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Target Stolen PIN Data Was Strongly Encrypted; NSA Phone Program Is Legal; Widespread Flu in the U.S.; Nationwide Manhunt for Cop Killer; Egypt Rounds Up Muslim Brotherhood; Political Winners and Losers of 2013

Aired December 27, 2013 - 13:00   ET

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

BRIANNA KEILAR, CNN ANCHOR: Hi there, I'm Brianna Keilar in Washington. Wolf Blitzer is off today. We'll be starting with more fallout from the Target hacking scandal and an admission from the retailer. Target now says debit card PIN numbers were stolen during that data breach.

Our Zain Asher joining me now from the New York Stock Exchange. She has been following the story for days now. This is a bit of an about face.

ZAIN ASHER, CNN CORRESPONDENT: Hi, Brianna. You know, it does look like it. I mean, Target now coming out saying that PIN data was stolen but they are emphasizing that the PIN data was encrypted and they don't believe that the hackers would actually able -- be able to unscramble the PIN data.

What's interesting is that we reached out to Target yesterday about this and they told us something slightly different. I'm going to read to you part of their statement from yesterday. They said, to date, there is no evidence that unencrypted PIN data was compromised. So, I mean it's not necessarily a lie but they certainly did omit the truth. There was definitely some corporate spin in there. The announcing that, in fact, encrypted PIN data was stolen. They don't necessarily believe the hackers will be able to unscramble that data.

I've been speaking to a professional what's known as a white hat hacker who works with corporations to sort of help their encryption systems. And I asked him, should consumers be worried? I mean, these hackers got away with the PIN data albeit scrambled PIN data. Should people be worried? He's saying to me that the hackers in this case would actually have to hack into the payment processor in order to be able to unscramble that data. He says that, you know, it's possible but it would take highly sophisticated hackers to be able to do that. So, he's saying it does look a little bit better for Target, believe it or not -- Brianna.

KEILAR: Yes, but that's really the issue, right? Is that sort of the P.R. problem here to come out in drips and drabs?

ASHER: I know.

KEILAR: And so, really the final thing, I think, Zain, that will tell us if we're out of the woods here is if there are no reports that customers have had their bank accounts cleaned out. Are there any at this point?

ASHER: You know, we have seen some reports of people having countless fraudulent charges on their Target cards. There's one blog actually saying she burst into tears after getting a call from Bank of America informing her of all the fraudulent charges. There's also some buzz on social media about it, too.

For the most part, though, people do seem to be taking it in their stride because you've got to remember for most of the time, you're really not going to be liable for fraudulent charges. The only -- the major issue is you have to be able to -- you have to report it in time, especially with debit card. But it can take up to two weeks for that money to be reversed to you -- reimbursed to you. So, most people are not actually going to be liable for the fraudulent charges. But we have heard of people actually suffering -- you know, suffering in this case and having money stolen from them in a sense -- Brianna.

KEILAR: Yes. And then the question is, is that definitely connected to this breach? Zain Asher at the New York Stock Exchange, thank you.

Well, joining me now on the phone is Clay Johnson from the Department of Better Technology. What is your reaction to this?

CLAY JOHNSON, DEPARTMENT OF BETTER TECHNOLOGY: Well, I mean, it's -- this is clearly a sophisticated security breach and it's clearly something that, you know, Target is still getting its ahead around and I think federal investors are getting their head around. I mean, at the end of the day, the thing to do if you're a Target customer is to call your bank and ask for a new credit or debit card. And that's going to buy yourself peace of mind and security in this.

I mean, if I was a Target shopper, that would be the first thing that I would do. With the PIN breaches, the security expert is exactly right. It's really hard to decrypt these kinds of PIN codes because the key that decrypts them is held on the actual PIN device, the hardware device in the store. And so, they would have to get access to countless numbers of PIN devices and match them up with the credit card that they were swiped on in order to decrypt your code.

So, I wouldn't worry too much about, you know, someone going to an ATM and making a withdrawal with your stolen debit card. But I would go and -- go ahead and call your bank and get your -- get your number -- get a new number and a new pin.

