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Internet Hackers Examined; Education Secretary Arne Duncan Discusses College Sports; Interview with Arianna Huffington; Tech Company Stocks Fall

Aired April 12, 2014 - 14:00   ET


CHRISTINE ROMANS, CNN ANCHOR: There is no place to hide. Wherever you go, someone is watching, waiting, and trying to steal your personal information. I'm Christine Romans. This is YOUR MONEY.

From the soda machine at work to the ticket machine at the train to a phone charges kiosk at the airport, hackers are lurking everywhere, and you are their prey. This week we learned about the heart-bleed bug, the worst security hole the internet has ever seen. It's a fatal flaw in software that was supposed to keep your passwords, bank information, and your other personal data safe. The websites you trust, the websites you use every day, are racing to upload a fix.

But the heart-bleed bug has existed for two years, giving hackers plenty of time to take advantage. And that's just the latest terrifying headline. Last year companies reported a record number of data breaches, 253 in all, up 62 percent from 2012. Eight of those breaches exposed more than 10 million identities each.

Brian Krebs spends his time hacking the hackers, and shining a light on the darkest corners of the internet. He's the cyber-security blogger who discovered the breach at Target. He is so despised and kind of admired by hackers they've sent him heroin, even sent a SWAT team to his house. Sony might turn his story into a movie. This week I sat down with Krebs in his home in Virginia. It used to be international arms dealers and drug cartels were the global bad guys, but now the bad guys have their yes on a new prize -- you.


ROMANS: Am I the new illicit thing that's being traded?

BRIAN KREBS, CYBER-SECURITY BLOGGER, KREBS ON SECURITY: Sure. Are you the new target of "Ocean's 11"?


UNIDENTIFIED MALE: I want to knock over a casino.


UNIDENTIFIED MALE: You've got to be nuts.



KREBS: Yes, pretty much, yes. I mean, that's the way a lot of this works. These guys have -- one guy in Crimea who was really good at writing malware. And then you have another guy that's really good at breaking into websites. And they sort of gather a bunch of people with different specialties and go after it that way.

ROMANS: Who's the sheriff? From our -- who's protecting the consumer?

KREBS: Well, hopefully the consumer is protecting the consumer. You know, when it comes to credit card information, not such a big deal, right? At the end of the day, here in America, as long as you're keeping a relatively close eye on this stuff and the fraud, you're going to get that money back. But when it gets really serious is when we're talking about people's personal information. The stuff you can't change.

ROMANS: That's the identity fraud stuff?

KREBS: Absolutely. And that's just growing by leaps and bounds.

ROMANS: How cheap is a financial life online if I wanted to buy somebody's identity?

KREBS: It depends. Anywhere from $2 to $10.

ROMANS: And I'm worth $2 to $10?

KREBS: It depends, but yes, generally.


ROMANS: That's $2 to $10. Back to the heart-bleed bug. Many companies are not informing customers of danger as sites update their software you need to change your password. But don't change all the passwords them yet. If you change it before a site is patched you are still at risk. These are just some of the big sites that you should go to and update your passwords right now. Go to for a consistently and constantly updated list, including a look at which sites you use every day that were not hit. You have to do something about this. You can't sit back -- scary stuff. Go to our website for that.

Bugs like heart-bleed or the big data breaches like Target get the most headlines, but the next threat to your privacy could be hovering over your head. I want to bring in Laurie Segall. Laurie, tell me about the drone that can hack you from above?

LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT: It's pretty terrifying. It's exploiting a hack that we've already seen. It's essentially exploiting Wi-Fi vulnerabilities. But then you add in the element of a drone and it takes this hack to a whole new level. Check it out.

(BEGIN VIDEOTAPE) GLENN WILKINSON, SECURITY RESEARCHER: Three devises, three mobile phones down, and they're below collecting data by at least those three people.

SEGALL: That's a hacker using technology installed on a drone to grab cellphone information from people below. This technology has been used on cellphones and laptops. One day it could be installed in a larger aircraft. Think helicopters or small planes.

WILKINSON: Down the road, and I seeing lots of devices. It must be the people walking down the road.

SEGALL: He can also see user names, passwords, credit card information, and, get this, in some cases, your home address.

WILKINSON: So somebody who was walking around the park, that's most likely their house or one of these houses here.

SEGALL: The tech on the drone is called Snoopy. We took Snoopy out for a spin on the streets of London.

WILKINSON: Fly within a relative close distance of a person with a phone tucked safely in their pocket. And if they've left Wi-Fi on, which most people do in my experience, the phone will very noisily be shouting out the name of every network it's ever connected to. So it will be shouting out, "Starbucks, are you there?"

