Disappearing Bank Accounts

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If you don’t
have money outside the computerized banking system, you should do
so now. You just never know when the system is going to go down.
At such a time, the person, who does have cash, will be calling
the tune. Remember, "He who has the gold makes the rules."
Below, Simon Black reports on the major malfunction at one of Australia’s
largest banks ~ Robert Wenzel

It all started
a week ago. National Australia Bank, one of the largest in the country,
had a technical malfunction in its core system. Within hours, a
simple problem had practically brought a large part of Australia’s
banking system to its knees. It was a crazy turn of events.

You see, banks
don’t use regular operating systems or database applications; they
run specialty software that is intended to synchronize complex operations
like cash deposits, overnight interbank drafts, central bank facilities,
electronic transfers, credit card monitoring, and a host of sensitive
data.

When something
goes wrong, it can throw the entire system into disarray, and customers
end up getting hurt.

In NAB’s case,
a corrupt file overloaded the bank’s payment system, and this single
failure eventually cascaded to other parts of their operations.

Much to their
surprise and fury, many customers found that their account balances
had been blotted out, automatic payments (mortgages, car payments,
insurance premiums) had not been drafted, and payment cards no longer
functioned.

Because of
NAB’s relative size in the country, the bank’s infrastructure handles
transactions for many of Australia’s smaller banks, so those banks’
customers were affected too.

Read
the rest of the article

December
2, 2010

2010
Economic Policy Journal

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