Ever since Treasury’s press secretary, Tony Fratto, had been read into the classified and closely held Society for Worldwide Interbank Financial Telecommunication (SWIFT) program, he had prepared for a leak. We had constructed the program to help track terrorist financing legally, effectively, and in secret. But we assumed all along that the program would see the light of day. Fratto knew the call would come. When it did, he was surprised it had taken so long.

The Treasury Department and officials involved in Europe made a serious attempt to keep the program quiet and to limit those with knowledge of its operations. But we always knew that the program would be revealed. From the outset we designed the program to ensure that it would stand up to legal and public scrutiny. The mechanics of the program were far more open than those of a classic intelligence operation. More foreign officials—especially more of those who were not traditionally in the intelligence business—were aware of the program than had been the case with any other highly sensitive counterterrorism program. The backlash that had come in 2005, when the New York Times reported the existence of the White House’s highly secret Terrorist Surveillance Program (TSP), had been a searing experience. Not just the U.S. government, but SWIFT executives, too, were nervous. The SWIFT officials feared their cooperation would be construed in the same critical light.

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This is what Fratto and the small group of public affairs professionals “read into” the program had prepared for since 2002. Fratto and his predecessors Michele Davis and Rob Nichols had crafted a communications plan that anticipated the inevitable leak—with detailed questions, designated phone trees, and anticipated lines of attack and counterarguments to use with reporters. The communicators held three tabletop exercises with SWIFT officials and Treasury’s European counterparts so that all of them would understand their roles and the various pitfalls of a poorly coordinated response. Fratto had made two trips to the historic SWIFT chateau in Brussels to work with the company’s senior officials on the communications plan until they felt comfortable with it and were ready to respond.

In 2006, Fratto picked up a call from New York Times reporter Eric Lichtblau, and he knew the time had come. Lichtblau was coy, mentioning only that he was looking into a possible story about Treasury acquiring data from SWIFT. He made it sound like he didn’t know much, but alarm bells went off for Fratto. He understood that a call like this would not have happened unless Lichtblau, who had won a Pulitzer Prize for his TSP piece, already had a story in mind. Lichtblau had begun to dig around and was asking other people questions about SWIFT as well. SWIFT communicators called Treasury press representative Molly Millerwise Meiners to let her know that New York Times reporters were sniffing around a story. In the conversation with Lichtblau, Fratto was able to discern that the Times had its hooks into the story and would ride it to the end. From the tenor of the conversation he could also tell that the Times thought the Treasury was doing something illegal—perhaps even stealing the financial data. Fratto did not reveal anything about the program, but he agreed to talk with Lichtblau again, since the Times would not be publishing a story without first talking to the Treasury Department.

Quickly, Fratto and the architects of the program put the response plan into motion—Fratto called Dan Bartlett, the communications director at the White House, while others called their counterparts throughout the U.S. government. Fratto assembled a group that included Stuart Levey, Molly Millerwise Meiners, and Treasury lawyers to determine the course of action. The team believed that the story the New York Times was constructing was flat-out wrong—there was nothing illegal about the SWIFT program. They hoped to convince the Times that the program was legal, effective, and appropriate—this would be our one chance to kill the story.

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Josh Bolten, the president’s chief of staff, convened a meeting in his bright and spacious office just down the hall from the Oval Office. All of the administration’s key senior stakeholders on this issue were present, including Vice President Cheney, White House Counsel Harriet Miers, National Security Adviser Steve Hadley, and Treasury Secretary Snow. The options on the table were straightforward—try to shut the New York Times out by not cooperating at all with the story; work with Lichtblau and his editor to try to convince them to not publish the story; work with them but try to shape the story in a favorable light; or hand the story to another publication.

Secretary Snow and the Treasury staff made the case for working with Lichtblau and the editors at the Times to try to convince them that they really didn’t have much of a story and the program they were investigating was legal, effective, and constrained in its application. Fratto did not want to be caught behind the story and knew that if it came out with inaccuracies and false assumptions, it would be a disaster for the Treasury, the administration, and SWIFT, jeopardizing the program itself. He also realized that the story could leak anyway, given the reporter’s ongoing inquiries to experts and officials in the United States and Europe about the program. I agreed wholeheartedly with Fratto and my former Treasury colleagues.

At every opportunity and every meeting I attended, we argued that this was a program worth defending vigorously and publicly if necessary. If the New York Times decided to publish the story, we should demand that it defend its decision and its reporting. Yet at the same time we knew that we were likely fighting a losing battle. The senior leadership could already tell that Lichtblau and his fellow reporter James Risen, who was also working on the story, thought they had found another TSP-like program worthy of front-page revelation—and perhaps another Pulitzer Prize.

