Why Musk’s access to U. S. Treasury payment systems risks a global financial meltdown

Whether or not you share the zeal for cuts in government spending embraced by President Donald Trump and his billionaire sidekick Elon Musk, you should know that giving Musk and his callow team of computer coders access to payment systems at the U. S. Department of Treasury risks a global financial meltdown. It doesn’t make such an event certain, but it lowers the odds considerably.

Here’s why:

First, the U.S. Department of Treasury processes some $6 trillion in payments each year. If that system were to come to a halt for even a relatively short period of time, the consequences would be devastating, not only for the U.S. economy but for the global economy as well.

It is also important to grasp that the Treasury Department stands behind the entire U.S. banking system. It is the lender of last resort in a banking crisis to the Federal Deposit Insurance Corporation which insures bank deposits nationwide, and because the Treasury Department has the full faith and credit of the United States government behind it, the department is a potent force for forestalling panic and crisis in the banking system.

In addition, the Treasury Department stands behind all U. S. government debt instruments, “Treasuries” for short, which today amount to $36 trillion outstanding. Treasuries are considered the most trustworthy, reliable and liquid government debt in the world and are, not surprisingly, found in the portfolios of pensions funds, banks, insurance companies, university endowments, individual investors and central banks around the world (to facilitate trade and monetary policy). Treasuries are frequently used as collateral for loans to banks, other financial institutions, and investment funds as part of the trillions of dollars in trading each day around the world.

When people want to hold an investment that they know will always pay interest on time in full and be redeemed at its full value at maturity AND that others will want to buy when they are ready to sell, they almost always turn to U. S. Treasuries. Much of the world’s financial system is premised on the belief that U.S. Treasuries will continue fit this description. Were this belief to be shattered, the consequences for the world economy would be grave.

So how exactly does giving access to the U. S. Treasury payments system to the members of Musk’s so-called Department of Government Efficiency risk financial stability? There are three ways:

1. It is important to understand that if Elon Musk and his team simply wanted to find out about government programs they’d like to cut, they could just look up appropriations bills passed by the U. S. Congress. But gaining access to the U. S. Treasury’s payment systems can only be for one purpose: To deny payments to programs and people Elon Musk and his boss, Donald Trump don’t like.
   

   Whether Elon Musk and Donald Trump can deny such payments is a matter of law. They cannot. Not without Congressional approval as specified by the Impoundment Control Act of 1974. And, then only the president can request such an approval. But I do not believe that either of these men cares about the law. As was demonstrated by Trump’s so-called freeze in federal spending, the president was seeing what he could get away with. A federal court quickly reversed the freeze. But I’ll be very surprised if Musk and Trump don’t try again, almost surely by using the U. S. Treasury payments system, perhaps by announcing denials of payments or perhaps by simply quietly denying payments and seeing if anyone notices.
   
   If investors in U.S. Treasury debt—who constitute a huge and highly consequential group in the financial markets as outlined above—come to believe that they might not get paid by the Treasury, they would almost certainly scramble to sell and move their money elsewhere. That would likely trigger a worldwide financial crisis given the central role of U. S. Treasuries in global financial markets.

   But surely, you may say, a man as smart and wealthy as Elon Musk understands such a risk and would never do anything to deny payments to holders of U. S. debt? As to how much Musk understands about the workings and role of government, we have some recent information. Regarding a stopgap budget measure needed to keep the government running after December 20 last year, Musk managed to convince Republicans in Congress to kill the carefully worked out bipartisan bill using a series of tweets on X as described in part by Rolling Stone:

   “YES,” Musk commented on an X post from a user who wrote, “Just close down the govt until January 20th. Defund everything. We will be fine for 33 days.” In his own post, Musk wrote, “No bills should be passed [by] Congress until Jan 20, when @realDonaldTrump takes office. None. Zero.”

   Speaker of the House Mike Johnson had to explain to Musk how things actually work in Congress. A stopgap measure was ultimately passed to avert a shutdown.

   Musk’s incendiary rhetoric and actions cannot be of much comfort to investors. But, perhaps investors still believe that Musk’s nominal boss, Donald Trump, will make sure nothing untoward happens to confidence in the U. S. Treasury market. But Trump’s foray into a tariff war with America’s largest trading partners, Canada, Mexico and China, unnerved financial markets so much that he quickly “postponed” tariffs for Canada and Mexico for a month after reaching “deals” with both nations. That calmed the markets, but Trump has not ruled out reimposing those tariffs.

