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EARLY START

Target Data Breach Expanding; Reeling in the NSA?; Crisis in California

Aired January 17, 2014 - 05:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN BERMAN, CNN ANCHOR: Under attack from Russia? Startling new information this morning for shoppers everywhere, the Target holiday mess part of an unprecedented hack attack like the world has never seen.

CHRISTINE ROMANS, CNN ANCHOR: The president just hours away from the most anticipated speech on spying in generations. But is it what he's not saying that might surprise you?

BERMAN: And drought emergency. Fires rage in California with fears this could just be the beginning. In just hours, the new, drastic measures going to be taken to survive these conditions.

ROMANS: All right. Good morning. Welcome to EARLY START. I'm Christine Romans.

BERMAN: I'm John Berman. It is Friday.

ROMANS: Say that again.

BERMAN: Friday, January 17th. It is 5:00 a.m. in the East.

ROMANS: All right, let's begin with some alarming, new developments concerning the holiday security breach at Target, which now appears to be part of a global computer hacking operation that potentially involves more retailers and millions more customers. A report from private and federal investigators suggests a highly sophisticated and nearly undetectable malware was used to obtain personal information at store checkout terminals.

Now, investigators say part of the malicious computer code appears to be written in Russian.

BERMAN: Mm-hmm.

ROMANS: Experts say they've never seen a hack attack of this size and of this sophistication.

(BEGIN VIDEO C LIP)

ROBERT SICILIANO, ONLINE SECURITY EXPERT: It currently looks like as much as a third of the U.S. population may have had their credit card information compromised by these hackers. However, now with this new information that many other retailers could potentially have been breached, that number could potentially double in the next couple of weeks. Consumers need to be aware right now, paying very close attention to their statements.

(END VIDEO CLIP)

ROMANS: Credit card numbers and other personal information, e-mail addresses, phone numbers of up to 110 million Target customers has already been potentially compromised. Target's now alerting people that the cyber attack stole much more than PIN numbers -- names, mailing addresses, phone numbers, e-mail addresses were also compromised.

BERMAN: So, this is a lot bigger, touching a lot more people than anyone realized. We knew it was big, but it really seems huge.

ROMANS: And it goes back to the core of what is the core of these hacking? It's usually, usually it's big, multinational organized crime. Sometimes you can trace it back to government servers, you know, in the case of some recent attacks that originated off Shanghai. This one, Russian code. That's what they're --

BERMAN: And quickly, tell me what you should do if you think you shopped at Target?

ROMANS: Well, you know, already 2 million people have changed their Chase cards, changed their Chase card numbers. I think you need to look at your statement and change the number if you feel strongly about it.

BERMAN: All right. It's important information this morning. And again, this story keeps getting bigger and bigger and bigger.

About two minutes after the hour right now.

And this morning, firefighters in southern California are getting the upper hand on a wildfire near Los Angeles that has destroyed five homes and damaged more than a dozen other buildings. Crews have stopped the flames from advancing. It's about 30 percent contained right now.

Authorities say they have arrested three men for allegedly starting this fire.

(BEGIN VIDEO CLIP)

CHIEF JIM STAAB, GLENDORA POLICE: The three people that we have in custody, they're all three males in their early 20s. Reportedly, they were up, they had set a campfire. They were tossing papers into the campfire and a breeze, reportedly, a breeze had kicked up and set this fire.

(END VIDEO CLIP)

BERMAN: A red flag warning for extreme fire danger is expected to remain in effect through tonight because of the low humidity and wind gusts. That's a bad combination. And water shortages are also adding to this big mess.

In just a few hours, Governor Brown of California is expected to declare a drought emergency throughout that state.

ROMANS: In just a few hours, President Obama will deliver a much- anticipated speech on surveillance reforms at the National Security Agency. Major changes to the agency's gathering of electronic intelligence are not expected. The White House says the president is likely to demand more oversight and transparency.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We can and should take steps to make the activities we engage in, in order to help keep America safe and Americans safe more transparent.

(END VIDEO CLIP)

ROMANS: Meantime, a report in the British "Guardian" newspaper says the NSA has been collecting some 200 million text messages globally in a global electronic sweep. That's every day.

The information is based on leaked documents from Edward Snowden.

BERMAN: New this morning, CNN has learned the names of some of those subpoenaed in the New Jersey bridgegate scandal, this as Governor Chris Christie, he's lawyering up. He's hired a high-powered legal firm, raising doubts that he will cooperate fully with the state assembly investigation. He said he will cooperate with what he calls appropriate investigations. We don't know yet what he considers appropriate, though.

