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CNN NEWSROOM

Interview with Rep. Ed Royce on North Korea Cyber Warfare; Snapchat Secrets Exposed; Dow Rocketing at Open; "Colbert Report" Ending Tonight; 49ers Release Ray McDonald; An Act of Cyber War

Aired December 18, 2014 - 09:30   ET

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


REP. ED ROYCE (R), CALIFORNIA: Stuart Levy said, well, why don't we just put sanctions on that regime for a while? Because if we block them from the international financial community, they can't get the hard currency that they need in order to carry out the types of activities, clandestine activities they're doing as well as their nuclear weapons program.

They did at Treasury until the State Department leaned in and forced Treasury to lift those sanctions. And for a while, the regime was really on the ropes. The dictator couldn't pay his generals. Not a good position for a dictator to be in.

I think it's time we do respond with something like those types of sanctions. We say to the banking community, look, we're going to -- you either bank with the united states or you bank with North Korea. We're going to freeze their accounts now, freeze their accounts and cut off their ability basically to function and give them a choice between compromise on these kinds of policies or economic collapse.

CAROL COSTELLO, CNN ANCHOR: President Obama is set to speak on this matters later today. What should he say?

ROYCE: Well, I think he should say, listen, given the fact that North Korea has been repeatedly warned, I think our president should say, the international community has found them in violation in terms of developing their ICBM program and their nuclear weapons program and given that hostile intent that we can infer from the video last year that shows, you know, the attack on Washington, D.C., we're going to impose those sanctions on the regime in North Korea, which means that no bank in Asia or anywhere else is to deal with the regime in North Korea. They need that hard currency in order to survive and these hackers, these several thousand hackers that they've trained overseas, they've sent some in to Russia to be trained. We know they sent some in the past to China to be trained and they've got the expertise, not just -- remember, not just to hit the business community here, but they also have the capability of looking into things like our energy infrastructure. It's time for us to respond to this in a very strong way and show the rest of the international community that, yes, the United States, when, you know, a grievance like this -- we're not going to allow this to happen without us imposing a cost on a regime that does it. And that's the way to do it. COSTELLO: Well, let's -- I want to talk a little bit more about this

Bureau 121, these cyber warriors that North Korea's training. The U.S. government knew about Bureau 121 for quite some time. Has it done anything about this in the past?

ROYCE: No, we haven't.

COSTELLO: Why?

ROYCE: As a matter of fact, Kim Hung-Kwang, who defected from North Korea, and I've been in North Korea and I've been many times to South Korea to talk to defectors there. Their basic focus in the past has been to do these attacks on the financial community in South Korea.

Listen -- look, there is no banking system really in North Korea. So if you -- if you screw up the banking system in South Korea with cyberattacks, it's sort of a no lose for the regime in the north. So in the past, that's been the focus of the attacks, is on South Korea commercial activity, financial activity and the South Korean government. Now they have turned their focused to the United States. And that's what's new here and that's why we're going to -- we should be looking at what we can do.

As pointed out, without resources, North Korea can't develop its nuclear weapons program. Without hard currency, it can't send, you know, students abroad to learn these skills in Moscow or in Beijing and then come home and practice them. Let's cut off their hard currency. That's what we should be doing to Bureau 121.

COSTELLO: Well, there is a sentiment right now -- I'm just going to show you the cover of "The New York Post" because I think it really, like, sums it up in a headline, "Kim Jong-Un Won." And "The New York Post" is saying that because Sony decided to pull "The Interview" from movie theaters and not show it. Did Sony do the right thing?

ROYCE: No, because if you remember, when Salman Rushdie published "The Satanic Verses," the threats were -- the fatwa was not just on Rushdie, it was on the publisher. And all the publishing houses came together and defended the right to publish. What should have happened here is that Hollywood, and frankly the wider business community, should have come together and defended Sony's rights here, because once you capitulate to one dictator, does that mean that the next dictator or the next terrorist, when they say, you're not going to -- you're not going to make a comedy about -- or a film at all about ISIS --

COSTELLO: Iran, let's say. Right, ISIS, right.

