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Debt Deal Approaching?; Murdochs Appear Before British Parliament; Baby Girls Abandoned in Pakistan; Hackers Targeting Cell Phones

Aired July 19, 2011 - 15:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: Hello to all you. I'm Brooke Baldwin.

Look, busy, busy Tuesday here. You have been watching all day long, stories breaking everywhere. In fact, just a short time ago, President Obama appeared before reporters saying this, that a bipartisan group of senators has come up with a plan that could pave the way for a deal on America's credit limit.

Folks, this could be the first bit of good news in weeks as the deadline quickly, quickly approaches, two weeks to the day. We will get to all that in just a moment here.

But let's start with this. Rupert Murdoch and his son were supposed to be the focus of a British Parliament committee hearing today in London, but they were upstaged momentarily by an intruder who somehow managed to get very, very close to the Murdochs, too close as you're about to see. Watch.

So no official word yet as to who exactly that guy in the plaid shirt was. We do know he apparently was shouting you greedy billionaire, but he pushed a plateful of shaving cream into Rupert Murdoch's face before he was grabbed, first actually by his wife, if you watch it, not in this shooting, but you can see she was wearing that bright pink jacket, and then of course by authorities.

Now, they did take a quick break. He then continued, jacket off, to answer questions before Parliament's Committee on Media, Culture and Sports. So the members wanted to know this. How much did Rupert Murdoch and his top executives know about the phone hacking by reporters on his payroll? They also wanted to how closely he followed day-to-day operations, did the newspaper close because of this whole thing, and how responsible he feels about this entire affair.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mr. Murdoch, do you accept that ultimately you are responsible for this whole fiasco?

RUPERT MURDOCH, CHAIRMAN AND CEO, NEWS CORPORATION: No.

UNIDENTIFIED MALE: You are not responsible? Who is responsible?

R. MURDOCH: The people that I trusted to run it, and then maybe the people they trusted.

UNIDENTIFIED MALE: Are you familiar with the term willful blindness?

JAMES MURDOCH, CHAIRMAN, NEWS INTERNATIONAL: Mr. Sanders (ph), would you care to elaborate?

UNIDENTIFIED MALE: It is a term that came up in the Enron scandal. Willful blindness is a legal term. It states that if there is knowledge that you could have had and should have had, but chose not to have, you are still responsible.

J. MURDOCH: Mr. Sanders, do you have a question?

Respectfully, I just -- I don't know what you would like me to say.

(CROSSTALK)

UNIDENTIFIED MALE: -- whether you aware --

(CROSSTALK)

J. MURDOCH: I'm not aware of that. I'm not aware of that particular phrase.

UNIDENTIFIED MALE: But now you are familiar because I have explained it to you.

Thank you, Mr. Chairman.

UNIDENTIFIED MALE: Thank you, Mr. Sanders.

R. MURDOCH: I have heard the phrase before. And we were not ever guilty of that.

UNIDENTIFIED MALE: Thank you.

J. MURDOCH: Mr. Chairman, we have been very clear that serious allegations of wrongdoing have been leveled about the "News of the World," and we believed that the "News of the World," the actions of some reporters and people some years ago have fundamentally tarnished the trust that the "News of the World" had with its readers and this is a matter of huge and sincere regret, mine, my father's, and the company's.

(END VIDEO CLIP)

BALDWIN: Let's go straight to London for more. Let's go to Richard Quest for more.

Richard Quest, I know you watched the Murdochs on the hot seat just like I did, so many of our viewers did through the day here. Rupert Murdoch and his son said several times -- in fact, the lead line to this opening statement which Mr. Murdoch actually read towards the end, "This is the most humble day of my career," talking about regrets, they're sorry, that they knew nothing about hacking or any elicit activities within their companies. In general, how do you think they did?

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: I think they get full marks for actually answering all the questions. And that certainly also goes for Rebekah Brooks who has been arrested and possibly faces proceedings.

So the fact that almost never did they hide behind legalese, on the advice of my lawyers, there was none of that Senate committee hearings where I plead the Fifth. Nothing like that at all. They answered the questions again and again and again.

However, having said that, they -- the committee never really got to the core question of why upper management either didn't know or should have known about what was happening. And on the very sensitive question of 9/11 and the hacking into potentially, allegedly, victims of 9/11, Murdoch said it hadn't happened. James Murdoch was far more, I don't know about this yet. We're still investigating.

BALDWIN: Richard, I'm just curious. Was there any point in time where they as we do here raise their right hand and pledge that they will be telling the truth? Were they formally sworn in or was this more of an informal Q&A?