Seventeen individuals and three organizations, they were issued subpoenas. Among those served, Christie's chief of staff, Kevin O'Dowd, former deputy chief of staff Bridget Kelly. She's the one who sent that infamous e-mail, and Bill Baroni, the top official at the Port Authority, also a Christie appointee.

Meanwhile, the governor is forging ahead with an ambitious public schedule. He heads to Florida this weekend for a weekend of ambitious fund-raising, and then next week he begins his second term officially, and he will have his second inauguration.

ROMANS: President Obama expected to sign a measure funding the government through the end of September. He's going to sign that as early as today. Current stopgap federal funding expires tomorrow. The Senate gave the final legislative sign-off on the $1.1 trillion spending bill following the lead of the House with an overwhelming show of bipartisan support.

The bill's passage eliminates the threat of another government shutdown any time soon. $1.1 trillion, that's a lot. I wonder what's in there that we don't know about yet.

BERMAN: One-point-one trillion things, no doubt.

Republicans and Democrats not getting along as well when it comes to extending long-term benefits to more than a million unemployed Americans. Republicans want any extension to be paid for by spending cuts elsewhere. Senate Majority Leader Harry Reid says the ongoing legislative fight has now turned personal.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY: I think that it's important that the Republicans go home during the few days we're going to be here, go there next week and explain to the people in their respective states -- these are Republicans -- why they didn't give these people the benefits because of process, because I was mean to them.

(END VIDEO CLIP)

BERMAN: Reid accused Republicans of filibustering efforts to get a measure passed. Republicans think that Harry Reid is doing nothing short of bullying them, and they say he's the cause for the impasse right now.

ROMANS: All right. Breaking overnight, after 15 years in Congress, Oklahoma Republican Senator Tom Coburn is taking early retirement. Coburn announcing he'll step down when the current session of Congress ends, foregoing the final two years of his term. The 65-year-old senator has been battling a recurrence of prostate cancer but says he's not leaving early because of his health.

BERMAN: We certainly wish him all the best.

What's interesting about Coburn, he's as conservative as they come, but he's always been willing to talk to the other side -- someone who President Obama has always considered a friend from his days in the Senate.

This morning, a report on the deadly U.S. consulate attack in Benghazi in 2012 is triggering fresh criticism of then-Secretary of State Hillary Clinton. Arizona Senator John McCain says that Mrs. Clinton should be held accountable for the attack that killed four Americans, including Ambassador Chris Stevens. The Senate Intelligence Committee concluded the attack was likely preventable and said Ambassador Stevens had rejected offers of extra security.

But Senator McCain tells CNN's Piers Morgan, this is only part of the story.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Well, I think it's important to point out that he had asked for additional assistance. What he turned down was additional military assistance, but he certainly sounded a number of warnings about the deteriorating situation, including 10 terrorist organizations, outfits that were right there in Benghazi.

(END VIDEO CLIP)

BERMAN: McCain says that Ambassador Stevens was very aware of the unstable security situation in Benghazi and informed the State Department of his concern.

We have new developments this morning in the fight for Syria. Secretary of State John Kerry says the Obama administration's goal has not changed. It still wants to set up a transitional government in Syria that does not include President Bashar al Assad, but Secretary Kerry reassured both sides, the opposition and the regime, that they will have a say in the country's future. The opposition is nearing a decision on whether it will attend next week's peace conference in Geneva.

ROMANS: Stock futures higher this morning, rebounding after markets got hit by weak earnings from electronics retailer Best Buy and underwhelming corporate results from Citigroup.

The Dow industrials down about 65 points, the S&P down a little bit. And it's a record close just the day before. The NASDAQ edged higher, so a mixed close yesterday.

In Europe right now, stocks are up in London, Frankfurt and Paris. In Tokyo, the Nikkei closed slightly lower.

Here in the U.S., shares of Intel are down more than 4 percent in premarket stock trading. The world's largest chipmaker said last night it expects revenue growth to remain flat this year.

BERMAN: That's not good.

ROMANS: Something that really surprised Wall Street. The company said it overestimated the amount of spending by companies on things like new PCs. Companies don't spend money unless they absolutely have to, and that's something that Intel is seeing.

All right. A big day for Apple in China. People flocking to the China mobile store to get the first iPhones which are now on sale in the country. How big a deal is the launch? Big enough that Apple's CEO was on hand to autograph iPhones for customers in China.