KEILAR: What, Clay, could Target have done differently here? Certainly there are ways that they could have performed better in an instance like this.

JOHNSON: Oh, for sure. I mean, the question really is whether or not this breach happened even upstream of Target. The other thing that people should really be concerned about, I think, is, you know, there's a new opportunity for new scams. So, you know, if you get a phone call from someone saying that there's been a breach on your -- on your credit card or some fraud on your credit card because of this Target thing, it may not be coming from your credit card company but from some other fraudster. Target -- you know, I think Target's done as much as it can. I wish that they had been a little bit more forthcoming about these PIN issues. You know, encrypted PIN numbers are, I think, the least of our worries. The account numbers and balances and that data breach, that's the big problem here.

KEILAR: So, Clay, you mentioned if someone were to kind of call I guess in some sort of phishing way to try to capitalize on this breach that has happened. So, how or what should we do and how should our antenna be up ready to make sure that doesn't happen to us?

JOHNSON: Well, you should never -- you should never take an incoming call from a credit card company very seriously. You should always say -- you know, if it's American Express, you should go on American Express's Web site and then call them to change your credit card and that kind of thing. You should never ever take a phone call from someone claiming to be your credit card company without the ability to verify themselves.

So, that's the -- you know, that's the thing that if most people did, they'd protect themselves 99 percent of the time. Just call your credit card company. Don't take calls from them.

KEILAR: Clay Johnson, very helpful stuff. The Department of Better Technology, thank you.

Well, you know, a judge has issued a ruling on the NSA's metadata collection program. Surveillance on your phone call data could be affected. The judge says the NSA's controversial bulk collection program is legal. And Justice Reporter Evan Perez joining us now. This is a big deal.

EVEN PEREZ, CNN JUSTICE REPORTER: Well, yes, it's a big ruling. We have two judges of equal rank coming to opposite conclusions. This judge today in New York in a lawsuit filed by the ACLU has found that the NSA's program which collects data on nearly every phone call made in America is legal.

Now, last week, there was another ruling by a judge in D.C., and he found that the program was -- he called it almost Orwellian and said it was possibly or likely unconstitutional in violation of the fourth amendment. So today's ruling is definitely a big victory for the NSA.

You know, they've been on a losing streak since Edward Snowden, the former NSA contractor, leaked documents that reveal this had and other programs. And so, they needed to have somebody get their back on some of these programs.

Now, I should say the Justice Department has just issued a statement on this ruling today in New York, and he -- the Justice Department says, we are pleased that the court found the NSA's bulk telephony metadata collection program to be lawful. They've been very critical of some of the previous rulings and they are being given time to appeal the ruling, the one last week in D.C.

And as you know, President Obama had appointed a blue ribbon panel to look at these programs.

KEILAR: And he's spending his vacation thinking about what changes may be made.

PEREZ: Exactly. And he says in next month -- in the next month, he's going to address those programs.

Now, one of the things that that blue ribbon panel said was that they don't -- they're not even sure if this 215 program, this metadata program, is even useful as it has even stopped an imminent attack in the United States.

KEILAR: Though the administration counters that and the president says he stands by that there actually has been some progress --

PEREZ: Right.

KEILAR: -- because of it. So, you have these competing rulings. And what happens next? It's an appeals process for each or what?

PEREZ: Right. And they're separate appeals courts that are going to be looking at this issue. What you likely will have is another -- maybe a couple of years of rulings that will go through the appeals courts in both -- in both -- in both sides here in D.C. And in New York, there are other lawsuits that are still outstanding. So, we may yet hear another ruling on this issue. And then, eventually, probably the Supreme Court will have to get involved.

KEILAR: Sure. That's what you would expect. It's an unsettled issue.

PEREZ: Right, exactly.

KEILAR: This will continue. Evan, thank you so much.

PEREZ: Sure.

KEILAR: Well, that dreaded H1N1 flu, it is back and it's threatening young people. The CDC is reporting widespread flu activity in one out of five states. We'll be showing you where the flu is making a huge impact next.