QUEST: No, no, no. You don't need any of that I swears, all that sort of stuff. This is a parliamentary committee and by definition you tell the truth. It's an offense to mislead Parliament.

There's a special offense of contempt of Parliament, so you don't need all of the rest of that sort of stuff.

BALDWIN: OK. OK.

QUEST: No. And in fact, Rebekah Brooks and the committee, she is accused of having misled Parliament at previous hearings that she has appeared before, but, no, they basically gave the evidence.

BALDWIN: Can hear a reporter behind you. I can only imagine the presence of the media right where you are covering this whole story.

Let me ask you this. Were M.P.s, the members of Parliament, were they really expecting anything other than, you know, the sincerest apologies and the words of being humbled from the Murdochs? And if the Murdochs had incriminated themselves in any which way, was Parliament prepared to act, to perhaps bring charges forth?

QUEST: You have to remember that these lawmakers that were doing the questioning today, they didn't just come to this yesterday or last week.

Tom Watson, for example, has been asking questions on this subject for the last two years at least, so they know their subject. They knew what they were going for. Now some will claim that they didn't forensically take them apart, they didn't destroy their arguments. But that wasn't what the job was about today. Today is all about setting a record, getting the answers, and remember one very important thing, Brooke. We have five other investigations about to take place. You have got the police looking into it. You have got the independent police commission looking into it. You have got a judicial inquiry, a full-scale judicial inquiry, a long way to go.

BALDWIN: Given all these investigations, Richard, you mentioned five, what are you hearing as far as company leadership? Is Rupert Murdoch done or will we not know that yet for quite some time?

QUEST: I'm sorry. Could you just repeat that question again?

BALDWIN: Sure. I know it's loud.

With these different investigations that are ongoing, as you just pointed out, from what you're hearing, is Rupert Murdoch done, or will we not find that out for quite some time?

(LAUGHTER)

BALDWIN: He laughs.

Why do you laugh, Richard Quest?

QUEST: The laugh -- well, the laugh is it's a really foolish person that would say that Rupert Murdoch is down and out. He may have been 80 and some of the pauses that he gave today you probably had time to drive a double-decker bus through, they took so long.

However, however, when he did speak, some of those comments, they just went straight to the heart of it. When asked about -- his final statement, it is wrong to phone hack. It is wrong to pay the police. No excuses. Time and again, when it mattered, Rupert Murdoch actually came out with the strong, hard answers.

Now, of course, then there was the other moment which you must not forget, Brooke, when somebody decided to throw a plate -- a plastic plate of --

BALDWIN: Shaving cream.

QUEST: -- of shaving foam in his face which also -- yes, which caused a certain amount of commotion.

But Rupert Murdoch just carried on. He reminded us he had 200 papers. He's been in the business 57 years. It is a foolish person that actually thinks Murdoch's down and out.

BALDWIN: Yes, he mentioned today at age 80 he works 10 to, what, 12 hours a day. We will talk a little bit more about this man behind the empire in just a moment.

But, Richard Quest, I appreciate it. Thank you so much. What a day for you all in London. And, look, we have been watching Rupert Murdoch face some very tough questions, but the News Corp. stock seemed to be faring pretty well today.

Let's go to Alison Kosik. She's been watching the numbers for us from the New York Stock Exchange.

And, Alison, looking at the numbers which may be surprising to some given the coverage today, what does this mean for News Corp.?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, we watched News Corp. shareholders do pretty well today. Shares are up almost 7 percent. That's after the broader markets rallied as well.

You know what? I guess shareholders see it as Murdoch did OK today in front of Parliament. It hasn't been an easy ride for News Corp. Heading into today's session, Brooke, News Corp. shares, they tumbled 17 percent since July 5, so that works out to about $8 billion in lost market value.

And the impact on the stock actually has been limited because newspapers only represent a very, very small part of the company's revenue and profits. Think about it. News Corp. owns everything FOX, the local TV stations that aired "The Simpsons" and "American Idol," the FOX News Channel, 20th Century Fox movie studio.

And, shareholders, they have been nervous to hold a stake in the company when the reputation has been dragged through the mud. But it looks like the Murdochs, they are doing their best to clean up the mess today. Reviews have been mixed. But once again it looks like investors are buying it at least for today. In fact one analyst, Brooke, called it a really great buying opportunity because much of the selling that we have seen has been emotional. So it looks like everybody buying back the stock today, Brooke.

BALDWIN: Perhaps some of the numbers are also due to the fact that we heard a nice phrase coming out of the president's mouth just about an half-an-hour ago, that being good news.

