Encrypted communication hasn't historically been a serious deterrent for one of the world's premier intelligence services. I like to assume the FBI hires capable detectives, but this recent "crypto frenzy" indicates otherwise.

Where in this document does that statement (or one like it) appear? I gave it a quick read but didn't spot it.

It's at the bottom of PDF page 3--search for "encryption."

Excerpt:

Unfortunately, changing forms of Internet communication and the use of encryption are posing real challenges to the FBI’s ability to fulfill its public safety and national security missions. This real and growing gap, which the FBI refers to as “Going Dark,” is an area of continuing focus for the FBI; we believe it must be addressed, since the resulting risks are grave both in both traditional criminal matters as well as in national security matters.

Ah. In context, it sounds quite a lot less ominous than title of the OP. Of course they have to address it. How is the question.

It is well-known that the FBI director's position is that laws should require the use of back-doored encryption. His position is both ominous and one that has been refuted by a preponderance of experts as dangerous and impractical.

Well, it's testimony to a lawmaking body. Congress drafts laws, not technical standards; the FBI is there to talk about laws. :)

If you keep reading, you'll see the FBI is not demanding new encryption-related laws "at this time."