Banks were requesting the government to allow them to use a stronger encryption method as numerous businesses expressed a need for stronger encryption for their data.
In the mid-90s, the US government prohibited encryption over 40 bits for internet use. AT&T used a specialized computer microchip called the Clipper chip, which allowed stronger encryption but also had a built-in backdoor key to allow the government to decrypt messages if needed.
The government's attempt to create a backdoor for law enforcement agencies could lead to weakening of encryption to the point where even the bad guys can access it.
The speaker discusses how the government was hiding the truth about how secure the technology was and how the speaker's team proved how insecure it could be, highlighting the need for a more secure government standard.