KOSIK: That had a lot to do with it as well.

BALDWIN: Might have a little something to do with it.

KOSIK: Yes.

BALDWIN: We will talk about that here in just a moment.

But, Alison Kosik, thank you so much.

And coming up here, the moment everyone is talking about. This is what Richard Quest was just mentioning. Rupert Murdoch facing a protester hell-bent on pieing him in the face. Did you catch this today? One woman, she is wearing the pick jacket, she comes to his defense, nearly tackling this guy with the pie. That woman is Murdoch's wife, Wendi. We will tell you a little bit more about her coming up. Plus, two weeks, folks, 14 days. It's all the time Congress has to reach a deal on raising the debt ceiling. Can a key group of senators actually help craft a plan all sides accept? President Obama tends to think so. More on that coming up.

(COMMERCIAL BREAK)

BALDWIN: It is the moment of the day. Everyone is talking about it. You're tweeting me about it. Have you seen this? After being grilled by British lawmakers for more than two-and-a-half-hours, 80- year-old Rupert Murdoch was attacked by a pie.

Take a look. A man at this hearing today, keep in mind this room just about 50 people are in there. Bottom left-hand corner of your screen there's a gal in a pink jacket. That is his wife.

Let me tell you about her. She doesn't waste any time or effort going after the attacker, so who is she? That is his wife. There we go. Slow-most. Lady in pink. This is Wendi, his wife.

And it got us wondering exactly who is this woman who literally stood up for her man? Well, here is what we know. She married Rupert Murdoch June 25, 1999. She is Murdoch's third wife. The couple has two young children. And "The Wall Street Journal" profiled Wendi actually back in 2000.

And in that article we learned she grew up in China and she came to the U.S. in 1988 to study. She went on to receive an MBA from Yale in 1996. Shortly after that she landed an internship at Star TV in Hong Kong. That internship turned into a full-time job and eventually led to her relationship with Murdoch.

Now to potentially big, big news in Washington. Debt talks, big news, a very significant step forward today, says President Obama just a short time ago. The president announced the so-called Senate gang of six made of members from both parties has floated this new proposal that he, the president, can work with.

The bipartisan group had thrown in the towel, ditched an earlier effort to find a debt reduction package OK to both parties and now at this late date, 14 days until a potential government default, they're back with a plan that the president says includes deep spending cuts and, yes, also includes tax increases. Here's the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Here's where we stand. We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts, modifications to Social Security, Medicaid and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component. We now have a bipartisan group of senators who agree with that balanced approach. And we've got the American people who agree with that balanced approach.

My hope, and what I will be urging Speaker Boehner, Nancy Pelosi, as well as Leader Reid and Mitch McConnell, is that they, tomorrow, are prepared to start talking turkey.

(END VIDEO CLIP)

BALDWIN: Talking Turkey, getting series. Again, according to the president, a very significant step. But as the president also said, still a long way to go and a short time to do it before the government runs out of ways to pay all of its bills. Stand by. I will take you live to the White House for more on that.

But I do want to remind you, and let's peek in here to pictures from the House and let me tell you what's happening right now. As we speak, the House of Representatives has just begun to debate this 10- year Republican budget proposal. So in addition to deep spending cuts, it calls for a balanced budget amendment to the U.S. Constitution.

Look, the president said today, forget it. Won't sign it. We're going to watch the debate for you nonetheless.

Now to the White House as promised to Dan Lothian.

And, Dan, the president said -- it was right around 1:30 Eastern time, top of the briefing -- that he had received this plan, just received this plan actually, put forth by the Senate gang of six or gang of seven now. I think he added an extra senator. He said he was reading the fine print. Have we learned any more, Dan, since about this particular plan that this group is proposing?

(CROSSTALK)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, a couple of things. First of all, what this plan lays out is these cuts between $3.6 trillion to $3.7 trillion over 10 years. A trillion of those cuts would come in the form of closing those tax loopholes.

In addition to that, one other provision of this plan would call for repeal of a long-term health care program. But as you pointed out, the president saying that in a broad sense this is something that seems very positive, but he is still trying to figure out all of the details of this plan, this proposal before signing on to it completely, Brooke.

BALDWIN: The president said after this vote, we just mentioned that's nearing in the House. They're debating it right now. He said he's going to pick up, he's going to call House Speaker John Boehner and try to arrange a meeting back at the White House to, in the president's words, we just heard him, talk turkey.

LOTHIAN: Talk turkey, that's right.

BALDWIN: Do we know anything about the time frame, Dan, with regard to the next big meeting?