   Well, of course, you may say, that’s Trump. But his treasury secretary is a hedge fund manager who surely will safeguard the good reputation of the U. S. Treasury market. Well, maybe. Treasury Secretary Scott Bessent has authorized two Musk team members to continue to have access to the department’s payment system after a court showdown circumscribed access. And, of course, Bessent’s presence on the Trump team didn’t prevent Trump from going all in on tariffs—until the markets revolted.

   The thing is, investors in Treasuries don’t have to actually experience a default by the U. S. Treasury (that is, a refusal or inability to pay), they have only to believe there is a likelihood that it could happen to start a stampede out of Treasuries. Given the erratic performance of the current administration to date, such a change of heart among investors cannot be entirely ruled out.

2. There is reason to believe the members of Musk’s computer coding army have inserted new code into the Treasury’s payment system. The purpose of such code might be surveillance, remote access or even to make it easier to find and deny payments. Whatever the purpose, the results could be catastrophic. Government systems are complex and multilayered. Changing them in any way without careful testing could lead to “damage [that] might be difficult or impossible to undo,” according to The Atlantic which interviewed several top former government IT professionals.
   
   In this case there would be no intent to deny holders of Treasuries their interest payments or payments to redeem their mature bonds, but there might be no way to pay them. The system might be unfixable, and the Treasury Department can’t just pull out a checkbook instead and start writing millions of checks.

   New code could also result in unrecognized security flaws that could be exploited by a hacker.

3. Which brings us to the problem of cybersecurity. First, Musk and his team had no security clearances when they began their work. Then, President Trump granted them clearances which he has the right and the power to do. Because I know a couple of friends who’ve gotten security clearances from the federal government, I can tell you that those clearances generally take months to obtain because those seeking such clearances must undergo an extensive background check. There was no background check into these members of Musk’s so-called Department of Government Efficiency, or a very, very cursory one at best. We have no way of knowing whether any of these people might be working for a foreign government or engaged in risky behavior that makes them subject to blackmail.
   
   But, assuming none of these people are security risks, there is also the sloppy way in which they’ve interfaced with government systems. One IT professional quoted in The Atlantic article said, “‘That these guys, who may not even have clearances, are just pulling up and plugging in their own servers is madness.'” The article pointed out that “[p]reviously, security protocols were so strict that a contractor plugging a non-government-issued computer into an ethernet port in a government agency office was considered a major security violation.”

   Unauthorized, unvetted computers may have all manner of malware, “malicious programs [that can] steal, encrypt and delete sensitive data; alter or hijack core computing functions; and monitor end users’ computer activity.” These malware programs could be transferred intentionally or transfer themselves without knowledge of the laptop owner and infect, alter, spy on or bring down the government’s computers.

   It gets worse: The top level of access for computers called “administrator privileges, could grant the broad ability to control a system, including hiding evidence of other alterations. ‘They could change or manipulate treasury data directly in the database with no way for people to audit or capture it,’ one contractor told us. ‘We’d have very little way to know it even happened.'” An insider with such access who is working for a foreign power or simply working to achieve partisan goals through illegal means could easily crash the whole system and make it difficult to bring up again.

   One IT contractor told Cyberscoop that all the systems accessed by the Musk coders must now be considered “untrusted.” The former federal employee said that “‘to have those systems back to the level of assurances they had on Jan. 20 will require a lot of work and a lot of resources'” after the Musk team members have left (if they ever leave).

   Of course, I haven’t even touched privacy concerns. The IT professionals interviewed by The Atlantic consider what has happened to be a “catastrophic data breach.” Nonpublic information on individuals, companies and organizations is there in the Treasury payments system for the taking. The fact the Musk’s team may now be limited to “read-only” access does nothing to prevent team members from copying information from the entire system and transferring it somewhere else.

   Who knew that the greatest danger to the private data of Americans held by the U.S. government would come from people with no genuine background checks walking through the front doors of U.S. government agencies with laptops under the direction of the president of the United States and a private citizen with no prior government experience?

If you are an investor, you should be monitoring the situation very closely. If you are citizen or a company and you’ve ever had any financial dealings with the U. S. government, you should be very concerned. A man who is a private citizen and the richest man in the world and his merry band of coders may have your information. How they would use or disseminate that information is anyone’s guess. I’m wondering when some enterprising class-action attorney is going to wake up to the fact that the biggest class-action privacy case in the history of the United States is waiting for someone to come along and file it. Maybe I won’t have to wait that long.