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NEW DAY

Target Breach Linked To Russia?; A Warning To Retailers; President Obama's NSA Plan; Bridgegate Scandal Subpoenas; California Wildfire; Hillary Under Fire; MLB Approves Expanded Replay for 2014

Aired January 17, 2014 - 06:00   ET

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


(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: It currently looks like as much as a third of the U.S. population may have had that credit card information compromised.

CHRIS CUOMO, CNN ANCHOR: New alert. The U.S. government warning retailers that the hackers who hit Target could strike again. They're revealing just how they did it. Their methods more advanced that we knew. All details ahead.

KATE BOLDUAN, CNN ANCHOR: Moment of truth. President Obama takes on the NSA today, expected to announce changes to the agency's controversial surveillance program. CNN has an advance look. What stays, what goes.

CUOMO: "Duck Dynasty" down. The hit reality show back on the air after huge controversy. The ratings are in. We'll tell you if the Phil firestorm helped or hurt.

Your NEW DAY starts right now.

ANNOUNCER: This is NEW DAY with Chris Cuomo, Kate Bolduan, and Michaela Pereira.

(END VIDEOTAPE)

CUOMO: Good morning. Welcome to NEW DAY. It's Friday. We breathe in, we breathe out, check day and date, January 17th, six o'clock in the east.

Now some news, it turns out the massive security breach at Target was a lot bigger than even we thought. New this morning, the federal government sounding a warning to retailers. The breach, it turns out, part of a much larger cyberattack on businesses that may not even know they've been compromised. And get this, the sophisticated malware used in the attack appears to be partly written in Russian. The hackers may have ties to the Russian mob. Chief business correspondent, Christine Romans, tracking the latest developments. What do we know?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: We know that a lot of what investigators know about the hack attack is being kept under wraps, Chris, as cyber forensic experts sifting through these clues. What we do know at this point, Chris, is that homeland security is worried this is not an isolated event.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): An international and nearly undetectable malware may have corrupted point of sale systems of multiple retailers. A bulletin distributed to retailers by the Department of Homeland Security suggests the shocking holiday breach affecting Target stores across the country has potentially infected a large number of retail operations. A cyberattack that has already compromised the credit card data of 40 million Target customers and the information of up to 70 million more.

ROBERT SICILIANO, MCAFEE ONLINE SECURITY EXPERT: Now with this new information that many other retailers could potentially have been breached, that number could potentially double in the next couple weeks.

ROMANS: According to a security firm called iSIGHT who has contributed to the investigation, many retail organizations may not know that they've been infected. This software contains a new kind of attack method that is able to covertly subvert network controls and common forensic tactics concealing all data transfers.

SICILIANO: It's an unknown exploit, one that they haven't seen before.

ROMANS: ISIGHT called the militia's computer code, Kaptoxa, a Russian word because parts of the code were written in Russian. According to the "Wall Street Journal," who spoke to sources familiar with the report, parts of Kaptoxa have been on the internet's black market for weeks. The paper added that unnamed U.S. officials say, these details suggest the attack may have ties to organized crime from the former Soviet Union. In a newly issued e-mail by Target to its customers, the cyberattack stole much more than pin numbers, names, mailing address, phone numbers and e-mail addresses were also taken.

SICILIANO: Consumers need to be aware right now, paying very close attention to your statements online every single day.

(END VIDEOTAPE)

ROMANS: So Target has agreed to testify before Congress in early February about the massive data breach there. No federal laws exist that set out standard rules for when and how companies must report these breaches to customers and law enforcement. Officials say the main objective of the hearing will help customers to protect themselves. Fair to say it is the wild west out there with your information. We don't even know where some of these attacks are coming from and they are huge, your information out there on the black market.

BOLDUAN: And it seems that we still don't know where this ends with the target thing. Every week you're telling us that it gets bigger and bigger. ROMANS: You can assume it's bigger than just target. Let's be clear about that. It was not just Target who was the victim of this malware. There are other companies as well.

BOLDUAN: All right, Christine, thank you.

So in just a few hours, President Obama will reveal his highly anticipated reforms to the National Security Agency. The White House has been tight-lipped about his plans, but there is word he'll likely call for new limits on phone record collection and more oversight to the spy agency.

Senior White House correspondent, Jim Acosta, is joining us live from the White House. So Jim, what is the president expected to stay? What are you hearing?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Kate, one thing that we can tell you is that the president and his team were working on the speech into the night. We assume that he'll have the speech ready later this morning for his plans that he'll be unveiling over at the Justice Department at 11:00 this morning.

