The Defense Department's geeks are spooked by a rapidly spreading worm crawling across their networks. So they've suspended the use of so-called thumb drives, CDs, flash media cards, and all other removable data storage devices from their nets, to try to keep the worm from multiplying any further.

The ban comes from the commander of U.S. Strategic Command, according to an internal Army e-mail. It applies to both the secret SIPR and unclassified NIPR nets. The suspension, which includes everything from external hard drives to "floppy disks," is supposed to take effect "immediately." Similar notices went out to the other military services.

In some organizations, the ban would be only a minor inconvenience. But the military relies heavily on such drives to store information. Bandwidth is often scarce out in the field. Networks are often considered unreliable. Takeaway storage is used constantly as a substitute.

The latest Microsoft patch MS08-68 is a great example. It is a problem with NTLM authentication where the attacker can force a client to authenticate to him and the credentials, while not exposed in cleartext, can be relayed to another server or brute forced to obtain the cleartext. This is a very classic crypto protocol vulnerability. It’s not the crypto algorithms that are the problem, but the protocol implementation.

Microsoft recently fixed the problem, perhaps due to the availability of exploit code, the availability of an easy to use Metasploit implementation, or perhaps Microsoft’s changed tolerance for vulnerabilities. We can sum it up as a change in the threat space that made it worth fixing. But make no mistake, this is a very old problem.

News reports have been citing Sir Dystic’s SMBrelay tool, which was published in March, 2001, as the first knowledge of this vulnerability. Eric Shultze who worked at MSRC in 2001 just yesterday is quoted as saying, “I have been holding my breath since 2001 for this patch.” Obviously it is a long time coming. But this wasn’t the first publication of the problem. In 2000, one of my collegues on the research team at @stake, Christian Rioux (aka Dildog) published the telnet NTLM authentication vulnerability.

Rioux’s advisory has a great description of the credential relay and cracking weaknesses. I have talked to him and he says he discovered these problems independently, but he didn’t find them first. Dominique Brezinski published exactly these NTLM vulnerabilities in the SMB protocol in 1996 in a paper titled, “A Weakness in CIFS Authentication”. The earliest reference I can find on the paper on the net is here where it is included in another paper published in 1997. Such is the ad-hoc world of independent security research of 12 years ago which still continues today.

It seems ridiculous that a field like security research, which is so important to the running of modern society is so ad-hoc. Shouldn’t we know who discovered a vulnerability? Shouldn’t all researchers and engineers know about it? More importantly if someone implements a tool that takes advantage of a vulnerability shouldn’t they credit the discoverer? Don’t get me wrong. Implementation takes a lot of work and sometimes makes all the difference in makeing people aware of a security problem. After all when I was at the L0pht our slogan was, “Making the theoretical, practical”. I still think researchers should get credit when credit is due.

The security community has gotten better at documentating our research but I still see instances of independent discovery, misplaced credit, and tools giving no credit to researchers. I hate to say it but getting a bit more academic is in order. Credit is the currency of a researcher and placing it well will reward the right people and we will all benefit.

The next question from the president-elect was what single policy issue he could focus on that would most help entrepreneurs.

“The most important thing he’s got to do is kick-start a huge amount of research and innovation in energy,” said Mr. Doerr, who backed Google and Amazon.com and has invested heavily in clean energy technology for the last few years.

The nation now invests less than $1 billion a year in renewable energy versus $32 billion a year in health care, Mr. Doerr said. “I think we’ve just scratched the surface in terms of clean ways to use energy, to produce energy. It’s the challenge of our generation.”

How to do that? Double the number of engineers who graduate from American universities each year to 60,000, Mr. Doerr said. Bring more women into the field, and encourage foreigners who study engineering here to stay here.

“What we do is bring foreign nationals to the world’s greatest universities. We train them, invest in them and make them go home,” he said. “What kind of national strategy is that? So I would staple a green card to the diploma.”

Warnings About Financial Institutions and Derivatives

Risks of Financial Institutions
The nature of a financial institution is that there are a lot of ways to go to hell in a bucket. You can push credit too far, do a dumb acquisition, leverage yourself excessively---its not just derivatives [that can bring about your downfall].

Maybe it's unique to us, but we're quite sensitive to financial risks. Financial institutions make us nervous when they're trying to do well.

We're exceptionally goosey of leveraged financial institutions. If they start talking about how good their risk management is, it makes us nervous.

We fret way earlier than other people. We've left a lot of money on the table through early fretting. It's the way we are -- you'll just have to live with it.