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Stuart Levey became the primary interlocutor with the reporters. In a back-and-forth dialogue, Levey focused on explaining the legal framework and the responsible handling and tracking of the SWIFT data accessed. He encouraged Lichtblau to consult an outside national security legal expert to test his proposition that the program was illegal. The Times reached out to David Kris, the well-respected national security lawyer who had run the Foreign Intelligence Surveillance Act (FISA) review process at the Department of Justice during the early years of the Bush administration. Kris, who would later become President Obama’s assistant attorney general for the National Security Division, reviewed the SWIFT program for the Times and determined that it was legal and that there were no inherent problems with its legitimacy. Levey, who knew Kris well from their days at the Department of Justice, knew what Kris had told the Times. The program as designed and implemented was legal—there was no story.

After several weeks, Lichtblau came back to Fratto. It was clear that the reporters had not found what they were looking for with the program. The Treasury was not stealing the SWIFT data out of the air and misusing the financial information therein. This wasn’t a massive fishing expedition into the world’s financial data. It really was an effort by the U.S. government to target and track terrorist financing as understood by the American public. As long as the methods were legal, there didn’t seem to be much basis for a story. But it seemed as though the New York Times was going to publish it anyway—potentially endangering a crucial source of financial intelligence for Treasury and exposing the SWIFT board to public scrutiny.

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Even though it still was not clear what the story actually was, to Levey, and the rest of us who had worked with the program, the risk was clear. Exposure in the New York Times threatened the very existence of the program and our most effective method of tracking terrorist financing through the banking system. It would also stir up European anger at SWIFT and European central bankers aware of the program. Fratto demanded to know why this was still considered a story, but Lichtblau simply demurred and said it was in the editors’ hands now.

At the same time, Josh Meyer from the Los Angeles Times, who had been covering Treasury stories for the paper and had taken trips with us abroad, called the Treasury Department asking questions about a relationship with SWIFT. The Los Angeles Times reporters did not have enough to pursue a story on their own, but it was clear that they were searching for whatever the New York Times investigation was stirring up.

There was little hope of stopping the story, but the administration tried. Bill Keller, the editor of the New York Times, agreed to a meeting with Treasury Secretary Snow. Snow and his team made the case for the legality of the program and its utility, while explaining the damage the revelation could do with our European partners and to SWIFT itself. Snow offered a separate briefing with Treasury’s enforcement lawyer assigned to the program. But Keller listened politely, asked a few perfunctory questions, and ended the meeting. It was apparent that Keller had already made up his mind, and that he was going to publish the story regardless of what was said in that meeting.

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The 9/11 Commission co-chairs, Lee Hamilton and Thomas Kean, both appealed to the New York Times not to run the story. Even Senator Russ Feingold, a Wisconsin Democrat known for his defense of privacy and civil liberties and his ardent opposition to the Bush administration, was convinced of the value and legality of the program and was asked to call the New York Times to intervene. Yet all who tried to convince the Times were rejected politely.

In the end, part of what drove publication was competition between papers, since the New York Times wasn’t the only paper to have uncovered the SWIFT program. Levey was in Italy when he got word that the Los Angeles Times had the story, too. This would accelerate publication and trigger the New York Times to publish. Levey and spokesperson Molly Millerwise Meiners flew back immediately, understanding that they would have to move quickly.

The call came in to Fratto that the New York Times was going to run the story. Once this was clear, the communications team decided to meet with the reporters from both the New York Times and the Los Angeles Times again before they published their articles. At the same time, the Treasury Department called Glenn Simpson at the Wall Street Journal, a seasoned journalist who understood the banking world and had followed the issues of money laundering, terrorist financing, and organized crime for many years. When Meiners spoke to Simpson, she told him, “Bring your laptop.” The Treasury intended to give him background on the program to allow him to publish a competing story. There had been no promise made to the New York Times not to speak to other reporters if the Times decided to publish the story, though Lichtblau would later complain to Fratto.

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Glenn Simpson’s story in the Wall Street Journal was published the same day as the articles in the Los Angeles Times and the New York Times. Simpson, who had covered Treasury after 9/11, had long been aware of Treasury’s program with SWIFT data but had elected not to publish it. He had lived in Brussels and had even met the SWIFT chairman, Lenny Schrank, once, testing him out and inquiring about any information sharing with the US government. Schrank had played it coy, but Simpson knew that there was an arrangement and a program in place.