One thing we are hearing from this White House Press Secretary Jay Carney said yesterday at the briefing here at the White House is that the president is going to offer up a defense of these programs, that they are legal because they keep Americans safe. But at the same time, he wants to make clear that he does respect the privacy rights of Americans. What we're hearing about these proposals that the president will lay out.

It will be well placed a U.S. official tells CNN that the president is expected to call on the NSA to keep one of its most controversial programs at the agency. That is the bulk collection of American's phone records. There have been some of advocates for privacy rights and even members of his own review panel have said that those records should be moved over to phone companies. But the president, according to this official, is expected to keep them at the National Security Agency for now.

Another proposal, he is expected to name or announce that he will name a privacy advocate for the federal surveillance court where a lot of these proceedings are hashed out by officials. Also that is expected in the president's speech is that he is going to scale back surveillance on foreign leaders. That will go a long way in the diplomatic healing process after the revelations that were disclosed former NSA contractor, Edward Snowden that U.S. allies were being spied on like German Chancellor Angela Merkel.

Now one thing that we should point out is that Congress is not waiting for this White House to add more oversight and more transparency. That massive spending bill that got through the Congress this week actually has a provision in it, Kate, that requires the administration to provide more details about the phone records being kept at the national security agency and whether or not that practice has actually thwarted any terrorist activities -- Kate. BOLDUAN: We'll have to hear exactly what the president says and the reaction that will quickly come from Capitol Hill. Jim, thank you very much -- Chris.

CUOMO: All right, more trouble for New Jersey Governor Chris Christie this morning. Take a look. These are some people you don't want to be this morning, a few of the 17 served by a special committee investigating the bridge gate scandal among them, Bridget Ann Kelly. That is Christie's former deputy chief of state. This weekend will be the first real political test for Christie. This is when he hits the road for major fundraiser. Erin McPike is in Trenton, New Jersey, following all the developments.

ERIN MCPIKE, CNN CORRESPONDENT: Chris, yesterday, the New Jersey assembly voted 75-0 in favor of creating this special investigative committee, meaning not a single Republican objected to it. Now the state senate also formed its own committee to investigate. That will be led by a powerful Democrat who represents Fort Lee, the affected area. Now it was clearly yesterday, there are a series of hearing some press conferences that the investigation itself is becoming more political.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: There's no intention right now to subpoena the governor.

MCPIKE: Governor Christie in the clear for now according to John Wisniewski, the Democratic assemblyman leading the special committee investigating the so-called bridge gate controversy.

The reason, he says because Christie's name has not come up in any documents that have already been reviewed. But the probe is growing in scope. After holding an executive session, the committee decided to subpoena 17 people in three groups they've seen listed in already reviewed documents.

UNIDENTIFIED MALE: I want to be clear, those people who receive them, some may expect them, some may not.

MCPIKE: CNN has obtained a list of those being subpoenaed. Among them are Christie's chief of staff, his communications director and his attorney general nominee. Also names also cited in e-mails like the chairman of the Port Authority, Christie's press secretary and his former deputy chief of staff at the center of the controversy.

The request for documents comes from newly hired special counsel, Reid Shar, the lead prosecutors in both corruption cases against the now imprisoned former governor of Illinois, Rod Blogojevich. To Republicans, that's a point of contention.

UNIDENTIFIED MALE: There are 56 thousand lawyers in the state of New Jersey. Couldn't you find one?

MCPIKE: Democrats on the committee countered they wanted not only competence, but the best in the country and someone without a conflict of interest. For his part, team Christie lawyered up too, bringing on former assistant U.S. attorney of New York. But Christie himself is moving on, hitting the Jersey Shore Thursday morning.

GOV. CHRIS CHRISTIE (R)- N.J.: Whatever test they put in front of me, I will meet those tests because I'm doing it on your behalf.

MCPIKE: This weekend he'll test the strength of his political standing nationally with fundraisers for Florida Governor Rick Scott and a dinner to cozy up to wealthy Republican donors Sunday night ahead of a likely 2016 presidential run, all this before a second inauguration, which will happen noon on Tuesday at the Trenton War Memorial.

(END VIDEOTAPE)

MCPIKE: And in another new federal wrinkle, Senator Jay Rockefeller who runs the United States Senate Committee with jurisdiction over this issue said that the Port Authority answered some of his questions. In a statement yesterday, Rockefeller said there is zero evidence to conclude that the purpose of these lane closures was to conduct a legitimate traffic study -- Chris.

