Investors Get the Jitters; Cost of Credit Card Breaches Mounting
- Jan 27, 2014
Wall Street took a tumble on Friday, with the Dow Jones Industrial Average losing 318.24 points, or 1.96 percent. The S&P 500 was off 2.09 percent and the S&P 500 was down 2.15 percent.
The drop was the sharpest daily one for the U.S. equities markets since last summer, and the sharpest weekly one since 2012. The sudden decline fueled speculation that an anticipated correction in the markets – at least anticipated by stock-market watchers and assorted other economists, since the markets have done extremely well lately – was finally about to start. The proximate cause of the decline was news from emerging markets, mainly China, that hinted that developing economies are softening.
There have also been mediocre earnings reports recently from U.S. corporations, plus a drone of worry about the impact of the Federal Reserve tapering its bond-buying program on the U.S. and other economies. The FOMC is scheduled to meet in the coming week to finalize the next months’ worth of tapering, which might well shave another $10 billion off the total, taking it down to $65 billion in February.
Cost of Credit Card Breaches Mounting
In news that falls in the “tip of the iceberg” department, the Credit Union National Association (CUNA) reported last week that the security breach suffered by retail giant Target late last year has already cost credit unions about $30 million, and the full damage to that particular sector of the financial industry – to say nothing of other parts of the industry – hasn’t been remotely tabulated yet.
The results come from an early January online survey that asked CUNA member credit unions to report the impact of the Target data breach, word of which first broke on Dec. 19. A total of 936 credit unions responded. Based on that data, the organization estimates that, on average, the Target breach has already cost credit unions more than $5 per affected card, including the costs of having to reissue debit or credit cards. The cost of fraudulent charges can’t be tabulated yet.
“Contrary to what some may think, these expenses will not be reimbursed to credit unions and their members by Target or other retailers,” Bill Cheney, CEO of the Credit Union National Association, said in a statement. “Rather, credit unions must solely cover these costs of their card program administration, including in these circumstances of reacting to a merchant data breach.”