Yet Simpson had not even approached his editors with the story at the time—because he didn’t think there was a story. For Simpson, the program was legal, unobjectionable, and in line with what the administration said it was doing to track terrorist financing. From his years of reporting on international organized crime and money laundering, Simpson knew that the banking world was subject to reporting requirements, suspicious activity reports, and a full regimen of otherwise intrusive regulatory scrutiny that made cross-border transactions fair game under the right circumstances. He felt the SWIFT program was in line with this historically intrusive regulatory system. From his point of view, this program was not infringing on anyone’s civil liberties, and there was no journalistic reason to expose it. When his editors heard that the New York Times story was imminent, it was not difficult for Simpson to put together a story on short notice. He already knew about the banking world, SWIFT, and how Treasury was likely using the data.

In contrast, the New York Times reporters came to the subject assuming that the SWIFT program was being run just like the NSA surveillance program that the Times had already revealed. Their lack of sophistication in understanding the international financial system and banking laws, and their related unwillingness to listen to experts inside and outside of government, added fuel to their fire. So it was that they decided to put in jeopardy one of the most valuable and legal counterterrorist tools the United States had at its disposal.

On June 23, 2006, the New York Times published its above-the-fold front-page story: “Bank Data Is Sifted by U.S. in Secret to Block Terror,” by Eric Lichtblau and James Risen. On the same date, Simpson published his article for the Wall Street Journal, as did Josh Meyer and Greg Miller for the Los Angeles Times. All had raced to publish their stories online ahead of the others. The Washington Post also published a story about the Treasury program on June 23.

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Members of the administration at all levels blasted the New York Times. President Bush called the story “disgraceful.” John Snow wrote in a June 29, 2006, letter to the editor of the Times: “In choosing to run its June 23 front-page article, the Times undermined a highly successful counterterrorism program and alerted terrorists to the methods and sources used to track their money trails.” In a hearing before the House Financial Services Subcommittee on Oversight and Investigations on July 11, Stuart Levey warned, “This disclosure compromised one of our most valuable programs and will only make our efforts to track terrorist financing—and to prevent terrorist attacks—harder. Tracking terrorist money trails is difficult enough without having our sources and methods reported on the front page of newspapers.”

Congress was outraged that the program had been compromised. On Capitol Hill, Senator Jim Bunning, a Republican from Kentucky, asked the attorney general to investigate the New York Times for treason. Representative Peter King from New York, the Republican chairman of the House Homeland Security Committee, called for an investigation of whether the paper’s decision to publish the article violated the Espionage Act. Representative J. D. Hayworth, Republican from Arizona, circulated a letter to colleagues asking that the Times’s congressional press credentials be suspended. Nevertheless, the New York Times and the other newspapers all stood by their stories.

There were many who later rationalized that the existence of the program was obvious and that the story was not really a revelation of anything secret. But if it was so obvious, why was it a front-page story? More importantly, why were there not more media inquiries before 2006, or savvy editorial writers or think tanks offering this as a good idea to use as a tool in countering terrorist financing? If it was so obvious, why then wasn’t this part of a concerted effort prior to 9/11 to subpoena SWIFT data for legal purposes?

The reality was that this program had been innovative and legal and had operated well and in secret right under the noses of those who pretended to understand the issues of terrorist financing and terrorism. Before this revelation, terrorist organizations and networks didn’t understand what we were seeing and tracking, although they knew we were tracking money flows. Most nonexpert observers had no idea what SWIFT was or how it functioned in the international financial system. Now they knew exactly what we were seeing—as did rogue regimes and every financial institution around the world.

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In a lunch meeting in New York after the stories hit the press, Times editor Keller met with U.S. intelligence officials, including CIA Director Mike Hayden. Keller was asked why he had decided to publish the SWIFT story when the program was legal and so important to the U.S. government. With surprising candor, Keller said, “It was because the president was weakened by then.” The attendees could not believe their ears as they heard this overt admission that there had been a political calculus to the decision making. When the U.S. officials got back to the airport, still stunned by what Keller had said, Hayden turned to his aides and asked, “Did you just hear what I did?” There was no question that Keller had declared that the decision to publish was ultimately based on a political decision about the state of the Bush presidency.

Excerpted from "Treasury's War: The Unleashing of a New Era of Financial Warfare" by Juan C. Zarate. Reprinted with permission from PublicAffairs.