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Senior military leaders took the exceptional step of briefing President Bush this week on a severe and widespread electronic attack on Defense Department computers that may have originated in Russia -- an incursion that posed unusual concern among commanders and raised potential implications for national security.
The invasive software, known as agent.btz, has circulated among nongovernmental U.S. computers for months. But only recently has it affected the Pentagon's networks. It is not clear whether the version responsible for the cyber-intrusion of classified networks is the same as the one affecting other computer systems.
The malware is able to spread to any flash drive plugged into an infected computer. The risk of spreading the malware to other networks prompted the military to ban the drives.
Entire story here in the LA Times:
There is a link there to a public report from the Symantec forums that has some further reading in regards to the known exploit.