Derivatives
The system is almost insanely irresponsible. and what people think are fixes aren't realy fixes. It's so complicated I can't do it justice here - but you can't believe the trillions of dollars involved. You can't believe the complexity. You can't believe how difficult it is to do the accounting. You can't believe how big the incentives are to have wishful thinking about values and wishful thinking about ability to clear.

People don't think about the consequences of the consequences. People start by trying to hedge against interest rate changes, which is very difficult and complicated. Then, the hedges make the [reported profits] lumpy. So they use the new derivatives to smooth this. Well, now you've morphed into lying. This turns into a Mad Hatter's Tea Party. This happens to vast, sophisticated corporations.

Somebody has to step in and say, "We're not going to do it - it's just too hard."

I think a good litmus test of the mental and moral quality at any large institutions [with significant derivative exposure] would be to ask them, "Do you really understand your derivatives book?" Anyone who says yes is either crazy or lying.

It's easy to see [the dangers] when you talk about [what happened with] the energy derivatives - they went kerflooey. When [the companies] reached for the assets that were on their books, the money wasn't there. When it comes to financial assets, we haven't had any such denouement and the accountings hasn't changed so the denouement is ahead of us.

Derivatives are full of clauses that say if one party's credit gets downgraded then it has to put up collateral. It's like margin - you can go broke [just putting up more margin]. In an attempt to protect themselves, they've introduced instability. Nobody seems to recognize what a disaster of a system they've created. It's a demented system. 

In engineering people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting. I'm more pessimistic about this than Warren is.

Accounting for Derivatives
I hate with a passion GAAP [Generally Accepted Accounting Principles] as applied to derivatives and swaps. JP Morgan sold out to this type of accounting to front-end revenues. I think it's a disgrace.

It's bonkers, and the accountants sold out. Everyone caved, adopted loose [accounting] standards, and created exotic derivatives linked to theoretical models. As a result, all kinds of earnings, blessed by accountants, are not really being earned. When you reach for the money, it melts away. It was never there.

It [accounting for derivatives] is just disgusting. It is a sewer, and if I'm right, there will be hell to pay in due course. All of you will have to prepare to deal with a blowup of derivative books.

Likelihood of a Derivatives Blowup
We tried to sell Gen Re's derivatives operations and couldn't, so we started liquidating it. We had to take big markdowns. I would confidently predict that most of the derivatives books of [this country's] major banks cannot be liquidated for anything like what they're carried on the books at. When the denouement will happen and how severe it will be, I don't know. But I fear the consequences could be fearsome. I think there are major problems, worse than in the energy field, and look at the destruction there.

I'll be amazed if we don't have some kind of significant [derivatives-related] blowup in the next five to ten years.

I think we're he only big corporation in America to be running off its derivative book.

It's a crazy idea for people who are already rich -  like Berkshire - to be in this business. It's a crazy business for big banks to be in.

Yo would be disgusted if you had a fair mind and spent a month really delving into a big derivative operation. You would think it was Lewis Carroll. You would think it was the Mad Hatter's Tea Party. And the false precision of these people is just unbelievable. They make the worst economics professors look like gods. Moreover, there is depravity augmenting the folly. Read the book F.I.A.S.C.O., by law professor and former derivative trader Frank Partnoy, an insider account of the depravity of derivative trading at one of the biggest and best-regarded Wall Street firms. This book will turn your stomach.

I'm not complaining about the fact that I can't see what I'm typing. I understand and laud that feature, because I don't want someone looking over my shoulder at the password I'm typing, and this even applies when I'm at home. I love my children, but I certainly don't want them knowing the password to my bank account!

No, what I'm bothered by is how a typical password text box behaves on a form that may incur multiple post-backs before it's finally submitted. If you use the built in ASP.NET TextBox control, it purposely does not repopulate the password text, which means if you press a button on the form that performs a post-back, or if you have a multi-page form that posts back on every step, that password disappears, and the user typically has to re-enter it. You could solve this with liberal use of ASP.NET Ajax UpdatePanels, but that adds its own complexities. I wanted a simpler solution.

So I did a little research to see what others had discovered about this problem, and I ended up deriving my own custom control from TextBox to make a much more user-friendly (and developer-friendly) TextBox control. I called it PasswordTextBox, and it acts just like a TextBox in password mode, but it retains the password while still giving the user the same level of protection the standard TextBox supplies.