CUOMO: All right, Erin, I will see your federal wrinkle. Coming up, we're going to talk to a former New Jersey prosecutor who says this isn't the first case of cronyism in the Christie administration. He says he was fired for trying to indict an ally of the governor. You'll hear his story, judge it for yourself.

BOLDUAN: And some breaking news, out west this morning. Three arrests have been made in connection with a fast-spreading wildfire that is forcing thousands of evacuations in the San Gabriel Mountains. That's about 30 miles northeast of Los Angeles. The fire just 30 percent contained as of last night. Now let's get straight over to Indra Petersons for a look at the latest on this fire. How is looking, Indra?

INDRA PETERSONS, AMS METEOROLOGIST: You take a look at these fire conditions and you wonder why is this happening in what typically should be the rainy season. You have a deficit of rain in many places. No rain after going in through January and February, you're talking about humidities into single digits.

Now remember, I keep stressing January and February. In California, it's really the only time that you actually get the rain. Take a look, last week. This is what it looked like for drought conditions. If you don't get rain in one week, this is what happens. We are expecting the governor to likely declare a drought emergency coming up today. You can actually see from space the fire itself. You can see the Santa Anna winds coming from the north easterly direction.

So with that, you have that fire concern out there. You can take a look and notice you can see the fire and these winds from space. Once again, what are we concerned with here? Offshore winds really bringing in dry conditions and record breaking heat. We are talking about temperatures here up to 90 degrees in January. This is temperatures even in the 60s for them, single digit humidities. So that's the concern. The winds are expected to die down as we go throughout the week weekend. In the east coast, we are watching that next system. That same system has now pushed to the east. What are we looking for? More snow into the Ohio Valley today. But it is wintertime. Some places actually getting rain in the northeast. They're continuing to see the showers.

A third system will be making its way in. So pretty much in the upper Midwest, look for showers throughout the entire weekend. What are you looking for? Yeah, some hot spots, 4 to 6 inches. The bulk of you only looking for about 1 to 2 inches of snow. The cold air funneling along with it so pretty impressive when you look at those drought conditions, in one week, you went all the way to northern California and Southern California.

BOLDUAN: They need some help from Mother Nature and quick.

CUOMO: Unfortunately not a surprise. You were saying earlier in the week, boy, they're not getting enough rain up there. Here it is.

BOLDUAN: Here we are.

CUOMO: A lot of other news as well. So let's get to John Berman in for Michaela.

JOHN BERMAN, CNN ANCHOR: A $1.1 trillion federal spending bill is headed to President Obama's desk. The bill easily passed the Senate Thursday and will fund the government through September. The House overwhelmingly approved the measure on Wednesday. The bipartisan bill includes a 1 percent pay increase for troops and a 1 percent cost of living boost for Federal workers. The president's signature is expected before midnight Saturday when a temporary funding measure expires.

New this morning, Oklahoma Republican Senator Tom Coburn is set to resign when the current session Congress. He was diagnosed with recurrence of prostate cancer. He says his decision to step down is not because of his health. His resignation comes nearly two years before his term is scheduled to end.

New details this morning in the West Virginia water crisis. The company behind the leak is offering a new theory about the cause there. Freedom Industries blaming in part a broken water pipe near its property. A source from the company saying it flowed under the tank farm and then expanded puncturing the tank from below.

A big scare on a United Airlines bound for Beijing. It hit turbulence so severe after Thursday's takeoff from New Jersey that five flight attendants were injured. The plane had to return to New York's Liberty airport. United said it's putting the effected passengers on a new flight this morning.

And I want you to take a look at this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMAL: I turn around?

That is not what you want to see in a sobriety test, not from a mayor. That's a mayor from North Carolina caught in a dash board camera giggling and dancing. It shows her making jokes and comparing the heel to toe test to a disco dance. She did fail the blood alcohol test. Gardner will not face any jail time. She's on probation now for one year. Don't make disco jokes when you're taking that test.

BOLDUAN: I don't think any jokes.

CUOMO: Especially if you're going to blow a point 1A, which is a big number.

Going to take a little break here on NEW DAY, when we come back, the backlash over Benghazi continues. Now Hillary Clinton is coming under fire again. What does this mean for her chances at the White House?

BOLDUAN: Also ahead, two Hollywood heavy weights taking at the NRA. They're making a movie about the gun group. In his words, the NRA will wish they weren't alive

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, FORMER SECRETARY OF STATE: As I have said many times, I take responsibility and nobody is more committed to getting this right.