CNN's David McKenzie live in Beijing.

David, why is this launch so important to Apple? Does it have something to do with, oh, 700 million potential customers?

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Christine, yes, more than double the entire population of the U.S. That's what could be the new base for customers and Apple here. They did a deal with China Mobile, the major cell carrier here, and that deal was six years in the making.

You just saw how Tim Cook came here, really putting his face on this deal. It's taken six years and it's taken many trips from the CEO in recent months to ink this deal. What it does mean is it could mean 10 million or 20 million more iPhones sold in China this year, and it is a boost for apple in China, which has been struggling a little bit against its competitors, Christine.

ROMANS: Apple's still far behind as the biggest provider in China. What about price? That's going to be important. And I know the first question that Tim Cook was asked by a customer in a store was, are you going to make one of the bigger screens? Chinese consumers don't like a 4-inch screen. They want a bigger screen.

MCKENZIE: Well, that's right, and that's where Samsung and other makers here in China have really edged Apple out for the Chinese market.

Chinese customers want a bigger screen, they want a cheaper phone, or at least that's what the numbers tell us. Apple is a distant fifth in the race to get that Chinese market, Christine, and they say, though, they're putting a bit of a positive spin on this, that they're all about premium sales to premium customers, and they have much bigger margins here in China, but they do want to expand that.

This deal helps them get out in the smaller cities outside of Beijing, Shanghai, reach those, frankly, rich customers here in China who can afford the Apple products. But they have a long way to go to catch up, Samsung.

And they'll have a big windfall in the first few months, but where they can sustain it. That's the question that will face apple in the most important mobile market in the world.

ROMANS: All right, David McKenzie -- thank you so much, David.

It will be fascinating to watch that.

BERMAN: Very, very fascinating and very important for Apple.

ROMANS: Yes.

BERMAN: Eleven minutes after the hour on January 17th, which means it is time to say happy birthday, Mrs. Obama! The first lady turns 50 today. She seems to have a positive attitude about the big 5-0, describing herself in all modesty as "50 and fabulous."

The highlight of her birthday celebration would be a weekend White House dance party. You know, it's dessert and drinks only, and there's talk this could start a whole new fad of dessert and drinks only parties. I'm not nearly cool enough to think of something that chic.

But you know, happy birthday, Mrs. Obama -- 50 is the new 30 or 60 or --

ROMANS: When you turned 50, what did you do?

BERMAN: Well, I -- exactly.

ROMANS: Just kidding. Berman's not that --

BERMAN: Long, long way to go.

Coming up, ferocious winds creating chaos on the freeway. Whiteout conditions shutting down roads across the Midwest. Look at that. Indra Petersons tracking the damage and what is still to come for your weekend. ROMANS: And new information this morning on a deadly grocery store shooting. Two women murdered. Did they know their killer? That's next.

(COMMERCIAL BREAK)

BERMAN: Developing this morning: a travel alert in effect in parts of snow-choked North Dakota. Look at that! You can't see a thing!

Whiteout conditions being caused by near hurricane-force winds clocked at 72 miles per hour. I think there's a phrase for this. I think we call it a ground blizzard, is that right? Officials shutting down I- 94 from Bismarck to Jamestown yesterday.

The interstate reopening this morning, but travel alerts are still in place with stiff winds and subzero wind-chills in the forecast.

ROMANS: Winter on the prairie.

All right. Slick, slippery conditions in central Ohio, the first of three fast-moving Alberta clippers already dropping two to four inches of snow around Columbus. There's more snow in the forecast for today and tomorrow with temperatures falling into the teens.

BERMAN: And a different kind of dusting in Frontier County, Nebraska.

Check this out. That's really dust! It's a dust storm taking visibility to near zero there. Oh, that looks awful, too. Debris and dirt just whipping past the camera there.

Wind gusts topping 60 miles an hour. This is near the city of Curtis, in Nebraska.

ROMANS: Let's get a check of the weather forecast right now. Indra Petersons has that for us.

Good morning, Indra.

INDRA PETERSONS, AMS METEOROLOGIST: I'm so proud this morning.

BERMAN: I said ground blizzard. That was for you.

PETERSONS: You said ground blizzard. I'm very excited. Yes, you get the concept. You have a lot of snow that's on the ground. You get those strong winds and, of course, it blows all that snow around and that's why they couldn't see around the Dakotas.