LOTHIAN: We don't. We can just surmise that perhaps there will be some type of meeting happening tomorrow, but nothing yet on the schedule. In fact we tried to get some answers to that from White House officials and they said that they had nothing for us at this point.

I should point out, though, that a lot of times there are these meetings that will happen either at the highest levels or on the staff level that take place sort of off the schedule. And we find out about them after the fact. Certainly the president talked about wanting to get together for at least a meeting, if not more meetings, but so far we don't know exactly when that will be, perhaps tomorrow, or what time that will be.

BALDWIN: OK. So that's still up in the air. What we have covered quite extensively is the Republicans' refusal to even begin to entertain some sort of tax increase.

LOTHIAN: That's right.

BALDWIN: But we have to talk about the left here. Because the president is now talking about changes to Social Security, changes to Medicare, dramatically reducing the size of the government. So how confident, Dan, is the White House that he can get Nancy Pelosi and her House Democrats to go along with that?

LOTHIAN: You bring up such a good point, because a lot of times you look at this fight as being between Democrats and Republicans and the demands that Republicans have, but even the president himself has pointed out how he has convincing to do within his own party.

And while he's embracing this proposal, at least as he sees it, in a broad sense, he still understands -- you heard him say that today -- that there needs to be more support for this beyond just the gang of six or the seven, that there has to be broad appeal in order for something like this to pass.

So one of the things I was asking Jay Carney at the briefing today was whether or not they had any plans whatsoever to reach out to some of these Democrats or Republicans to try to get them to come on board once the president formally embraces this plan, if, in fact, he does. And he said, look, that's essentially putting the cart in front of the horse, that they haven't gotten there yet. And there are no plans at this point to do that. But certainly the White House will have to mount some kind of effort to woo over those Democrats who have deep concerns about cuts on these entitlement programs.

BALDWIN: Right. Absolutely.

Well, the hour is nearing to talk turkey, I guess the time and date still TBD.

LOTHIAN: That's right. And it's not even Thanksgiving.

BALDWIN: I know. It's like, talking turkey. What?

LOTHIAN: That's right.

BALDWIN: All right, Dan Lothian for me at the White House, Dan, I appreciate it so much.

LOTHIAN: OK.

BALDWIN: And while members of the British Parliament grill Rupert Murdoch, another hacking investigation under way right here at home. The FBI today raiding homes, confiscating computers. Folks, this is a huge deal. We will tell you why coming up.

(COMMERCIAL BREAK)

BALDWIN: We have been talking a lot about the British hacking investigation. But there is news developing right now on a major hacking investigation under way right here in the United States. At least 14 people have been arrested for possible links to the notorious hacking group called Anonymous.

Let's go to Brian Todd who has been digging on this one for us today from Washington.

Brian, I know this is a big deal. Tell me why.

BRIAN TODD, CNN CORRESPONDENT: Well, Brooke, the group Anonymous is the group that is being targeted here and they are very notorious in this country for several high-profile hacking incidents over the past year.

They're linked to hacking of the Web sites of the CIA, of Sony, of FOX News. Also they were said to have hacked into and disrupted the Web sites of visa, MasterCard and PayPal back in December as a protest for those groups ending their affiliation with WikiLeaks. So Anonymous has been very active over the past year. These takedowns are a major operation.

As you mentioned at least 14 people have been arrested across the country. We're told the arrests took place in Florida, California, New Jersey, but also several search warrants were executed this morning in the New York City area. So we're told that maybe more arrests can be expected. Again, this group Anonymous has been very active over the past year. They are also linked to possibly some members of this notorious group called LulzSec that has also disrupted some major sites, including the U.S. Senate.

They are trying to figure out who is who. It takes a while to have people turn on each other in these organizations, but they hope to have more arrests in the days and weeks ahead.

BALDWIN: And do you know, quickly, according to the folks you have been talking to, how many arrests we're talking?

TODD: Well, they have 14 right now.

BALDWIN: Right.

TODD: They expect probably at least a few more in the days and weeks ahead, but they're going to have to interrogate the suspects that they have in custody right now.

BALDWIN: Got it. TODD: And cyber-experts will tell you that these people who are in custody very often give evidence for other people. So it does take a while to play out.

BALDWIN: Indeed, indeed. Sometimes they do talk. Brian Todd, thank you so much.

And, folks, don't forget, CNN and HLN are the very first news networks in the U.S. to stream 24-hour news online and on mobile. And excuse me. Of course it stopped right when I try to show live TV on my phone because somebody treated me and I appreciate your tweets.