(COMMERCIAL BREAK)

KEILAR: If you did not get a flu shot, that would be me, this story may scare you a bit. The CDC is reporting widespread flu in one out of five U.S. states. Doctors have seen that dreaded H1N1 flu and it sickened and scared so many of us a few years back. The first U.S. deaths from that dangerous H1N1 strain are trickling in.

Our Victor Blackwell is tracking this story from Atlanta. So, Victor, walk us through this. H1N1 can be a threat for people not commonly at risk for serious flu complications. Why is that?

VICTOR BLACKWELL, CNN CORRESPONDENT: Well, you know, there is no exact reason why but some doctors believe that possibly a similar strain circulated maybe 50 to 60 years ago and now people who are elderly have built up immunity to that. But this season, H1N1 is back. It's being considered a seasonal flu. And we have new numbers from the Center for Disease Control and Prevention that really illustrate how much and how quickly the flu is spreading.

If we have that map, let's put it back up because we know from the CDC today that 49 states -- here's the map, 49 states are the reporting some level of activity, some flu-like activity. Now, the only state that isn't reporting is North Carolina, and it's not that there isn't any flu there. It's just that they didn't send in their report. Ten states though. Ten states are reporting widespread activity. Let's list them off, Alabama, Alaska, Kansas, Louisiana, Massachusetts, New York, Pennsylvania, Texas, Virginia, and Wyoming.

Remember, we are still several weeks out from the peak of flu season. And in Texas, five deaths were reported as related to the flu this season. But federal health officials say that H1N1 has not reached the epidemic or even the pandemic level that we saw in 2009 -- Brianna.

KEILAR: OK. So, Victor, if you haven't gotten a flu shot, is it too late? Should you rush out and get one? And, of course, I'm asking for a friend.

BLACKWELL: For yourself and for me because I haven't gotten a flu shot yet. And I'm sit here doing the report on the flu. But no, it is not too late.

KEILAR: I know, we're so bad.

BLACKWELL: But we're going to get them. I'm going to get mine.

KEILAR: I think I will, too.

BLACKWELL: You certainly should go out and get the flu shot. Get the vaccine. But doctors say also wash your hands often, cover occur coughs and your sneezes. And if you're sick, don't go to work. Stay home from school -- of course, keep the kids home from school. And here's the other reason why you should get that vaccine. Listen.

(BEGIN VIDEO CLIP)

DR. MICHAEL JHUNG, INFLUENZA DIVISION, CDC: Every formulation of vaccine that you can get this year will protect against H1N1 and it also protects against other influenza viruses that we think are also circulating. So, it's very important for folks to get vaccinated if they haven't already been vaccinated.

BLACKWELL: One more element, Brianna, about that vaccine. The CDC reports that last season, their estimate is that the vaccine prevented 79,000 hospitalizations. And that's 79,000 people. That's enough to fill a football stadium. And it prevented 6.6 million sicknesses. So, they emphasize if your doctor advises, get the vaccine -- Brianna.

KEILAR: OK. So, I pledge to go and get mine and you're going to get yours, right, Victor? BLACKWELL: I will get it soon.

KEILAR: All right. We promise each other. OK, thanks, Victor. Victor Blackwell in Atlanta.

BLACKWELL: Sure.

KEILAR: Well, you know, right now, a nationwide manhunt is underway for a cop killer. Hours ago, a funeral was held for Officer Gale Stauffer in Tupelo, Mississippi. He leaves behind a wife and two small children. The FBI says bank robbers shot and killed Stauffer two days before Christmas. The suspect is believed to have been in this car that you see here. And our Nick Valencia is tracking this story.

What's the latest on the manhunt, Nick?

NICK VALENCIA, CNN CORRESPONDENT: Hey, good afternoon, Brianna.

The latest coming to us from local media in the Chicago area where authorities there were reportedly told to be on heightened alert because the suspect in this shooting, the fatal shooting of that 38- year-old officer may have fled to Chicago. Now, as you mentioned, this is a nationwide manhunt for this man.

