Despite gas masks and orange alerts, war cries and the amassing of U.S. troops in the Middle East, jitters in the Northeast, and talk even of another September 11, Wall Street analysts seem to shrug off the impact of domestic terrorism on the financial services firms they cover.
Not that they aren't talking about terror scares. Indeed, several analysts said their conversations with these companies constantly come around to security and contingency planning.
"I've always discussed contingency backup plans, but never to the extent that we've discussed them in the past 12 to 18 months," said Christopher Siedman, an analyst with Friedman, Billings, Ramsey Group Inc.
Yet analysts throw up their hands when asked how they handicap a given bank's security measures.
Gerard Cassidy, an analyst with Royal Bank of Canada's RBC Capital Markets, said his firm looks at a bank's security and contingency planning. And though he said that a possibility of a terror strike "worries us, to quantify the impact by saying a stock should trade down to a different multiple, based on the possibility of an attack, is difficult to do."
Like most analysts interviewed for this article, Mr. Cassidy said he is satisfied with what banks are telling him about their security. "But how do we know for sure that that's adequate? We don't," he said. "And I think that's reflected in the way the general market is behaving. The unknown is very unnerving to many folks."
Like floods or earthquakes, terrorist attacks occur with little warning and can cripple the infrastructure of a city or even an entire region. Yet several analysts stressed that there are problems with making this sort of comparison.
Bill DeMartini, a senior vice president of consulting operations at SunGard Planning Solutions, said that historically, corporations built their continuity and recovery plans for natural disasters, including fires, floods, and other smaller and isolated incidents.
What happened on Sept. 11 of 2001 drastically changed this type of planning. New dangers such as dirty bombs and biochemical warfare "had never really been considered before," Mr. DeMartini said.
Added Mr. Cassidy: "There is no comparable period of time to what we're going through today that we can use. This is a new world order that has no precedent on how stocks should behave."
Several analysts, however, dismissed concerns about terrorism with respect to equity analysis, saying they assume that banks have taken the necessary steps. And even if terrorists targeted a specific firm, they said, it is doubtful they would put it out of business.
"The majority of larger banks have systems in place and the ability to handle catastrophic events," said Jason Goldberg, an analyst with Lehman Brothers.
Banks, of course, are tight-lipped about security except to quietly acknowledge they have beefed it up in the last 18 months or so. Not wanting to compromise their security and contingency plans or draw attention to themselves lest they become a target, bank officials prefer to avoid the subject altogether.
Citigroup Inc., for example, would not comment on its security - or even say why it would not comment. "Like McDonald's, Citigroup is a symbol of the United States," explained an analyst requesting not to be named.
A J.P. Morgan Chase & Co. spokesman said, "Obviously, the company has taken steps to make sure the security measures are adequate and appropriate," and said no more. A spokesman for SunTrust Banks Inc. would only say that the "safety of our employees and the protection of our customer assets and data are among our top priorities." He said the Atlanta company has taken "appropriate measures," but he would not specify.
The comments from two banks that were willing to talk offer a glance at what the nation's largest financial institutions are doing about the terror threat.
William R. Wipprecht, Wells Fargo & Co.'s security director, said that from the first person to arrive to work on the East Coast to the last person to leave on the West Coast, the San Francisco company carefully monitors State Department announcements and the media for potential threats.
It has fortified all aspects of security since the attacks on the World Trade Center and the Pentagon - its guard force and computer systems protection, for instance - and is raising or lowering its alert status as the government does so.
Wells has a dedicated business continuity planning group, which Mr. Wipprecht called a "major organization" that involves every business line and thousand of hours of preparation. It has considered any number of scenarios, from planes flying into its buildings to fires to earthquakes.
"We realize that the financial industry is one of the key industries, and we're doing everything on daily basis to prevent action against Wells Fargo and the industry," Mr. Wipprecht said.
A spokesman for Bank One Corp. said the Chicago company does drills "to test our capabilities and our preparedness" and that it has a response team at each of its business lines.
Many of the efforts were under way at Bank One before September of 2001 but have been expanded since. "Because we're a financial institution and our customers expect us to provide for their needs during emergency situations, we needed to be prepared before and need to be prepared now," the spokesman said.
And though many say the industry is prepared, two reports issued last week by the General Accounting Office raised concerns about how well the financial system could withstand another attack.
Banking and securities regulators "have not taken important actions that would better ensure that trading in critical U.S. financial markets could resume in a fair and orderly way after a major disaster."
Mr. Siedman of Friedman Billings said he believes banks are ready, but it's "hard to say how well prepared they are, because you don't know the size and scale" of any attack.
The United States has never been threatened as it is now on its own soil, Mr. Cassidy observed. Even during the nation's war 12 years ago in the Persian Gulf there were no fears of bombs going off in lower Manhattan, he said. "This is a whole new way of living that we have to get accustomed to."