But, look, even if you're not sitting in front of a TV, you can watch me and all of our other favorites. It's loading. Stand by. I promise we will get it up for you. But basically quickly -- here we go. Take a look. It's Brian Todd from a couple seconds ago because it's a little bit on delay. Just go to CNN.com/video.

Now this:

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The crime scene was certainly -- it was a merciless killing. It was brutal.

(END VIDEO CLIP)

BALDWIN: A Florida teenager accused of the unthinkable. Police say a 17-year-old beat his parents to death with a hammer. But it's what he did afterwards that shocks that community the most.

(COMMERCIAL BREAK)

BALDWIN: Air traffic controllers have had their troubles recently. You remember the air traffic controllers in New York took her kids to work earlier this year? Some of them have fallen asleep.

Well, now one in Colorado is suspected of being drunk at work. The FAA says his blood alcohol level tested above the allowed legal limit during a random test on July 5. Family members say the controller was given a choice to resign or go to rehab and he chose rehab. Since no accidents happened on his watch, our affiliate KMGH says he could eventually return to his job.

Philadelphia Eagles quarterback Michael Vick was on Capitol Hill today to voice his support for legislation cracking down on dogfighting operations. The bill would make it a crime to be a spectator and to bring children to dogfighting events. Remember, Vick served 19 months in prison after pleading guilty to involvement in an illegal interstate dogfighting ring back in 2007. Today, Vick reflected on why he chose to support this particular bill.

(BEGIN VIDEO CLIP)

MICHAEL VICK, NFL PLAYER: I'm doing it for myself. I'm doing it for the Humane Society. I'm doing it for the animals. I'm doing it for all the people out there who are involved, because there's so much more that you can be doing with your time. And, you know, there's so many animals that can be raised in better households.

(END VIDEO CLIP)

BALDWIN: Michael Vick today.

Now to a disturbing story out of Florida. Police say a teenager beat his parents to death with a hammer, then hid the bodies, and then afterwards hosted a house party.

According to sheriff's officials there, the teen posted an invitation on Facebook inviting friends to a party at his parents' home. Soon after that, he allegedly killed his parents with a 22- ounce hammer, dragged their bodies to a bedroom. The party went on as planned. Forty to 60 people showed up it at the house to party. Police were called in for a welfare check the next morning, and that is when they discovered the bodies all covered up.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Books, files, towels, anything that he could find inside the home to cover the body.

CAPT. DON KRYAK, PORT ST. LUCIE POLICE: The crime scene was certainly -- it was a merciless killing. It was brutal.

(END VIDEO CLIP)

BALDWIN: Seventeen-year-old Tyler Hadley is in custody. He was arraigned today. He is charged with two counts of second-degree murder, and authorities say he will be tried as an adult.

And take a look at this. Take a look at this. In case were you wondering, this is what $1 million looks like in cash, and this is what was confiscated during a traffic stop in Montgomery, Alabama. It was hidden in a tractor trailer pulled over for an illegal lane change, and a police dog named Daisy is credited with sniffing out the cash which investigators say contained cocaine residue. Police are trying to trace the money back to the source.

And the top dogs in News Corp say they had no idea what their own reporters were doing. So is this a case of executive I go mourns or straight up lying? And who is going to take the fall here? Coming up next we're going to talk about the legal implications of the Murdoch hacking scandal. Be right back.

(COMMERCIAL BREAK)

BALDWIN: Rupert Murdoch, the boss of 52,000 people all around the world, says someone else is responsible for the phone hacking scandal that has caused this huge uproar in the United Kingdom. Today A British parliament committee fired question after question after 80- year-old Rupert Murdoch, also his son James, a top executive within his company, and Murdoch's former head of print media in the U.K. I want to talk to CNN's senior legal analyst Jeff Toobin here. And Jeff, before I talk to you, we have prepared a scroll here of all these different companies, publishing houses, websites, television, film, basically all these different companies under the News Corp umbrella to give people an idea how many and how vast this company is. Now, Jeffrey, they denied today, distanced, deflected, even tried dodging the shaving cream pie. What were your impressions of today's testimony?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, ignorance was bliss. I guess that was the theme of the day in that Rupert Murdoch and his son James, and then later Rebekah Brooks who has since been arrested in this scandal, said they had no idea that all this hacking was going on by their employees or contractors, people working for them. They simply did not know.

They paid off various lawsuits where people had been hacked, but they also said those were isolated incidents as far as they know. They didn't know the actual individuals who did the hacking. And the members of parliament doing the questioning were skeptical, but they didn't have the proof to confront them with. So I thought it was kind of a draw.