And even same concept into Nebraska, they just blew all that dust around. So, the same system with all the strong winds that was producing some of that snow has now made its way to the east today. So, the Ohio Valley is looking for, yes, snow and gustier conditions, and some cooler temperatures as this guy starts to slide into the Northeast. Even the Northeast looking for maybe some light showers or kind of a wintry mix.

Keep in mind, there are three systems out there. Let's count them, one, two, three. All of these guys will continue to roll through as we go throughout the weekend. So, if you're in the Midwest, Ohio Valley or the Northeast, we're not looking for a lot out there, but just enough that a series of systems will continue to drop those temperatures kind of up and then back down, up and then back down, and of course, chances for showers.

Where are the hotspots? Right around Minneapolis, we'll see maybe a hotspot, four to six inches of snow, also maybe kind of around one to two inches as we go get towards Northeast. But Syracuse, the farther north you are, you'll be affected by more of the clippers as they go through, so those will be heavier amounts of snow. Generally, everyone else, just a light precipitation, wintry mix through the weekend.

Temperature-wise, same thing, will be talking about temperatures kind of fluctuating back and forth, generally around average if not slightly below through the weekend, even down to the southeast looking pretty good. So, there is something out there. It's just kind of on the mild side, which is nice.

BERMAN: Thank you very much.

ROMANS: Thanks, Indra.

Learning new details this morning about a deadly grocery store shooting in Elkhart, Indiana. Police say the two women who were killed may have actually known the gunman. He's been identified as 22-year-old Shawn Walter Bair. The boyfriend of one of the victims says her family is still in shock.

(BEGIN VIDEO CLIP)

KYLE BARNETT, VICTIM'S BOYFRIEND: She did not deserve this at all. Out of all the people, she did not -- she didn't deserve it. I don't know what his goal was, I don't know what his aim was, mad at the world. There is definitely a family grieving for her.

(END VIDEO CLIP)

ROMANS: Police shot and killed the suspect, Shawn Bair, who was holding the store manager at gunpoint when they arrived on the scene.

BERMAN: Some people in West Virginia are still without water this morning following a chemical spill, and there are new concerns this morning. Health officials advising pregnant women to continue drinking bottled water. One expert says they just don't know enough to determine for sure if the water is safe there.

An employee for Freedom Industries, this is the company behind the leak, is proposing a theory that the chemical leak was caused in part from a broken water pipe near its property. This is no comfort for the mayor of Charleston.

(BEGIN VIDEO CLIP)

MAYOR DANNY JONES (R), CHARLESTON WEST VIRGINIA: I can't believe that what those folks did wasn't against the law on its face. In other words, if what they did was not against the law, we're in real trouble. The wall was deficient, the tank had leaked for quite some time, and somebody, apparently, dropped the ball. Most coal operations are safe, and they're as clean as coal is allowed to be.

(END VIDEO CLIP)

BERMAN: Renewed focus on regulations there.

Meanwhile, officials for the CDC continue to gather data on the chemical's potential health impacts.

ROMANS: New details released in the Aaron Hernandez murder case. Newly unsealed documents show police suspect the former NFL star pulling the trigger in another shooting, an unsolved double murder from 2012. No charges have been filed in that case.

Hernandez is already awaiting trial on murder charges in the death of Odin Lloyd. Police say they're investigating a possible link between the 2012 and 2013 shootings.

BERMAN: A complicated, dark web surrounding that man.

New this morning, the family of an Ohio man put to death Thursday now says they plan to sue. Dennis McGuire was executed by lethal injection with a combination of drugs never before used in the United States. It reportedly took nearly 25 minutes for him to die as his daughter looked on in horror.

Attorneys for the family had tried to block the execution and called what happened Thursday a failed, agonizing experiment. McGuire was convicted of the 1989 rape and murder of a pregnant newlywed.

ROMANS: This morning, the two victims in the Roswell, New Mexico, middle school shooting are showing signs of improvement. Doctors say they remain optimistic about 12-year-old Nathaniel Tavares. He's heavily sedated, on a breathing machine, still in critical condition. The other student shot by a classmate, 13-year-old Kendall Sanders, is expected to be released from the hospital.

BERMAN: Let's hope that recovery does continue.

New questions this morning about a fatal Black Hawk helicopter accident in Georgia. One soldier was killed, two others injured as the chopper slammed into the ground during a routine training exercise. Officials are calling it a hard landing.

Now, we're learning the soldiers involved were part of a special unit called Nightstalkers. This is the unit responsible for flying Navy SEALs into Pakistan during the bin laden raid. Officials say there were no known mechanical problems during Wednesday's flight.

