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While data mining represents a significant advance in the type of analytical tools currently available, there are limitations to its capability. One limitation is that although data mining can help reveal patterns and relationships, it does not tell the user the value or significance of these patterns. These types of determinations must be made by the user. A second limitation is that while data mining can identify connections between behaviors and/or variables, it does not necessarily identify a causal relationship. Successful data mining still requires skilled technical and analytical specialists who can structure the analysis and interpret the output.

Data mining is becoming increasingly common in both the private and public sectors. Industries such as banking, insurance, medicine, and retailing commonly use data mining to reduce costs, enhance research, and increase sales. In the public sector, data mining applications initially were used as a means to detect fraud and waste, but have grown to also be used for purposes such as measuring and improving program performance. However, some of the homeland security data mining applications represent a significant expansion in the quantity and scope of data to be analyzed. Some efforts that have attracted a higher level of congressional interest include the Terrorism Information Awareness (TIA) project (now-discontinued) and the Computer-Assisted Passenger Prescreening System II (CAPPS II) project (nowcanceled and replaced by Secure Flight). Other initiatives that have been the subject of congressional interest include the Multi-State Anti-Terrorism Information Exchange (MATRIX), the Able Danger (2, 3) program, the Automated Targeting System (ATS), and data collection and analysis projects being conducted by the National Security Agency (NSA).

As with other aspects of data mining, while technological capabilities are important, there are other implementation and oversight issues that can influence the success of a project’s outcome. One issue is data quality, which refers to the accuracy and completeness of the data being analyzed. A second issue is the interoperability of the data mining software and databases being used by different agencies. A third issue is mission creep, or the use of data for purposes other than for which the data were originally collected. A fourth issue is privacy. Questions that may be considered include the degree to which government agencies should use and mix commercial data with government data, whether data sources are being used for purposes other than those for which they were originally designed, and possible application of the Privacy Act to these initiatives. It is anticipated that congressional oversight of data mining projects will grow as data mining efforts continue to evolve. This report will be updated as events warrant.

Data Mining and Homeland Security: An Overview

The Federal Reserve Act authorizes the Federal Reserve to undertake various types of discount window loans and open market operations. While the Federal Reserve generally has not found it necessary to use all types of such authority, there could be circumstances in which the Federal Reserve might need to consider utilizing its statutory authority more broadly than it has in the past. We examine the limits imposed by the Federal Reserve Act along two dimensions: those types of counterparties and financial instruments with which the Federal Reserve may conduct monetary policy. In doing so, we develop a theme not commonly pursued in the literature - the ways and extent to which the Federal Reserve Act limits the Federal Reserve from taking credit risk onto its balance sheet. We also provide some historical perspective on how the current powers of the Federal Reserve came to be authorized.

This paper is mentioned in a recent story in the Telegraph.

The Scope of Monetary Policy Actions Authorized under the Federal Reserve Act

Partisan warriors may love our polarized political culture. Everyone else is turned off, and tuning out.

Closing of the American Mind

It is absolutely true that yesterday's victory in forcing Harry Reid to pull the FISA bill from the Senate floor is temporary. Allies of the administration and lawbreaking telecoms will spend the next several weeks plotting to overcome the obstacles thrown in their path yesterday and, like a weed that has been cut but not uprooted, will return in January to try again.

Opponents of telecom amnesty and warrantless surveillance ought to and likely will use that time, too, to strengthen the opposition and improve the strategy. There will be ample time for all of that. But yesterday's victory, while limited, is still very significant in several key respects, particularly in understanding how and why it happened -- i.e. the source of the successful opposition -- and it is worth taking a step back to chronicle what took place.

Anatomy and significance of Monday's FISA victory

The current legislative and oversight activity with respect to electronic surveillance under Foreign Intelligence Surveillance Act (FISA) has drawn national attention to several overarching issues. This report briefly outlines three such issues and touches upon some of the perspectives reflected in the ongoing debate. These issues include the inherent and often dynamic tension between national security and civil liberties, particularly rights of privacy and free speech; the need identified by the Director of National Intelligence (DNI), Admiral Mike McConnell, for the Intelligence Community to be able to efficiently and effectively collect foreign intelligence information from the communications of foreign persons located outside the United States in a changing, fast paced, and technologically sophisticated international environment, and the differing approaches suggested to meet this need; and limitations of liability for those electronic communication service providers who furnish aid to the federal government in its foreign intelligence collection. Two constitutional provisions, in particular, are implicated in this debate — the Fourth and First Amendments.

Congress currently has before it several bills that, if enacted, would amend certain FISA provisions, among them H.R. 3733, which was passed by the House on November 15, 2007; S. 2248 (as reported out of the Senate Select Committee on Intelligence); and S. 2248 (as reported out of the Senate Judiciary Committee with an amendment in the nature of a substitute). Two other bills regarding FISA were introduced by Senator Reid on December 10, 2007, and have been placed on the Senate’s legislative calendar include S. 2440 and S. 2441. S. 2402, introduced by Senator Specter on December 3, 2007, was referred to the Senate Judiciary Committee. In Committee markup on December 13, 2007, an amendment in the nature of a substitute to S. 2402 was adopted by unanimous consent. Then, by a vote of 5-13, the Committee rejected S. 2402, as amended. The proposal would have permitted substitution of the government for electronic communication service providers in law suits where certain criteria were met.

FISA: A Brief Overview of Selected Issues

The scope of presidential power is the most urgent and the most ignored legal and political issue of our time.

Who Cares About Executive Supremacy?

The Beacon fiasco gives a good outline of what future conflicts over the Internet will look like. Whether a system is opt-in or opt-out has an enormous influence on how people use it. He who controls the “default option” — the way a program runs if you don’t modify it — writes the rules.

We used to live in a world where if someone secretly followed you from store to store, recording your purchases, it would be considered impolite and even weird. Today, such an option can be redefined as “default” behavior. The question is: Why would it be? The price in reputation for overturning this part of the social contract is bound to be prohibitively high.

For the owners of social-networking sites, it may be a price worth paying.

Well?

Intimate Shopping

There's what a politician believes, and how a politician believes. As I get older I put increasing weight on the latter. As a protest vote, Ron Paul seems fine, but hearing him or reading about him just makes me depressed. A good rule of thumb is not to get too excited about any candidate whose actual election would make the Dow lose thousands of points.

The monetary economics of Ron Paul

A Texan man in his 70s shoots and kills thieves at his neighbor's house. Is it legal?

The Castle Doctrine allows law-abiding citizens attacked in their own homes (their "castles") to respond with force, even deadly force, to protect themselves — though the law varies from state to state. Self-defense laws are back in the spotlight after two recent cases in which intruders were shot and killed by homeowners.

Castle Doctrine: In Defense of Self-Defense

The new National Intelligence Estimate on Iran appears to rely heavily on notes from a discussion between Iranian military officials involved in that country's nuclear weapons development program. What if, instead of such easily manipulated documentary evidence, the CIA's National Clandestine Service had been able to recruit a spy at the highest reaches of the Iranian government, someone who could just tell us what the country's nuclear capabilities and plans were?

It wouldn't have made any difference.

With Spies Like These . . .