Protecting the Federal Reserve
1. The Federal Reserve System is undoubtedly one of the most important departments within the United States government. It would be important for the Federal Reserve System to have complex system to ensure that there is continuity in its operations. If the Federal Reserve were to be destroyed, it would cripple the US economy. Consequently, the global economy would be thrown into a frantic sense of despair. This is because the economic downturn in 2008 through to 2010 in the US economy had global ramifications. The members of the Federal Reserve board have the responsibility of regulating the banking system in the country (Meltzer 34). If the Fed is destroyed, then it means banks may have the freedom to raise interest rates at their pleasure. This is why it is important for the Federal Reserve System establish measures to ensure that the United States economy does not come to a standstill.
The possible negative consequences for the Federal Reserve lacking a back up plan would be an economic meltdown of global implications. The United States has the leading currency and the world looks to the United States for economic direction. The moment the Federal Reserve is destroyed, the United States and global economies would be thrown into turmoil if is found that the Federal Reserve has no backup plan. Government projects will stall and services such as educational grants, health benefits through Medicare and Welfare programs will all shutdowns leaving many Americans suffering. The destruction of the Federal Reserve may also mean that government employees who comprise of a large work force in the US will not receive payments. Whichever way one looks at it, it is bad for the country and the world.
2. The possible scenarios that could shutdown the Federal Reserve include a terrorist attack that cold employ physical damage of a cyber attack. The other scenario could be through legislation passed by Congress to abolish the Federal Reserve. A physical attack on the Federal Reserve could be done using a bomb. A bomb would raise the Federal Reserve building in Washington DC to the ground. This in essence would destroy the systems that keep the reserve online and the people who maintain these systems. Therefore, a bombing will have two effects. It will destroy the building and the information systems within the building. A cyber attack refers to an attack on a company or organization’s information technology systems. A cyber attack is aimed at crippling the Federal Reserve’s ability to access relevant information from the compute systems (Buffington 77). Such an attack could cripple all government operations that require financial involvement. It will also stall the banking system since it would be difficult for banks to establish exchange rates and lending rates hence creating a fiasco in the foreign exchange market.
The other scenario that could see the Federal Reserve shut down is if Congress for some reason decides to stop the operations of the central bank. It is true that the Federal Reserve was formed because of the Federal Reserve Act of December 1913 (Meltzer 56). The banks formation was in response to the panic that was experienced by the 1907 economic crisis in America. Therefore, it is also possible for Congress to do away with the Federal Reserve and replace it with another entity of abolish it all together. However, the implications of the United States operating without the Federal Reserve could spawn disastrous consequences to the country.
3. For the Fed to prepare itself for such a situation, it would mean taking extensive security measures. For one, the Federal Reserve should ensure that the access to the Federal Reserve is on authorization basis only. It would be important therefore, to screen all motorists who come through the gates of the Federal Reserve to make sure that no one is in possession of a bomb. Limiting access within the office should also be important such that a terrorist does not gain access to areas whose destruction could be cause for havoc in the country. It is also important to ensure that the Federal Reserve fortify its structures so that it can be able to withstand a blast. However, if such measures do not succeed, the Federal Reserve System should Store have aback facility from which they could relocate their and continue with business as usual. Investing in a remote backup server whose location is not known will ensure that the information sensitive to economic stability of the company remains safe.
Even if there is no threat to the Federal Reserve, is vital for the Reserve to take a proactive stance in ensuring that the economic balance of the United States always remains stable. Even if intelligence is unaware of such attacks, it does not mean the Federal Reserve is safe from an attack. The events right after 9/11 should be a lesson for security personnel across the country not to underestimate the resolve of the enemy to strike the United States where it hurts most. These attacks surprised the nation and the government made it a priority that national security should be upheld at all costs. Security measures since then have been buffed up and the country is safe again. However, it is necessary that it be not forgotten that the attack happened and it can happen again. Enhancing security measure and being proactive may just save the country and the world he possibility from an economic disaster. The best form of security is one that ensures all the weakest links through which an enemy can attack from are all covered.
4. A good plan for the Federal Reserve when it has been put of commission would be to relocate the headquarters to another financial institution that could have the capacity to shoulder all the responsibility the Federal Reserve is charged with. The best options would be to move to the United States Secretary of the Treasury Office. It would be important for the Federal Reserve to maintain authority within Washington DC where it would be easy to coordinate other branches of the Federal Reserve across the country. It is also logical to move to the Treasury building since it is also concerned with the financial well being of the country. The senior employees should be relocated to the same building while the junior employees should be moved to other branches of the Federal Reserve across the country.
The immediate problem would be the issue of overcrowding if the Federal Reserve employees were to move to the Treasury building. This is because the building will already be occupied and the employees at the Treasury may be inconvenienced in such a situation. Parking may also become a problem since parking in buildings has always been created jus enough for the people who use it regularly. The extra parking may only accommodate a few employees. A contingency plan, the Federal Reserve Could Commission the Building of a new site where if it is attacked, the Federal Reserve could move to their new office space. This may be a costly and even an overly ambitious affair, but it would be able to reduce the inconvenience of having to borrow office space from someone else’s office. Compared to the cost of the ramifications of a collapsing economy of the United States, having an extra building laying around will solve all problems including parking and the option for relocating employees to other locations in the country.
5. The computer data that is stored in the Federal Reserve System headquarters should be constantly backed up at an off site location. This should be done as frequently as possible to ensure that the data is up to date in case of an attack on the headquarters in Washington DC. Depending on an onsite data backup assumes that the area within which one is operating is safe from any from of harm. The possibility of losing data in the event of a man-made disaster such as war and terror is inevitable. The advantages to having an off site location are obvious. For one, the Federal Reserve will have the chance to ensure that its data is always safe even if the primary data may have been lost in the event of a bombing on the Federal Reserve building in Washington DC. The data should be backed up daily during at a time when people are not working.
Backing up data on a daily basis during a time when people are not in the office makes it possible for work to go on during the day without the inconvenience of a slow computer system owing to immediate backing up procedures. Even if the data is being saved in multiple locations, the backing up mechanism should be fast enough to make sure that the systems capabilities are not siphoned off to backing up measures. One may think that backing up information over multiple off sites is a costly process. This may be true, but the security implications can nit be debated. If one back up location has been compromised, one has the option of retrieving data from other locations (Buffington 71). The importance of backing up data gives institutions such as the Federal Reserve to have a chance of operating at an optimum capacity despite the fact that a bombing may have destroyed its headquarters.
Buffington, Jason. Data Protection for Virtual Data Centers. Indianapolis (IN: Wiley Publishing, 2010. Print.
Meltzer, Allan H. A History of the Federal Reserve, Volume 2, Book 2, 1970-1986. Chicago, IL: University of Chicago Press, 2010. Internet resource.