We have a snapshot from surveillance video provided to us by the Mississippi Bureau of Investigations. He's described as a black male, about 6'3", last seen wearing that cart heart (ph) hoodie, a ski mask and blue jeans. He is the suspect in the fatal shooting of one officer. He critically wounded another officer. A very sad day for that family. You mentioned the funeral held earlier for the former Louisiana National Guardsman. We should give you an update on the other officer who was shot. He has been stabilized and the reward for this suspect, Brianna, about $162,000 right now.

Brianna.

KEILAR: All right, Nick, we know you'll be following that.

Ahead on NEWSROOM, a government crackdown leads to escalating violence in Egypt. The reasons behind it, ahead.

(COMMERCIAL BREAK)

KEILAR: The mission? To free a trapped ship just off the coast of Antarctica stalled a short time ago. A Chinese icebreaker ran into icy conditions of its own, but it is within sight of the stuck ship just miles away there. Seventy-four people on board the ship. They've been trapped there for four days now. The expedition leader says though that everyone seems to be in good spirits.

Well, no word yet on who detonated a car bomb in Beirut that killed six people and wounded dozens. A key friend of the U.S. is among the dead and was the apparent target. Mohamad Chatah was Lebanon's former ambassador to the U.S. He shared Washington's concerns in the region. Chatah was a staunch critic of Syria's president and the militant group Hezbollah. Now, in Egypt, fighting between Muslim Brotherhood supporters and police has left at least three people dead today. Egypt's government officially considers the Brotherhood, the Muslim Brotherhood, a terrorist organization and 250 people are now locked up for their connection to the group. This is that group that supported Mohammed Morsi, the first democratically elected president of Egypt. Morsi has since been forced out of office and the new military leaders say anyone who claims to be a member of the Muslim Brotherhood will go to prison. Elise Labott, our foreign affairs reporter, joining us now.

Why did the Egyptian government do this? What started this?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORT: Well, this is an expansion of the crackdown that you saw when the military ousted President Morsi over the summer. Since then, a lot of their leaders, a lot of their supporters that have been protesting in the streets have been put in jail, have been put on trial, and the violence has increase. And now this is an expansion of that. And it's, for the first time in a decade, this large social movement in Egypt, the Muslim Brotherhood, anyone who's even a member of that group is going to be arrested and it's illegal to be a member of that group.

And that is really concerning because you can't just arrest these people and put them away in jail and shoot their way out of this. This is a very large movement. And the concern is that with this group having to go underground, that you might have a lot more people turning radicalized and supporting some of the other forces in the country. You've seen in the Sinai groups tied to al Qaeda gaining strength. And these are the groups that are believed to be responsible for these bombings, Brianna, not the Muslim Brotherhood.

KEILAR: And just to be clear, the U.S. does have ties to the Egyptian military. The U.S. has been suspicious of the Muslim Brotherhood, but certainly the U.S. doesn't look -- this is the complication of the entire situation. The U.S. doesn't look favorably on the fact that they have been deemed a terrorist organization. Why -- explain that. Explain the sort of complexity here.

LABOTT: Well, you saw after President Morsi was ousted by the military, the U.S. kind of hemmed and hawed, but eventually did some small halt to U.S. aid to Egypt, to the military in particular. Some weapons shipments and some money. And now this expansion of this crackdown is really concerning. You had Secretary of State John Kerry calling the foreign minister this -- about this terrorist designation. Very concerned that this is the exact opposite of what the U.S. wants to see. In fact, they wanted the military to see -- bring the Muslim Brotherhood into the political fold. OK, they're not in power anymore, but you have to recognize that they're an important force in the country and this is just going in the exact opposite direction and there is a lot of concern that you're going to see Egypt look towards the kind of civil strife that you're seeing in Syria and other places and very important ally of the U.S. was very instrumental in -

KEILAR: In holding peace in the region, yes.

LABOTT: In holding peace in the region and holding peace between Israelis and Palestinians. And we see that's not going so well right now.

