Markets preparing for attacks

NEW YORK – How prepared is the U.S. financial system for another terrorist attack?

The Sept. 11 attacks resulted in the longest closure of the stock market since the 1930s, but future attacks, as the Government Accountability Office warned in a 2003 report, “could directly target critical financial market organizations and close the markets for an extended period.”

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Securities and Exchange Commission set a goal of resuming core trade clearing and settlement activities within the same business day a disruption occurs.

Since the attacks, the GAO has done checkups on financial markets’ readiness, looking at 15 large financial players, including seven exchanges. During the most recent checkup in 2004, the GAO found that three organizations’ primary facilities and backup facilities were too close to each other. (A 2003 GAO report said backup facilities were too close if they were within two to 10 miles of the primary office.)

The agencies’ final draft said backup sites should not rely on the same infrastructure, such as transportation, telecommunications, water supply and electric power, used by the primary office.

Many firms didn’t wait to be told. Lehman Brothers Holding Inc. told the SEC it would move some operations to its offices in London.