SEGALL: You can are protect yourself by turning off your Wi-Fi. But if you don't, Snoopy can trick your phone and send back a signal pretending to be the network the phone is looking for. Then the drone can intercept everything the phone sends and receives.

WILKINSON: If phone is looking for Starbucks, I pretend to be Starbucks, your phone connects to me and I see all of your traffic.

SEGALL: We tested it out on dummy accounts we created.

WILKINSON: We can see here it's logging into So Yahoo! Mail and I created an account. Angela Smith, and there's her user name and her password is ABC123. Amazon, PayPal. So PayPal e-mail, address, user name. If the technology got into the hand of criminals or bad hackers, which it may already have done, there's all kinds of things they can do. At them most basic level, track people through space and time.


SEGALL: I want to emphasize, he is an ethical hacker. He's not trying to fly around a drone and get everyone's information, but he's saying, look, this exists. This security flaw exists. We can put this kind of software on drones and we can do all of this stuff. So protect yourself. Turn off your Wi-Fi and wants to raise awareness, and oftentimes they get into trouble for even putting this information out there.

ROMANS: Turn off your Wi-Fi, that's the take away there. Thank you so much, Laurie Segall.

Coming up, education secretary and former college basketball standout Arne Duncan go one on one on the most controversial issue in college sports.


ARNE DUNCAN, EDUCATION SECURITY: This one's very, very personal for me. The priorities, incentives, are way out of whack.


ROMANS: Shabazz Napier calls his national basketball championship team the hungry Huskies. But off the court he says he's just hungry. The University of Connecticut won the men's NCAA tournament this week and Napier was named MVP, but he told reporters he sometimes goes to bed starving because he can't afford food, despite UConn's student athlete guidelines that include provisions for meal plans. The players get free tuition, a few get fame, but meantime billions are brought in from TV deals, ticket sales, and merchandise, including sales of Napier's jersey. They're selling his jersey and he goes to bed hungry.

So should the players the fans are paying to watch be getting a piece of the revenue they're generating? Education Secretary Arne Duncan was co-captain of Harvard basketball team and played professionally overseas. He even took home the MVP at this year's celebrity game as part of the NBA's all-star weekend. He knows what he's talking about. He told me the system supporting big time college athletes, it's out of whack.


DUNCAN: They have to be students first. They have to be athletes second. That balance is out of whack in far too many places. Money is driving this thing, money for the universities.

ROMANS: Not money for the kids?

DUNCAN: Money for college coaches, for administrations, and making sure young people aren't going to college just to play sports but to get their degree. I was one of those many young men, wanted to go to the NBA, didn't make it. But what I was always told, chase that dream and catch an education. So many of the incentives for coaches are just around wins and losses, not around graduation rates. Universities have been complicit, presidents, boards. And we need to push very, very hard to make sure that young people have a chance to get a great education that will change their opportunity structure forever, if they graduate. If they go to college, play for a couple years, make a bunch of money for the university, don't graduate, they go back home, nothing to show for it.

ROMANS: Who wins?

DUNCAN: That is not fair. That is not fair. I grew up with a lot of players on the south side of Chicago. So this one's very, very personal for me. The priorities and incentives are way out of whack right now.


ROMANS: Also personal for Duncan the president's race to the top campaign, a competition among states for federal money to fund education innovation. This week the White House marked the fourth anniversary of that program. I asked Secretary Duncan if he this race to the top is a success.


DUNCAN: Well, I'm never going say mission accomplished. We have a lot of hard work ahead of us. But I was in Delaware yesterday, one of the first two states to receive the race to the top award, and it was remarkable to see the progress they've made, increased access to high quality learning opportunities, math and reading scores up, dropout rates cut in half.

ROMANS: How did they do it? They innovated?

DUNCAN: They innovated. They were thoughtful. Governors provided extraordinary leadership. Dropout rates at all-time lows. Very significantly to me, every single low-income high school graduate who's done well is now applying for college. Some of these young people they didn't apply before. They had a real strategy behind that. And they are working very hard to bring in talent to their underserved communities. Great principals and great teachers make a huge difference.

ROMANS: Can I ask why sometimes education innovation terrifies people?

DUNCAN: I think challenging the status quo is hard. And very frankly I'm trying to challenge the status quo every single day. Our dropout rate is too high. Our graduation rate isn't enough. It's at an all- time high. We still have a long way to go.