BALDWIN: Let's talk about the room itself. Look, you've been in plenty of courtrooms. This room today seated like 50 people. And all out of nowhere, it appears, two-and-a-half hours into this thing, this guy jumps, rushes the room and has this shaving cream pie. I mean, where was security?

TOOBIN: It was really shocking and really appalling. It's one thing to try to maintain security in a room of 1,000 people, a room of -- a ballpark of 50,000 people. This was 50 people. It's like a large classroom. You could have searched everyone. You should have searched everyone. This was the biggest hearing in parliament in a generation, and some clown walks in there with a bag, and apparently like a shaving cream pie in it. People sometimes make jokes about pies in the face. This is very serious stuff. That could have been a brick. It could have been a knife.

This was an appalling lapse of security, and everyone is very fortunate that only Rupert Murdoch's jacket was injured. This could have been a really serious thing. And I think security at parliament was a disgrace and those people ought to be ashamed of themselves.

BALDWIN: Yes. He did appear to brush it off his shoulder, take off his jacket, and they did continue on.

I'm curious, though, going into this sort of hearing, this line of questioning, how do you think Rupert Murdoch and his son James were, I don't know, advised, prepped for this? This isn't something they endured before.

TOOBIN: Well, sitting behind them you could see Joel Klein who used to be at the New York city school chancellor, who has now become very much a top aide there, also a very distinguished lawyer. I think the answers -- the advice you always give to clients in this situation is tell the truth but don't speculate. Don't volunteer anything. And I think they followed that advice as far as I could tell. They did not acknowledge anything that could be considered wrongdoing unless there was a specific document or a specific fact that they were confronted with. They were very contrite. Rupert Murdoch said this was the most humble day of his life. They apologized repeatedly. But they didn't acknowledge that they knew of the wrongdoing.

And one of the most interesting I thought was towards the end Rupert Murdoch was asked you're the boss here. What about your accountability? Do you feel responsible? And in his very straightforward, Australian way he said, nope, I'm not responsible. I was let down by the people beneath me. Now maybe that's not how leadership is supposed to work, but, you know, this is his candy store. They own about 40 percent of the company and he sort of does what he wants.

BALDWIN: I was reading criticism of his monosyllabic answers today.

Quickly, as I was trying to read up on this foreign practices -- corrupt practices act, because, look, despite this company's global reach, it's an American company headquartered not too far from you in Manhattan, very much accountable to U.S. laws as well. Just explain to me how they are accountable here to laws in the U.S. under the foreign corrupt practices act.

TOOBIN: This is a law that was set up for the problem American companies, especially in the 1970s, were paying bribes to foreign governments, foreign officials, individuals in other countries in order to get business, like go to country x, pay the prince $10 million, and that company will buy your fighter planes. They passed this law to stop those kinds of bribes.

I don't think this law really applies to anything that went on here with News Corp. I don't think News Corp has any serious criminal liability to worry about. I think they have to worry about whether they have the respect of the world community, whether the independent directors are going to be upset enough to rebel against the Murdoch family. But I don't think in the American legal system at least anybody has anything to worry about in terms of prosecution, at least based on the evidence I've seen so far.

BALDWIN: OK, interesting and worth asking you about. Jeff Toobin, always a pleasure. Thank you.

TOOBIN: OK, see you.

BALDWIN: Coming up next, newborn babies being killed and thrown into dumps like garbage. In fact some of them hung. Find out why that's the horrific reality in Pakistan now. CNN's Reza Sayah visits a morgue there. His explosive report is coming up.

(COMMERCIAL BREAK) BALDWIN: I want you to take a look at the video I'm about to play for you carefully because what you're about to see, here it is, wrapped in cloth are dead baby girls in a morgue. Babies just like these are being found in garbage dumps all around Pakistan, thrown away by families who just don't want them just because they're girls. And girls, by the way, are considered a financial burden on families there. I want you to watch this report. This is from our own Reza Sayah.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: It's in garbage piles like this where according to an aid group Pakistan's worst tragedy is unfolding -- the killing and dumping of newborn baby girls.

ANWAR KAZMI, EDHI FOUNDATION: Sometimes they kill, they hang.

SAYAH (on camera): They hang them?

KAZMI: They hang them and sometimes they're killed by knife and sometimes we find dead bodies that have been burned.

SAYAH (voice-over): Anwar Kazmi is a manager at Edhi Foundation, Pakistan's largest privately run social service and relief agency. At call centers like this, aid workers receive reports of more than 1,200 newborns and infants killed or left to die in Pakistan last year, up 200 from 2009.