(END VIDEO CLIP)

BOLDUAN: Welcome back to NEW DAY.

That was Hillary Clinton at a hearing last year on the Benghazi consulate attack that left four Americans dead. She's under fire once again by members of the Senate who say she didn't do enough to prevent the attack. But here's the catch, most of her critics are Republicans, probably not surprisingly this morning, Clinton backers say it's less about Benghazi and more about 2016 where this criticism is coming from.

Let's get a better take on this.

CNN's Elise Labott is in Washington with much more.

What are you hearing, Elise?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Well, Kate, Hillary Clinton is putting the finishing touches on her book. Those close to her say it will address Benghazi, although I don't expect it will be in any credit detail. But Republicans are doing their best to make sure the issue stays front and center.

(BEGIN VIDEOTAPE)

LABOTT (voice-over): Hillary Clinton's role in the Benghazi attack, political red meat for the GOP, as her former colleagues took the Senate floor.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: This may not be a big deal to you, but --

LABOTT: Raising questions that could dog her if she runs for president.

GRAHAM: I think if she wants to be commander-in-chief, she has to answer for her leadership as secretary of state when it comes to Benghazi. She has a lot of accomplishments. She's a very accomplished woman. But under her leadership, the consulate became a death trap.

LABOTT: A Senate intelligence report blasted the State Department for failing to protect the U.S. diplomatic mission. But the main report gives Clinton herself a pass.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: There is no evidence that Secretary Clinton even knew about this.

LABOTT: But a 16-page edition written solely by Republicans on the committee places the blame squarely at her feet, saying "final responsibility for security at diplomatic facilities lies with the former secretary of state, Hillary Clinton."

And it is statements like this --

CLINTON: The fact is we had four dead Americans. Was it because of a protest or was it because guys out for a walk one night decided to go kill some Americans. What difference at this point does it make?

LABOTT: -- that could haunt her in 2016.

SEN. JOHN MCCAIN (R), ARIZONA: If she wants to be president of the United States, she should come clean and reveal every detail for this tragic situation that resulted in the deaths of four Americans.

LABOTT: As the presumed Democratic front runner, "TIME" magazine asks, can anyone stop Hillary?

Republicans are hoping Clinton's own legacy on Benghazi will stop her.

UNIDENTIFIED FEMALE: Bottom line, it's a mark on her resume. It's something she's going to have to answer for. And it gives her opponents a line of attack on whether she's a competent manager of the State Department.

LABOTT: And by extension, fit to lead the country.

(END VIDEOTAPE)

LABOTT: And Clinton insiders insist she has never played politics with Benghazi. And if the Republicans want to do it, they're going to have to do it without her.

That said, Clinton knows she is going to have to address the Benghazi issue during the campaign if she does run. But the strategy is to let as much time passed as possible, no point in getting into a political battle so early, Kate and Chris.

BOLDUAN: That may be a point. How forthcoming will she be when she does decide to come out and address it? We'll see.

Thanks, Elise.

CHRIS CUOMO, CNN ANCHOR: So, next season, Major League Baseball is officially going to change as we know it, now that instant replay has been approved. The way games are governed on the field is going to be very different, dramatically different.

Joe Carter has more on this morning's "Bleacher Report".

I use such big words, dramatically, different, big -- tell us why, Joe.

JOE CARTER, BLEACHER REPORT: I'll tell you why, Chris, because it really changes the game as a whole. It gives baseball the opportunity to get those big plays, those game-changing plays correct.

Now, you think the NFL's been using it since the mid '80s, the NBA since the early 2000. Even the Little League World Series uses video instant reply.

So, think of this as something similar to how the NFL works. If the team does not like a call on the field, the manager with can challenge the play for video review.

Now, balls and strikes, they cannot be challenged. Think of plays at a plate, home runs, catches in the field. Those are the types of things that managers can challenge. Each manager will get no more than two challenges per game.

Now, in addition to all these changes, replays will also be shown on video boards inside the ballpark so that fans inside the ballpark can see what everyone else is seeing at home on their TV. Now, it's not a perfect system, there's going to be a lot out there that say it's not. But it's certainly major progress for baseball.

All right. So, 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 Super Bowl. But you know what? It's not as much as he had on the line last November when he had to be rushed to a hospital for emergency heart surgery.