KEILAR: Exactly, some violence there as well. We'll be following that. Elise Labott, thank you so much.

Now, on Tuesday - actually, we want to breakdown the year in politics, actually. Chris Christie and Hillary Clinton may be the front-runners in 2016, but where do they fall on the 2013 list? We'll look at the winners and losers of the year, next.

(COMMERCIAL BREAK)

KEILAR: It is that time of year where we take a look at the winners and the losers here in Washington. There are just so many choices, right, and reasons to be on either list. So let me bring in CNN political commentator Ryan Lizza and Larry Sabato, director of the Center for Politics at the University of Virginia.

All right, political winners and losers. Let's start with New Jersey Governor Chris Christie. He is on both of your winner lists.

Ryan, why?

RYAN LIZZA, CNN POLITICAL COMMENTATOR: Well, this one's pretty obvious. This is the guy who won a crushing - a Republican who won a crushing re-election campaign in a blue state, and he's the most talked about person for -- on the GOP side running for president in 2016. And I know these polls don't matter this far out but they matter to Chris Christie. He's already up at the top of the heap on these early 2016 presidential polls. So, all in all, a good year for Chris Christie. 2014, I think, will be a little bit different for him. There will be a lot more scrutiny of his record as New Jersey governor.

KEILAR: Sure, a lot more scrutiny. And we know that there's some stuff there. We learned that in the last year. So I think that will get picked over.

LIZZA: Yes.

KEILAR: Larry, another duplicate for you two, Paul Ryan.

LIZZA: We didn't coordinate this.

KEILAR: That's right, you didn't. This is why we find this so interesting. He started the year as a loser. What turned him into a winner?

LARRY SABATO, DIR., CTR. FOR POLITICS, UNIV. OF VIRGINIA: Which one did you say? I couldn't hear.

KEILAR: Oh, sorry, Paul Ryan. So he sort of started the year as a loser and then he turned into a winner. Why did that happen?

SABATO: Paul Ryan. Well, because he managed the more difficult half of the budget compromise. Democrats were much more likely to vote for it than Republicans and he managed to get it through the House with a big majority. I don't think it does much for a potential presidential candidate, but it does add luster to his record if he decides to go for speaker of the House, which think he will eventually.

KEILAR: Yes, and he was able to do something, of course, that we've seen repeatedly Speaker Boehner has been unable to do.

Now, OK, this is the --

LIZZA: Yes, totally agree with that one. Yes.

KEILAR: Yes, right? He's been able to sort of, in a way, shepherd that conference through in a way that Boehner hasn't.

LIZZA: He navigated the very tricky politics of the GOP House conference in a way that few others did, successfully.

KEILAR: And the disagreement that you two have is on our number three winner. Ryan, first for you.

LIZZA: Well, I think Elizabeth Warren had a very successful 2013. She is now holding up the banner of the Democratic left. There is a sort of populist - economic populist wing in the party that is revived and she is their champion. And she's someone to watch going forward. She says she might not run for - she probably won't run for president in 2016, but there are a lot of people who want her to run.

KEILAR: And, Larry, who is your third winner of 2013?

SABATO: Well, I thought it was Hillary Clinton, because Hillary Clinton essentially has the large majority of the Democratic vote. In fact, in some polls she's up in the mid 60s. I agree she's going to be challenged. She's going to have a much more difficult 2014 than she had 2013. But I doubt it's Elizabeth Warren. If I had to pick somebody who will actually follow through and challenge her other than Joe Biden, it would be Brian Schweitzer, the former governor of Montana, who's a populist.

KEILAR: And, Larry, as we move on now to our naughty list, the losers of 2013, I'm going to start with you on this. Did President Obama land on this list? And I think I - I think I sort of know the answer. At least I know the answer that I would give. What do you say?

SABATO: Oh, yes. I would put him at the top of the losers list. He put himself at the top of the losers list. He admitted that he had had the worst year of his five as president. Now, you know, every year's different. You never know what's going to happen.