And what's heartbreaking to me is so many of our young people who actually graduate, not the dropouts, high school graduates, truly aren't prepared for college. They go to college and have to take remedial classes. But what we've been doing for far too long is we've been lying to children and families, telling them they're ready and they're not. Any time you're raising the bar, any time you're asking more of everyone, teachers, parents, students themselves, change is are hard.

ROMANS: But as a strong supporter of common core, the president has talked about common core, how are we doing? Some of the school districts, and I'm not talking about really low performing school districts. Fenger in Chicago, she loves it, and some of these high performing school districts are turning out STEM ready unbelievable candidates. In the middle, we have some schools where parents are saying I don't like this.

DUNCAN: Again, across the country, there is always going to be debate and it's a very health debate to have. Across the country we've seen about 46 states, Republican, Democrat, left-right, everything in between, about 46 states have raised standards, truly implemented college and internationally benchmark standards. That is an amazing profile of courage. That's happened voluntarily across the nation. And every day folks are working hard to get there.

Adopting the higher standards, as important as it is, that's the easy part. Implementing that, teaching to those higher standards, helping students to understand what's asked of them, communicating this clearly to parents, implementation, as you know, is the hard part. There have been bumps. I promise you there will continue it be bumps and there will be hurdles to jump over. But if we can stay the course over the next couple years and as a nation move to higher standards, move to better assessments, move to meaningful teacher and principal support, we will change education in a profound way.

ROMANS: All of the other countries that are going to eat our lunch with the quality of the student they're putting out, we're still in this agrarian school calendar, when don't go school until you're five. Why are we doing that?

DUNCAN: It makes no sense. Education moves far too slow.

ROMANS: Which is ironic because education is what fuels change in the world, but it doesn't change.

DUNCAN: So I think as a nation we're living on our past glory days. As you said, so many other countries are out-educating, out- innovating, out-investing. I literally just left two weeks ago an international conference we partner with every single year. And 20 nations, rapidly improving nations, high-performing nations, and the questions particularly on the early childhood were brutal. We ranked somewhere between 25th and 30th amongst industrialized nations. I had folks from other countries come to me and say, how many your citizens don't care about your children? And it's -- I don't have an answer for them.


ROMANS: Early childhood education is expensive, but the idea is if you spend early you save later on things like prison costs, safety net programs, overall weakness in the economy because people don't have the right skills and education. And this is not just a poverty issue. They are dual-income households struggling here because take-home pay is less than it was a generation ago. The Obama administration is not alone in pushing early learning, early childhood education. Go to to see why Secretary Duncan has particular praise for Jeb Bush and some other prominent Republicans, calling them huge profiles in courage on this subject.

Coming up, women still earn less than men, but how much less? The truth about the pay gap.

Plus, Arianna Huffington on sleeping your way to success. I'll explain, next.


ROMANS: Queen had a right. We're under pressure and a lot of it. A new CNN Money poll asked readers what stresses them out the most when it comes to money. Almost half said retirement. I sat down with Arianna Huffington who called stress the disease of our generation. She's the author of a new book, a best-seller, "Thrive, the Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder." I asked her about the moment she realized she'd been measuring success all wrong.


ROMANS: I was just shocked by, by the story you tell in the book, 2007, you're really at the peak of your success as an influential woman in the world and you collapse in your office. You break your cheekbone, you hurt your eye, and you realize success for you came at a very big price?

ARIANNA HUFFINGTON, EDITOR-IN-CHIEF, "THE HUFFINGTON POST": Exactly. And that's what started me asking these big questions, like, what is a good life? What is success? Because, as you said, by conventional definitions of success I was successful. But by any sane definition of success it was lying on the floor of my office in a pool of blood. I was not successful.

Success needs to be redefined. That's point of the book. The two metrics of success, money and power, are not really a complete life. So the third metric of success for me consists of these four pillars, well-being, health, first, wisdom, a capacity to connect with our own wisdom and intuition, wonder, not to miss life, to miss the delight and joy of life. And giving, giving has to be a big component of life.

ROMANS: Sheryl Sandberg actually wrote a blurb on the book, Sheryl Sandberg, who talks about leaning in, especially for young women and mid-career women, to lean into your career, to get what you want, to think in different ways. Do we lean in or lean back? Are these conflicting ideas or are they complementary?

HUFFINGTON: That's why Sheryl did a big endorsement of the book, because they're not contradictory ideas at all. I think "Lean In" is really about making sure our negative fantasies, our fears, our self- doubts don't get in the way of our dreams.

But if we don't also lean back and regenerate, we are not going to be as effective and we're not going to be as happy.

