"In 2007 we probably had our electronic Pearl Harbor. It was an espionage Pearl Harbor," Lewis said. "Some unknown foreign power, and honestly, we don't know who it is, broke into the Department of Defense, to the Department of State, the Department of Commerce, probably the Department of Energy, probably NASA. They broke into all of the high tech agencies, all of the military agencies, and downloaded terabytes of information."

Last November, someone was able to get past the firewalls and encryption devices of one of the most sensitive U.S. military computer systems and stay inside for several days.

"This was the CENTCOM network," Lewis explained. "The command that's fighting our two wars. And some foreign power was able to get into their networks. And sit there and see everything they did. That was a major problem. And that's really had a big effect on D.O.D."

Asked what he meant by "sit there," Lewis said, "They could see what the traffic was. They could read documents. They could interfere with things. It was like they were part of the American military command."

Lewis believes it was done by foreign spies who left corrupted thumbnail drives or memory sticks lying around in places where U.S. military personnel were likely to pick them up. As soon as someone inserted one into a CENTCOM computer, a malicious code opened a backdoor for the foreign power to get into the system.

Lewis said the Pentagon has now banned thumbnail drives.

Even the country's most powerful weapons are targets. So technicians at the Sandia National Laboratories make their own microchips for nuclear weapons and other sophisticated systems. Jim Gosler - one of the fathers of cyber war - says most commercial chips are now made abroad and there are concerns that someone could tamper with them.

"So you're worried about somebody being able to get in and reprogram a nuclear weapon, or get inside and put something in there that would make it…," Kroft asked.

"Well, certainly alter its functionality," Gosler said.

Asked what he means by "alter its functionality," Gosler said, "Such that when the weapon needed to be to go operational, it wouldn't work."

"Have you found microchips that have been altered?" Kroft asked.

"We have found microelectronics and electronics embedded in applications that they shouldn't be there. And it's very clear that a foreign intelligence service put them there," Gosler said.

"I know that people in the audience watching this are going to say, 'Could somebody steal money out of my bank account or could somebody attack a bank that would wipe out my life savings?'" Kroft asked.

"And the answer is yes, that's possible, but that is not the major problem. The more insidious issue is, what happens when the attacker is not attempting to steal money, but to destroy the process that accounts for money? That's the real issue we have to worry about," McConnell said.

"It's all record keeping. It's accountability of the wealth and the movement of that money through the system that had to be reconciled at the speed of light. So if you impact or contaminate the data or destroy the data where you couldn't have reconciliation, you could have cascading impact in the banking system," he added.

Asked to describe the consequences, McConnell said, "If everybody goes down to take the money out, it's not there. So that's the issue. Since banking is based on confidence, what happens when you destroy confidence?"

said by seldom :

I simply refuse to believe anyone could launch an ICBM or take down a power plant over the Internet

In January 1982, President Ronald Reagan
approved a CIA plan to sabotage the economy of
the Soviet Union through covert transfers of
technology that contained hidden malfunctions,
including software that later triggered a huge
explosion in a Siberian natural gas pipeline,
according to a new memoir by a Reagan White
House official.
Thomas C. Reed, a former Air Force secretary
who was serving in the National Security Council
at the time, describes the episode in "At the
Abyss: An Insider's History of the Cold War," to
be published next month by Ballantine Books.
Reed writes that the pipeline explosion was just
one example of "cold-eyed economic warfare"
against the Soviet Union that the CIA carried out
under Director William J. Casey during the final
years of the Cold War.

At the time, the United States was attempting to block Western Europe
from importing Soviet natural gas. There were also signs that the
Soviets were trying to steal a wide variety of Western technology.
Then, a KGB insider revealed the specific shopping list and the CIA
slipped the flawed software to the Soviets in a way they would not detect it.

'Programmed to go haywire'
"In order to disrupt the Soviet gas supply, its hard currency earnings
from the West, and the internal Russian economy, the pipeline
software that was to run the pumps, turbines, and valves was
programmed to go haywire, after a decent interval, to reset pump
speeds and valve settings to produce pressures far beyond those
acceptable to pipeline joints and welds," Reed writes.
"The result was the most monumental nonnuclear
explosion and fire ever seen from
space," he recalls, adding that U.S. satellites
picked up the explosion. Reed said in an
interview that the blast occurred in the
summer of 1982.
"While there were no physical casualties from the pipeline explosion,
there was significant damage to the Soviet economy," he writes. "Its
ultimate bankruptcy, not a bloody battle or nuclear exchange, is what
brought the Cold War to an end. In time the Soviets came to
understand that they had been stealing bogus technology, but now
what were they to do? By implication, every cell of the Soviet leviathan
might be infected. They had no way of knowing which equipment was
sound, which was bogus. All was suspect, which was the intended
endgame for the entire operation."
Reed said he obtained CIA approval to publish details about the
operation.

said by NOVA_Guy :

Didn't Tom Clancy author a story where something like this was part of the plot? IIRC, one of the targets was Wall Street and screwing up all transactions that happened on it over a period of time or something. I also seem to recall that the folks who instigated this came over from Asia-- not sure if it was Japan, China, or someone else. Sum of all Fears comes to mind as the title.

said by rcdailey :

Ron Paul says all our money is fiat money (not related to the Italian automaker, necessarily).

Everyone can't go down to every bank at the same time and take out their money because it really is not there. There is nothing new in that.

said by rcdailey :

Ron Paul says all our money is fiat money (not related to the Italian automaker, necessarily).

Everyone can't go down to every bank at the same time and take out their money because it really is not there. There is nothing new in that.

said by rcdailey :

Concerning power plants, you have to worry as we seem to be headed toward a really "smart" grid, which means the whole power grid will be linked to the internet, at least in some way. It would likely be subject to being hacked.