(on camera) The tiny corpses that are found end up in this morgue here. These five were found within the past few days, all of them dumped around Karachi. It's hard to believe that wrapped inside these sheets are newborns that never had a chance. And this is an awful detail, but sometimes these corpses are mutilated by animals before they're ever found.

(voice-over) Many of the victims are declared by families as illegitimate in a culture that condemns children born outside of marriage. Nine out of 10 are baby girls considered too costly to keep in a country where women are often not allowed to work.

KAZMI: Why are you killing these innocent babies?

SAYAH: Rights activists blame Pakistan's crippling poverty and a government that for decades has failed to educate the masses and generate jobs.

(on camera) What's the solution?

KAZMI: The solution is to increase literacy rates and also to eliminate poverty.

SAYAH (voice-over): The government claims it's improving education, but 55 million Pakistanis remain illiterate according to the United Nations, and the government is billions of dollars in debt while entangled in a costly fight against militant groups. The killing of newborn children gets little attention. KAZMI: We see all this sorrow, what's happening in this country.

SAYAH: Until things improve, the Edhi Foundation says it will keep these cradles in front of its offices where families can drop off unwanted newborns. The foundation cares for them, puts them up for adoption, no questions asked.

KAZMI: Please don't kill your innocent baby.

SAYAH: Reza Sayah, CNN, Karachi.

(END VIDEOTAPE)

BALDWIN: Reza, thank you.

If you think the hacking scandal does not reach you, consider this. There have been more cell phone hacks in the past 30 days than in all of 2010. Did you know that? Coming up, why mobile devices are hackers newest targets and how you can protect yourself from becoming the next victim.

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POPPY HARLOW, CNNMONEY.COM: Time now for the help desk where we get answers for your financial questions. Joining me this hour Jack Otter, the executive editor of CBSMoneyWatch.com, and Ryan Mack the president of Optimum Capital Management. Thank you for being here, guys.

JACK OTTER, EXECUTIVE EDITOR, CBSMONEYWATCH.COM: Great to be here.

HARLOW: First question comes from Anand in Mountain View, California. They write, "I have a couple of 401(k) accounts from previous employers that I haven't paid attention to over the last few years. Would consolidating these into a rollover IRA make sense? Where can I find the best rollover IRA's?" Jack?

OTTER: Well, first of all, this is probably great news because people who did pay attention to their 401(k) freaked out and a lot of them made bad decisions, sold stocks at the bottom and so forth. So he may be pleasantly surprised when he opens these statements finally.

Generally I recommend rolling over into an IRA the one down side is the 401(k) you have a little bit more protection from creditors. So if there's something dangerous on the horizon, leave it in the 401(k). Otherwise roll it over. I'm a big advocate of index funds, as Ryan was saying, diversify. So maybe, depending on the age, 60 percent in foreign and domestic stocks, 40 percent in bonds, leave it alone. You'll be in great shape for retirement.

HARLOW: Don't get to over involved. Let the market work itself out.

For you Ryan, a question from Rich in California. Rich writes "My mother's in an assisted living facility. I want her money to be protected and generate income. My financial adviser suggests moving some of her investments into a preferred stock. Are these right for us?" What do you think? Is it risky at that age?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: The ideal is some. At the end of the day stocks were getting over 10 percent return, preferred stock about 7.4 percent, and then bonds maybe about six percent. So with more return you're going to have additional risk. Preferred stock does have advantages. They have additional advantage over common stocks in terms of the dividends and whatnot and liquidation of the benefits. But bonds have advantages over preferred stock in that as well.

HARLOW: Safety.

MACK: Exactly. You'll have a little bit of fluctuation with the capital still with preferred stock. Not as much with common stock, but with bonds, I mean look, right now I'm a huge advocate of municipal bonds. Get a good, qualified financial adviser who can navigate the marks. It's not that difficult to navigate a multi- trillion dollar market with more defaults than normal, but not as much that would cause me a lot of concern. You can get revenue that will give you good conservation of capital and security as well.

HARLOW: You don't just have to look at stocks to make decent money.

MACK: Exactly.

HARLOW: Thank you guys so much, appreciate it. Well, if you have a question you want answered just send us an e-mail anytime to CNN Help Desk at CNN.com.

BALDWIN: Poppy Harlow, thank you very much.

Coming up in one minute, News Corp is not the only hacking scandal coming to light here. Hackers are targeting cell phones and cracking into users' personal information. We're going to tell you how to protect yourself. Back in 70 seconds.

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BALDWIN: OK, it could the word of the day -- hacking. Rupert Murdoch and his son say they're sorry for it. They say they're humbled by all of this, but they're not exactly taking the blame for the phone hacking that allegedly went on at the now defunct tabloid "News of the World."