ROMANS: Why does it have to seem like a luxury to sleep for eight hours, to meditate, to maybe read a book for fun, and not for work? Why is that, does it seem like a luxury to me?

HUFFINGTON: It's because of the culture that, frankly, men have created. And we need to change it. I think this is the third women's revolution, because --

ROMANS: The third women's revolution? HUFFINGTON: The first being, getting us the vote. The second being equal access to all the jobs in the top of every field. But the third is remaking the world of work and of priorities, because it's not basically working for anybody right now, and especially for women. It's not good for businesses either because it affects the bottom line. Stress and burnout are the diseases of our civilization, and we women need to lead the way to change that, because it's not sustainable anymore.


ROMANS: You just heard Arianna Huffington call equal access to jobs the second women's revolution. The White House may argue the revolution not quite complete yet because women still don't earn equal pay for equal work. This week President Obama signed two executive actions designed to strengthen equal pay laws, but they only apply to companies with federal contracts.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: America should be a level playing field, a fair race for everybody.


ROMANS: So just how big is that pay gap? The White House says women earn 77 cents for every dollar a man makes. But that stat is a little misleading because it doesn't account for differences in occupations and hours and work experience. When you just compare full time workers, women earn 82 cents for every dollar a man makes. When you drill down to specific jobs, the gap still exists. Look at teachers, even though it's a profession dominated by women, men still make more, same thing with retail sales and nursing.

For more stories that matter to "YOUR MONEY," give me 60 seconds on the clock. It's "Money Time."


ROMANS: Stay at home moms are on the rise, the tough job market and high cost of childcare too big reasons. Pew finds 29 percent of moms stay at home today. That's up from an all-time low of 23 percent in 1999.

Another quality control headache for Toyota, the automaker recalling 6.4 million cars worldwide for a variety of issues. It's Toyota's second major recall this year following a record fine for the handling of its unintended acceleration recall four years ago.

Save the environment in style. Bentley will showcase a plug-in hybrid of its flagship sedan at the Beijing auto show, but hybrid models won't be on the market until 2017.

Teens are cutting back for prom night. A new visa survey finds the average family will shell out $978 this year. That's down 14 percent from last year. Need to juice your phone fast? An Israeli company developed technology that can charge your phone in 30 seconds. The battery is too large to fit into today's smartphones. The company says a smaller version could hit the market two years.


ROMANS: Up next, are bubbles bursting in the tech sector? Twitter, LinkedIn, Amazon shares all falling back to earth. But we've got some stocks that could be on the rise. Check bargains, next.


ROMANS: A plunge in technology stocks this week leading investors to wonder, are bubbles starting to burst? Twitter, LinkedIn, Amazon, all down double digits this year. Facebook and Netflix are taking hits as well. But there are some good bargains out there right now. For that let's bring in CNN Money's Paul La Monica. He joins me not to make light of anybody who lost money today and this week with the bubble talk, but let's put 90 seconds on the clock and talk about some of these potential bargains. Bubble or bargain, Microsoft?

PAUL LA MONICA, ASSISTANT MANAGING EDITOR, CNN MONEY: Microsoft is a bargain. Amazingly enough, this is a company investors seem to appreciate the leadership. Their cloud guru is now the CEO, and he is the anti-Steve Ballmer. People seem to appreciate that, and I think there's a lot of excitement about many of their new cloud offerings, such as office for the iPad.

ROMANS: Let's talk about Qualcomm.

LA MONICA: Qualcomm, it doesn't matter if you love IOS and Apple iPhones or Google android phones. Qualcomm chips in all mobile devices and they are expanding more into China. They pay a dividend, and you have to love that.

ROMANS: Not a terrible week for Qualcomm?

LA MONICA: Not at all. Qualcomm is up nicely year to date, and people are really excited about their technology. It's also going to help speed up Wi-Fi.

ROMANS: And what about AOL?

LA MONICA: A tough year. AOL, I'm surprised they made it through my screen, because it is a company that a lot of people have negative feelings about, but it is now actually cheap. It's shedding its reliance on the old internet access business and focusing on more rapidly growing things like the "Huffington Post." You have to look past boneheaded comments from CEO Tim Armstrong about Obamacare and distressed babies. You invest in companies and the fundamentals, not the CEOs who may or may not be the nicest guys in the world.

ROMANS: Paul La Monica, thank you so much. For Paul's full list of bargains, he's calling them the seven lucky tech stock bargains, login to CNN Money. Thank you for spending your Saturday with us on "YOUR MONEY." Have a great weekend.