(BEGIN VIDEO CLIP)

JOHN FOX, BRONCOS HEAD COACH: Well, it was pretty hum blink. It was a little bit scary. I had an episode to where I really thought I was dying. You know, as a player, you get injured and you miss a game or two. Probably been 200 games since I missed a game. So, that was very hard. That was probably the hardest part.

(END VIDEO CLIP) CARTER: So, you can watch the entire interview with Coach John Fox tonight on "UNGUARDED WITH RACHEL NICHOLS". That's 10:30 Eastern, right here on CNN.

(BEGIN VIDEO CLIP)

PEYTON MANNING, DENVER BRONCOS: Omaha. Omaha. Omaha. Omaha.

(END VIDEO CLIP)

CARTER: Yes, you heard that right. That's a lot of Omahas. Peyton Manning yelled Omaha 44 times in Sunday's playoff win over the San Diego Chargers. Now, five Obama-based corporations want to pay for it forward. The plan is to donate $500 every time the quarterback yells Omaha during Sunday's AFC Championship game. All that money will go to Manning's payback foundation, which help disadvantaged kids.

Peyton's Broncos host Tom Brady and the Patriots. That's Sunday, 3:00 p.m. Eastern. The 49ers with a late game in Seattle for the NFC Championship. That's 6:30 p.m. Eastern.

Going back to the Omaha thing guys, he yelled it 44 times. Do the math, times $500. That's $22,000 going to Peyton's foundation. So, that's pretty cool. I hope Peyton goes the line and just says, Omaha, Omaha, Omaha, Omaha.

BOLDUAN: Exactly.

CARTER: A few times just to rack a few dollars for his foundation.

BOLDUAN: Just rack it up. So, I guess we can hope for him screaming a few Omahas.

I'll hope for a win, John Berman.

BERMAN: Why would you say that? Why would you say that?

(CROSSTALK)

CARTER: She's smart. She's respectable. She knows what she's talking about.

BOLDUAN: Thank you, Joe.

CARTER: It's Peyton's turn. It's Peyton's turn.

CUOMO: That does it. I can't have this. Listen, nobody watching this show right now hates the Patriots more than I do. I'm a Jets fan.

But I got to tell you, I love my man, JB.

BERMAN: Thank you.

BOLDUAN: I'm not saying I don't love you. I just want you to lose in spectacular fashion. CUOMO: I feel like -- you are nasty, nasty little person.

CARTER: The Broncos are the most likable team left in the playoffs. You have to admit that, Chris.

(CROSSTALK)

BOLDUAN: And the most talented.

CUOMO: Joe Carter says it with a dead straight face.

They are the most likable team left in the playoffs. Just because you drop your voice doesn't make it true.

(CROSSTALK)

BOLDUAN: It's going to be a fun one, clearly.

CUOMO: I can't even really say it, but the thought is coming in my head that I'm kind of --

BERMAN: Are you going for the Patriots on Sunday?

CUOMO: I can't say that yet, because I'm afraid --

BOLDUAN: I just got a little nauseous.

CUOMO: Because of my affection for you.

BERMAN: I so appreciate this.

CUOMO: I'm not decided yet. I'm a man of very little emotional depth. So, it could just swing the other way.

BOLDUAN: Just to remind you, I have a very long memory. You know.

CUOMO: That's true. That's true. Especially when she's wrong.

BOLDUAN: Thanks, Joe.

We're going to take a break. Coming up next on NEW DAY: retailers are reeling after the holiday season. Sales down sharply. A big spike, though, in online shopping is getting the blame. So, is your favorite brick and mortar store about to shut its door?

CUOMO: And Meryl Streep preparing to star in a new film about the NRA. The Hollywood mogul who's spearheading the project says the goal is to destroy the gun group. What do we think of this? Discuss.

(COMMERCIAL BREAK)

BOLDUAN: Welcome back to NEW DAY.

Let's get back over to John Berman, in for Michaela.

BERMAN: Thanks so much. New this morning: the security breach that compromised 110 million customers' credit card accounts was part of a much broader attack on retailers and may have been orchestrated by international hackers with links to organized crime in Russia. Investigators say one-third of the U.S. population, one-third, may have been affected. But many victims still might not know they were hit because the malware so sophisticated and hard to detect.

Later this morning, President Obama is expected to spell out details of reforms to be made at the NSA. Among the changes he's expected to reveal: new limits on phone record collection by ending the metadata program as it currently exists; the appointment of a public advocate to argue before a federal surveillance court that oversees the NSA; and scaling back surveillance of foreign leaders.