My PasswordTextBox operates very simply: it stores the password in control state, and renders a series of fixed characters (with the same length as the actual password) into the text box so that it "looks" like the user's password has been rendered. Since control state is part of view state, and since view state is stored in a hidden field on the form, I encrypt the password before putting it into control state.

The result is quite nice - the user can post your form back as many times as she needs to, perhaps moving back and forth across wizard steps or tabs, and when she finally presses the "Finish" button (or whatever you call the last step of your input form), your code will be able to read the password by simply accessing the Text property on the PasswordTextBox. The user will believe that her password is sitting there on the form while she's working, as the same number of obfuscated characters will show up in the field as she typed in originally (what she doesn't know is that those characters aren't her real password anymore, but what she doesn't know won't hurt her!)

Note that to keep this simple, I used DPAPI to encrypt the password, which suited my purposes. But if you have a web farm, that won't work well at all if you don't know which machine the user's going to post back to, so you'll want to replace that with something more robust. I could see looking up the <machineKey> for entropy, as that tends to be sync'd already across the farm, but I've not yet spent the cycles to go down that road, since unfortunately all of the code for generating keys based on that config section are off limits in ASP.NET (most of the useful stuff is marked internal). I don't think it'd be that hard to do though.

Anyway, without further ado, here's the code, which you'll see is quite simple. I'd love feedback, especially if you see any glaring problems with the idea or the implementation!

public class PasswordTextBox : TextBox
{
    // unlikely that a string of these would be used for a password
    const char PasswordPlaceholderChar = '}';

    string password; // stored encrypted in control state

    protected override void OnInit(EventArgs e)
    {
        base.OnInit(e);
        Page.RegisterRequiresControlState(this);
    }

    protected override object SaveControlState()
    {
        byte[] encryptedPassword = ProtectPassword(password);

        object baseControlState = base.SaveControlState();
        if (null == baseControlState)
            return encryptedPassword;
        else return new Pair(baseControlState, encryptedPassword);
    }

    protected override void LoadControlState(object savedState)
    {
        byte[] encryptedPassword;

        Pair pair = savedState as Pair;
        if (null != pair)
        {
            base.LoadControlState(pair.First);
            encryptedPassword = pair.Second as byte[];
        }
        else encryptedPassword = savedState as byte[];

        password = UnprotectPassword(encryptedPassword);
    }

    /// <summary>
    /// This control always uses TextMode=Password
    /// </summary>
    public override TextBoxMode TextMode
    {
        get
        {
            return TextBoxMode.Password;
        }
        set { }
    }

    /// <summary>
    /// TextBox doesn't render value attribute for TextMode=Password
    /// So we add code that renders a placeholder text instead
    /// </summary>
    /// <param name="writer"></param>
    protected override void AddAttributesToRender(HtmlTextWriter writer)
    {
        base.AddAttributesToRender(writer);

        string text = Text;
        if (text.Length > 0)
            writer.AddAttribute(HtmlTextWriterAttribute.Value,
                GetPlaceholderPassword(text));
    }

    /// <summary>
    /// TextBox doesn't save the "Text" viewstate in
    /// TextMode=Password and we don't want our behavior to break
    /// if ViewState is turned off so we store the password in
    /// Control State, encrypted with MachineKey
    /// </summary>
    public override string Text
    {
        get
        {
            return password ?? string.Empty;
        }
        set
        {
            // this prevents us overwriting the actual
            // password with a placeholder
            if (!string.IsNullOrEmpty(password) &&
                value.Equals(GetPlaceholderPassword(password)))
                return;

            password = value;
        }
    }

    private string GetPlaceholderPassword(string realPassword)
    {
        int length = 12;
        if (!string.IsNullOrEmpty(realPassword))
            length = realPassword.Length;

        StringBuilder sb = new StringBuilder();
        sb.Append(PasswordPlaceholderChar, length);

        return sb.ToString();
    }

    public byte[] ProtectPassword(string password)
    {
        if (string.IsNullOrEmpty(password))
            return null;
        byte[] cleartext = Encoding.UTF8.GetBytes(password);
        return ProtectedData.Protect(cleartext, null,
            DataProtectionScope.LocalMachine);
    }

    public string UnprotectPassword(byte[] ciphertext)
    {
        if (null == ciphertext)
            return null;
        byte[] cleartext = ProtectedData.Unprotect(ciphertext, null,
            DataProtectionScope.LocalMachine);
        return Encoding.UTF8.GetString(cleartext);
    }
}