ROMANS: A new legal battle brewing this morning in Washington state over the sale of pot for recreational use. The state's attorney general, Bob Ferguson, says cities may opt to ban marijuana businesses, despite a voter-approved state law. Now, his opinion is not legally binding, but the issue could land in court. Some applicants for marijuana licenses in the state have indicated they'll sue if they are blocked from doing business in Washington state.

BERMAN: All right, coming up for us next, a huge change coming to the world of baseball. And I say a welcome change. Christine Romans does, too, although she says the game will never be the same again.

ROMANS: Look, I stayed up all night worrying about this.

Joe Carter is going to explain which one of us right in the "Bleacher Report".

(COMMERCIAL BREAK)

BERMAN: So, next season in Major League Baseball, it is going to be way, way different --

ROMANS: Wait, it's going to be faster?

BERMAN: No, baseball is always fast and interesting. Stop that. There is instant replay now.

This means, by the way, if this had been in place in 1996, the Yankees would not have won the World Series.

ROMANS: Whoa!

BERMAN: The world would have been a better place. Honestly, this could change everything.

Joe Carter is here to explain the enormous impact of this.

ROMANS: Hi, Joe.

JOE CARTER, BLEACHER REPORT: I'm totally on board with you both. I'm totally onboard with you, John. I think this helps the game of baseball.

You look at football, they've been using it since the mid-'80s, basketball's been using it since the early 2000s. Even Little League World Series uses instant video replay.

So, this basically gives baseball the best chance at getting those big plays inside the game correct. Now, think of it like the NFL but minus the red challenge flag.

Now, if a team does not like a call on the field, the manager of that team can challenge the play for video review. Now, balls and strikes, they cannot be challenged. Think plays at the plate, plays at a base, home runs, catches in the field.

Those types of things can be challenged. And each manager will get no more than two challenges per game. Now, in addition to all of this, replays will also be shown on video boards inside the ballpark so that fans can see what everyone else at home can see on TV.

Now, it's not a perfect system by any stretch, but it is major progress and a long time coming.

Hey, speaking of coming, on Sunday, Denver Broncos head coach John Fox has a lot on the line when his team plays the Patriots for the right to go to the Super Bowl, but it's not as much as fox had on the line last November when he had to be rushed to a hospital for emergency heart surgery.

(BEGIN VIDEO CLIP)

JOHN FOX, DENVER BRONCOS HEAD COACH: Well, it was pretty humbling and it was, you know, it was a little bit scary. I mean, I had an episode to where I really thought I was dying. As a player, you get injured and you miss a game or two. There had been probably about 200 games since I had missed a game, so that was very hard. That was probably the hardest part.

(END VIDEO CLIP)

CARTER: You can watch the entire interview with Coach John Fox tonight on "UNGUARDED WITH RACHEL NICHOLS".

Now, Rachel also sat down with hockey legend Wayne Gretzky. That's tonight, 10:30 Eastern right here on CNN.

(BEGIN VIDEO CLIP)

PEYTON MANNING, DENVER BRONCOS: Omaha! Omaha! Omaha! Omaha!

(END VIDEO CLIP)

CARTER: All right, you heard that right. Peyton Manning yelled "Omaha" 44 times in Sunday's playoff win over the San Diego Chargers, and five Omaha-based corporations took notice to all those Omahas. And now they want to pay it forward, and the plan is simple.

They basically are going to donate $500 every time Peyton Manning yells "Omaha" during the AFC Championship game this Sunday. And of course, all that money will go to Peyton Manning's payback foundation, which helps disadvantaged kids. Great story.

Hey, Peyton's Broncos, well, they host Tom Brady and the Patriots Sunday. That's 3:00 p.m. Eastern. The 49ers are in Seattle for the NFC championship game at 6:30 p.m. Eastern.

ROMANS: Journalistic integrity is really in question --

BERMAN: Tom Brady, go Patriots.

CARTER: I subtly heard that, but I was thinking, Peyton Manning, Peyton Manning, it's his time, Peyton Manning.

It's going to be warm in Denver on Sunday. Oh, your boy's in for a treat. ROMANS: Ooh!

CARTER: In for a treat!

ROMANS: Thanks, Joe.

BERMAN: Trash talking at 5:28, way too early! Joe Carter, thank you so much.

ROMANS: I love it.

CARTER: On Friday.

ROMANS: The top headlines and everything you need to know for the day, right after this break.

(COMMERCIAL BREAK)