Here in the U.S., the FBI is arresting people tied to the hacktivist group called Anonymous. But there's another phone hacking getting to know about. For that let's go to Dan Simon with details. Dan, what are we talking about here? Malware, what is that?

DAN SIMON, CNN CORRESPONDENT: Well, first of a you would, let me just state here the idea or notion that somebody could get into your cell phone, get your personal contact information, maybe steal money from you, the idea is over, it's now happening because the hackers have realized that these phones that we all carry, they're just personal computers. So our personal information is in here and that's why we're vulnerable.

We have seen a tremendous increase in hackers injecting malware into applications. Let me clear here, the most vulnerable application is the android platform. That's where the hackers have turned their focus. And one of the most alarming trends we've seen over the past few months is hackers taking what appears to be a normal application from a website or from a store, they take it and then they inject it with malware and then upload it back to the store. So unsuspecting users download what they think is a safe application.

And what many of these applications do is they take control of our text messaging. They mind send out a premium text message that costs you $10, you have no idea that this is taking place. You would have to look at your cell phone bill to realize that you were a victim. Most people don't know we believe, at least according to the experts, hundreds of thousands of users have been targeted this way. I want you to listen now the CEO of a company called Lookout Security. They are an industry leader when it comes to this kind of hacking. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: People are realizing their phones are computers and that the data on them have become digital currency. So voicemail is one thing. But think about your location, your banking information, work info, corporate information, documents. That all is incredibly valuable, and hackers are new turning their attention to mobile devices for that reason.

(END VIDEOTAPE)

SIMON: So Lookout is just one company that that has built a business is in trying to get users to get that bad stuff off their phone.

In terms of what users can do to protect themselves, number one, look at the reviews. Other people have done basically the homework for you. See how many downloads an application has gotten. Another thing you can do is if you're going to get a banking application, if you bank with Bank of America, make sure the app is from Bank of America, just common sense measures. The bottom line here is that this is happening. And we don't really know who these perpetrators are. They operate in the shadows. Most of them are in China or in Eastern Europe. So following the money currency is difficult because remember the internet itself is basically an anonymous place. Brooke?

BALDWIN: It's an anonymous place, it's global. Like you said, it's happening. Be smart and think before you download. Dan Simon, thank you.

And let's talk about more of this weather. I'm about to show you a sight you never want to see when you're behind a wheel and you're up to your wheel wells in water. Can you imagine this is what you see out the window, water is rushing by like a river? This cell phone video was shot just last night in Pittsburgh where a flash flood seemed to come out of nowhere. There are no reports of injuries. That guy was ability to climb out of that mucky mess. But Chad Myers, talk to me about this heat wave. And also we're seeing the pictures of the dust cloud, crazy pictures.

CHAD MYERS, CNN METEOROLOGIST: Big thunderstorm in Arizona yesterday.

BALDWIN: Look at this.

MYERS: Although we had one -- they're called haboobs. It's an Arabic term because most of these sand storms happen in the Middle East. But we had one a couple of weeks ago, a big one. This was a smaller one, one of our iReporters said the last one was like being mauled by a bear. This was coming home to 100 adorable puppies.

BALDWIN: Is he being facetious? Not anything cute and fuzzy about this.

MYERS: This looks like dust in your dog's ears and everywhere else. And it just looks like everything in your air conditioners and all of that. But that was the dust storm.

BALDWIN: Quickly -- heat?

MYERS: It's hot everywhere. And part of the reason why the Pittsburgh thunderstorm you saw with all that rain was so bad and so deep is because the warmer air can hold more water. So like the Amazon, hot muggy air can hold a lot of water, you get a lot of rain. And that rain came right down in Pittsburgh.

And it will be coming down -- the heat will be moving to the east. And even New York City by the end of the forecast may approach 100-something for heat index. The heat does move to the east and look at this, 108 in Philly and 108 in D.C. The heat does move to the east. A more populated area where more people can be affected, especially on the weekend, too. Make sure all those things are working in your cars. You don't want to drive out there and get broken down in 112 degrees outside.

BALDWIN: As you've been saying, whether you have AC or not, hydrate, drink that water. Chad, thank you very much.

MYERS: Sure.

BALDWIN: Coming up here in mere minutes at the top of the hour, Congress has just two weeks to reach a deal on the debt ceiling. If there's no deal, you know the U.S. could default. I'm going to be talking to a Republican Senator Orrin Hatch. I'm going to ask him what are the Republicans willing to do to compromise. Be right back.

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