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Fed bank insurer's worker data breached
Personal information of thousands of FDIC employees accessed, some possibly used for fraud.
June 18, 2005: 11:44 AM EDT

NEW YORK (CNN) - The Federal Deposit Insurance Corp., which insures many of the nation's banks, has alerted 6,000 current and former employees that personal information may have been released and that some individuals could be the victims of identity theft.

In a letter dated last Friday and obtained by CNN, the FDIC told employees that anyone employed at the agency since July 2002 may be affected. It said that names, birth dates, Social Security numbers and account information may have been breached.

The letter instructs employees to "remain vigilant over the next 12-24 months, and promptly report incidents of suspected identity theft to the local police and the credit bureaus."

Paul Resson, a spokesman for the FDIC, told CNN that the FBI is investigating the security breach along with the FDIC's own internal investigators.

According to the letter sent to employees, the unauthorized release of the data apparently occurred in early 2004, and included information on all FDIC employees in an official pay status with the insurer as of July 2002.

In a small number of cases, the letter states, the information is known to have been used to obtain fraudulent loans from a credit union.

Resson declined to comment on why the insurer took so long to notify its employees of the breach, referring the question to the FBI. The FBI did not immediately return calls seeking comment.

The FDIC also declined to say which credit union was involved, nor comment on the number of FDIC employees whose data was used fraudulently, citing the investigation.

American Banker reported Thursday, in its online edition, that the credit union was NIH Federal Credit Union, located in Maryland.

American Banker said that Lindsay Alexander, the chief executive of NIH, told it that an employee of NIH had opened accounts in the late summer or early fall of last year using the identities of the FDIC employees, and took out 28 fraudulent loans in their names.

The loans were worth between $10,000 and $18,000 and were not backed up with collateral, American Banker report Alexander as saying. She said one of the defrauded individuals contacted NIH in March about something suspicious, American Banker reported, and the credit union began investigating before notifying federal employees.

When reached by phone Thursday afternoon, Alexander declined to confirm her comments to American Banker, telling CNN, "I am not at liberty to discuss details. This is an active investigation, and I don't want to jeopardize it."

The FDIC insures many of the nations banks and their account holders against failures. It was formed in 1933 in response to the thousands of bank failures that occurred in the 1920s and 1930s.

Today, the FDIC insures more than $3 trillion of deposits in U.S. banks and thrifts with insurance funds totaling more than $44 billion, according to its Web site.

For more on ID security, click here.

For today's top business news headlines, click here.

By Caleb Silver, CNN Business News  Top of page

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