so pursuant to the rule of law, with clear guidance and strict oversight. But even with lawful authority, we may not be able to access the evidence and the information we need.

Current law governing the interception of communications requires telecommunication carriers and broadband providers to build interception capabilities into their networks for court-ordered surveillance. But that law, the Communications Assistance for Law Enforcement Act, or CALEA, was enacted 20 years ago—a lifetime in the Internet age. And it doesn’t cover new means of communication. Thousands of companies provide some form of communication service, and most are not required by statute to provide lawful intercept capabilities to law enforcement.

What this means is that an order from a judge to monitor a suspect’s communication may amount to nothing more than a piece of paper. Some companies fail to comply with the court order. Some can’t comply, because they have not developed interception capabilities. Other providers want to provide assistance, but they have to build interception capabilities, and that takes time and money.

The issue is whether companies not currently subject to the Communications Assistance for Law Enforcement Act should be required to build lawful intercept capabilities for law enforcement. We aren’t seeking to expand our authority to intercept communications. We are struggling to keep up with changing technology and to maintain our ability to actually collect the communications we are authorized to intercept.

And if the challenges of real-time interception threaten to leave us in the dark, encryption threatens to lead all of us to a very dark place.

Encryption is nothing new. But the challenge to law enforcement and national security officials is markedly worse, with recent default encryption settings and encrypted devices and networks—all designed to increase security and privacy.

With Apple’s new operating system, the information stored on many iPhones and other Apple devices will be encrypted by default. Shortly after Apple’s announcement, Google announced plans to follow suit with its Android operating system. This means the companies themselves won’t be able to unlock phones, laptops, and tablets to reveal photos, documents, e-mail, and recordings stored within.

Both companies are run by good people, responding to what they perceive is a market demand. But the place they are leading us is one we shouldn’t go to without careful thought and debate as a country.

At the outset, Apple says something that is reasonable—that it’s not that big a deal. Apple argues, for example, that its users can back-up and store much of their data in “the cloud” and that the FBI can still access that data with lawful authority. But uploading to the cloud doesn’t include all of the stored data on a bad guy’s phone, which has the potential to create a black hole for law enforcement.

And if the bad guys don’t back up their phones routinely, or if they opt out of uploading to the cloud, the data will only be found on the encrypted devices themselves. And it is people most worried about what’s on the phone who will be most likely to avoid the cloud and to make sure that law enforcement cannot access incriminating data.

Encryption isn’t just a technical feature; it’s a marketing pitch. But it will have very serious consequences for law enforcement and national security agencies at all levels. Sophisticated criminals will come to count on these means of evading detection. It’s the equivalent of a closet that can’t be opened. A safe that can’t be cracked. And my question is, at what cost?

Correcting Misconceptions

Some argue that we will still have access to metadata, which includes telephone records and location information from telecommunications carriers. That is true. But metadata doesn’t provide the content of any communication. It’s incomplete information, and even this is difficult to access when time is of the essence. I wish we had time in our work, especially when lives are on the line. We usually don’t.

There is a misconception that building a lawful intercept solution into a system requires a so-called “back door,” one that foreign adversaries and hackers may try to exploit.

But that isn’t true. We aren’t seeking a back-door approach. We want to use the front door, with clarity and transparency, and with clear guidance provided by law. We are completely comfortable with court orders and legal process—front doors that provide the evidence and information we need to investigate crime and prevent terrorist attacks.

Cyber adversaries will exploit any vulnerability they find. But it makes more sense to address any security risks by developing intercept solutions during the design phase, rather than resorting to a patchwork solution when law enforcement comes knocking after the fact. And with sophisticated encryption, there might be no solution, leaving the government at a dead end—all in the name of privacy and network security.

Another misperception is that we can somehow guess the password or break into the phone with a so-called “brute force” attack. Even a supercomputer would have difficulty with today’s high-level encryption, and some devices have a setting whereby the encryption key is erased if someone makes too many attempts to break the password, meaning no one can access that data.

Finally, a reasonable person might also ask, “Can’t you just compel the owner of the phone to produce the password?” Likely, no. And even if we could compel them as a legal matter, if we had a child predator in custody, and he could choose to sit quietly through a 30-day contempt sentence for refusing to comply with a court order to produce his password, or he could risk a 30-year sentence for production and distribution of child pornography, which do you think he would choose?

Case Examples

Think about life without your smartphone, without Internet access, without texting or e-mail or the apps you use every day. I’m guessing most of you would feel rather lost and left behind. Kids call this FOMO, or “fear of missing out.”

With Going Dark, those of us in law enforcement and public safety have a major fear of missing out—missing out on predators who exploit the most vulnerable among us…missing out on violent criminals who target our communities…missing out on a terrorist cell using social media to recruit, plan, and execute an attack.

Criminals and terrorists would like nothing more than for us to miss out. And the more we as a society rely on these devices, the more important they are to law enforcement and public safety officials. We have seen case after case—from homicides and car crashes to drug trafficking, domestic abuse, and child exploitation—where critical evidence came from smartphones, hard drives, and online communication.

Let’s just talk about cases involving the content of phones.

In Louisiana, a known sex offender posed as a teenage girl to entice a 12-year-old boy to sneak out of his house to meet the supposed young girl. This predator, posing as a taxi driver, murdered the young boy and tried to alter and delete evidence on both his and the victim’s cell phones to cover up his crime. Both phones were instrumental in showing that the suspect enticed this child into his taxi. He was sentenced to death in April of this year.

