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40 FDIC URGES INSTITUTIONS TO MITIGATE CYBER-RELATED RISK A release issued by the Federal Deposit Insur- ance Corporation (FDIC) urged financial insti- tutions to "actively utilize available resources to identify and help mitigate potential cyber-related risks." e timing of the release was particularly germane, considering the recently discovered Heartbleed bug, which affects almost two-thirds of the web. "Cyber threats have been widely covered in the national media, and we believe that financial institutions and their technology service providers have been managing system updates to mitigate potential vulnerabilities in an effective manner," said Doreen Eberley, director of the FDIC Divi- sion of Risk Management Supervision. e FDIC release appears to reference the Heartbleed bug, which, according to the ap- propriately named heartbleed.com, "is a serious vulnerability in the popular OpenSSL crypto- graphic software library. is weakness allows stealing the information protected, under normal conditions, by the SSL/TLS encryption used to secure the Internet." e site continues, "SSL/TLS provides com- munication security and privacy over the Internet for applications such as web, email, instant messaging (IM), and some virtual private networks (VPNs)." SSL, or secure sockets layer, is a standard web protocol used for encrypting secure data. A computer using SSL sends a request to another computer, verifying the other computer is in fact the one it is attempting to reach. If successful, the second computer responds with data verifying itself, and a handshake occurs to exchange data securely. Heartbleed exploits this connection. "Web servers that use the affected versions of the code store some data unprotected in memory. Hackers can grab that data and reconstruct information about users or keys that would allow them to monitor past or future encrypted traffic," according to a report by the Wall Street Journal. e Journal article commented on possible actions for consumers: "If you need strong ano- nymity or privacy," Roger Dingledine, president of the Tor Project, a web service used to obscure Internet users' identity, wrote in a blog post, "you might want to stay away from the Internet entirely for the next few days while things settle." e FDIC urges financial institutions to "ensure that their information security staff are aware of and subscribe to reliable and recognized resources that can help quickly identify cyber risks as they emerge." Specifically, the FDIC recommends U.S. Computer Emergency Readiness Team (US- CERT), U.S. Secret Service Electronic Crimes Task Force (ECTF), FBI InfraGard, Regional Coalitions, and the Information Sharing and Analysis Centers (ISACs) REPORT: BANK MERGERS OUTPACE BANK FAILURES According to the Mortgage Graveyard report by Mortgage Daily, the number of mortgage-related failures has significantly declined this past year, and wholesale lenders are disappearing equally as quickly. However, mortgage mergers are on the rise. rough the first quarter of 2014, 13 mortgage-related businesses tracked by Mort- gage Daily either failed or closed. rough the first quarter of last year, the number of failed mortgage-related businesses was slightly higher at 15. If the pace continues, 2014 should prove to have the fewest number of failures since prior to the financial crisis in 2006. A lack of credit union failures is credited with slowing the progress of failed businesses. Non-bank closures for Q1 2014 were reported as six, the same number as Q1 2013. Bank failures increased slightly from four to five, while credit union failures dropped noticeably—with only two failures in Q1 2014 compared to the five of Q1 2013. Failures peaked in 2009, when 235 mortgage-related businesses closed their doors. "Many mortgage lenders are adapting to sharply lower originations by reducing staffing, cutting branches, or shutting down," said Sam Garcia, Mortgage Daily founder. "However, a good share are acquiring origination opera- tions or agreeing to be acquired." Garcia also commented that among those being acquired, many have sold out to banks. Others have adjusted business models to capitalize on income and originations that can be created through the acquisition of mortgage servicing rights, he says. Total Dividends Paid to the Federal Government by Fannie Mae Source: Fannie Mae's Quarterly Earnings Statement, Q1 2014 STAT INSIGHT $126.8 Billion