In Los Angeles, police investigated the death of a 2-year-old girl from blunt force trauma to her head. There were no witnesses. Text messages stored on her parents’ cell phones to one another and to their family members proved the mother caused this young girl’s death and that the father knew what was happening and failed to stop it. Text messages stored on these devices also proved that the defendants failed to seek medical attention for hours while their daughter convulsed in her crib. They even went so far as to paint her tiny body with blue paint—to cover her bruises—before calling 911. Confronted with this evidence, both parents pled guilty.

In Kansas City, the DEA investigated a drug trafficking organization tied to heroin distribution, homicides, and robberies. The DEA obtained search warrants for several phones used by the group. Text messages found on the phones outlined the group’s distribution chain and tied the group to a supply of lethal heroin that had caused 12 overdoses—and five deaths—including several high school students.

In Sacramento, a young couple and their four dogs were walking down the street at night when a car ran a red light and struck them—killing their four dogs, severing the young man’s leg, and leaving the young woman in critical condition. The driver left the scene, and the young man died days later. Using “red light cameras” near the scene of the accident, the California Highway Patrol identified and arrested a suspect and seized his smartphone. GPS data on his phone placed the suspect at the scene of the accident and revealed that he had fled California shortly thereafter. He was convicted of second-degree murder and is serving a sentence of 25 years to life.

The evidence we find also helps exonerate innocent people. In Kansas, data from a cell phone was used to prove the innocence of several teens accused of rape. Without access to this phone, or the ability to recover a deleted video, several innocent young men could have been wrongly convicted.

These are cases in which we had access to the evidence we needed. But we’re seeing more and more cases where we believe significant evidence is on that phone or a laptop, but we can’t crack the password. If this becomes the norm, I would suggest to you that homicide cases could be stalled, suspects could walk free, and child exploitation might not be discovered or prosecuted. Justice may be denied, because of a locked phone or an encrypted hard drive.

My Thoughts

I’m deeply concerned about this, as both a law enforcement officer and a citizen. I understand some of this thinking in a post-Snowden world, but I believe it is mostly based on a failure to understand why we in law enforcement do what we do and how we do it.

I hope you know that I’m a huge believer in the rule of law. But I also believe that no one in this country should be above or beyond the law. There should be no law-free zone in this country. I like and believe very much that we need to follow the letter of the law to examine the contents of someone’s closet or someone’s cell phone. But the notion that the marketplace could create something that would prevent that closet from ever being opened, even with a properly obtained court order, makes no sense to me.

I think it’s time to ask: Where are we, as a society? Are we no longer a country governed by the rule of law, where no one is above or beyond that law? Are we so mistrustful of government—and of law enforcement—that we are willing to let bad guys walk away…willing to leave victims in search of justice?

There will come a day—and it comes every day in this business—where it will matter a great deal to innocent people that we in law enforcement can’t access certain types of data or information, even with legal authorization. We have to have these discussions now.

I believe people should be skeptical of government power. I am. This country was founded by people who were worried about government power—who knew that you cannot trust people in power. So they divided government power among three branches, with checks and balances for each. And they wrote a Bill of Rights to ensure that the “papers and effects” of the people are secure from unreasonable searches.

But the way I see it, the means by which we conduct surveillance through telecommunication carriers and those Internet service providers who have developed lawful intercept solutions is an example of government operating in the way the founders intended—that is, the executive, the legislative, and the judicial branches proposing, enacting, executing, and overseeing legislation, pursuant to the rule of law.

Perhaps it’s time to suggest that the post-Snowden pendulum has swung too far in one direction—in a direction of fear and mistrust. It is time to have open and honest debates about liberty and security.

Some have suggested there is a conflict between liberty and security. I disagree. At our best, we in law enforcement, national security, and public safety are looking for security that enhances liberty. When a city posts police officers at a dangerous playground, security has promoted liberty—the freedom to let a child play without fear.

The people of the FBI are sworn to protect both security and liberty. It isn’t a question of conflict. We must care deeply about protecting liberty through due process of law, while also safeguarding the citizens we serve—in every investigation.

Where Do We Go from Here?

These are tough issues. And finding the space and time in our busy lives to understand these issues is hard. Intelligent people can and do disagree, and that’s the beauty of American life—that smart people can come to the right answer.

I’ve never been someone who is a scaremonger. But I’m in a dangerous business. So I want to ensure that when we discuss limiting the court-authorized law enforcement tools we use to investigate suspected criminals that we understand what society gains and what we all stand to lose.

We in the FBI will continue to throw every lawful tool we have at this problem, but it’s costly. It’s inefficient. And it takes time.

We need to fix this problem. It is long past time.

We need assistance and cooperation from companies to comply with lawful court orders, so that criminals around the world cannot seek safe haven for lawless conduct. We need to find common ground. We care about the same things. I said it because I meant it. These companies are run by good people. And we know an adversarial posture won’t take any of us very far down the road.

We understand the private sector’s need to remain competitive in the global marketplace. And it isn’t our intent to stifle innovation or undermine U.S. companies. But we have to find a way to help these companies understand what we need, why we need it, and how they can help, while still protecting privacy rights and providing network security and innovation. We need our private sector partners to take a step back, to pause, and to consider changing course.

We also need a regulatory or legislative fix to create a level playing field, so that all communication service providers are held to the same standard and so that those of us in law enforcement, national security, and public safety can continue to do the job you have entrusted us to do, in the way you would want us to.

Perhaps most importantly, we need to make sure the American public understands the work we do and the means by which we do it.

I really do believe we can get there, with a reasoned and practical approach. And we have to get there together. I don’t have the perfect solution. But I think it’s important to start the discussion. I’m happy to work with Congress, with our partners in the private sector, with my law enforcement and national security counterparts, and with the people we serve, to find the right answer—to find the balance we need.


Thank you for having me here today.

No responses yet

Leave a Reply