ROYCE: Well, Iran -- yes, Iran did not win with the attack on Salman Rushdie, but now this is a very different lesson and already the movie, I've heard, has been canceled. That's a very serious documentary about a young man, who I've interviewed, who escaped out of North Korea, out of North Korea. And Mr. Shin (ph) told his story. And I've heard that there was a movie planned that has already been canceled. So movies about North Korea, you see the capitulation going on now. There's more than one that has already been canceled. And so --

COSTELLO: Right. The movie you're talking to would have starred Steve Carell.

Let me ask you this, though, in Sony's defense. If something were to happen at a movie theater, God forbid, we're a litigious society. Sony could be in bigger financial trouble than it is already. So is it the government's responsibility to help Sony?

ROYCE: Well, the responsibility here for the international community, including people in public life, is to stand up and remind people of what we did and said after Salman Rushdie printed "Satanic Verses."

Listen, if at that point the world had capitulated, there wouldn't -- there couldn't even be a critical dialogue today about these important issues. So we cannot walk down that road. So all of us in public life have a responsibility right now to speak out and to say, no, Sony, you did the wrong thing. And to say to Hollywood, come behind, you know, the other studios should come behind Sony and offer their support. And at this point, no more capitulation. No more cancellation of scripts.

You know, freedom of speech is a very important thing, not just in this country, but all over the world, if we're going to move the needle in places like North Korea and see humanity continue to experience the possibility of more freedom, it is through news and information and beginning to self-censor ourselves is in exactly the wrong direction here and that's what's most worrisome about this decision.

COSTELLO: I agree wholeheartedly with you, as a lover of the First Amendment. Congressman Ed Royce, thank you so much. I appreciate your being here with me.

ROYCE: Thank you, Carol.

COSTELLO: Sony is not the only victim in that massive cyber terror attack. New company secrets (ph) from the popular app Snapchats have also been leaked. And those leaks include details about an offer made by Facebook, a merger Snapchat has just wrapped up, and a potential music label the company was considering.

Samuel Burke joins me now to tell us more.

SAMUEL BURKE, CNN CORRESPONDENT: If you're sitting at home scratching your head saying, what does Snapchat have to do with Sony? There's actually an interesting leak -- link, rather. Michael Lynton, the CEO of Sony, also sits on the board of Snapchat. So, of course, in his e- mails, which have been leaked online, there's lots of information about Snapchat. And the CEO of Snapchat is very upset, even emotional. He actually posted on Twitter the memo that he sent out to his entire company and it gives much more emotion than we've heard from Sony.

I want to just read you what he posted online. Quote, says Evan Spiegel, "I've been feeling like crying all morning. I am so sorry that our work has been violated and exposed. It's not fair that people who try to build us up and break us down get a glimpse of who we really are."

And it's interesting that he's so emotional in this, Carol, because actually what I'm hearing from the business community is they're very impressed by these e-mails that have been leaked. He's only 24 and he sets out an incredible business plan in these e-mails. So this actually might be a silver lining in this story. Company e-mails leaked that actually give a positive image and maybe could help the company.

COSTELLO: Yes, but I don't think we should think about it like that. I just -- I mean I know you're trying to look at the glass half full and all --

BURKE: No, I -- yes, I'm trying to find something positive in this story.

COSTELLO: Right.

BURKE: And the fact that Wall Street is responding so positively to this news, at least there's some type of silver lining in what's a very negative story.

COSTELLO: Samuel Burke, thanks so much.

We'll be right back.

ANNOUNCER: This is CNN breaking news.

COSTELLO: All right, before we go, a bit of breaking news, and it's good news. That's a good thing. Let's get a check on the markets. The opening bell rang just moments ago. The Dow is skyrocketing. Let's bring in CNN Money correspondent Cristina Alesci.

Cristina.

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Yes, really a confluence of factors sending stocks higher this morning. First and foremost, the Fed yesterday decided to keep interest rates lower than -- well, low for a longer time than a lot of market participants expected. That is really boosting this idea that easy money is here to stay, at least until -- through mid-2015. Then you've got jobless claims coming in lower than expected. That's giving investors and traders some confidence that we've got a recovery, a very strong recovery underway. Then you have oil, actually, coming up, giving a boost to some of those energy producers. And you can't discount this, Carol, it is the Santa rally in December. December historically has been a great month for stocks and so you can't take that out of the equation.

So you've got this incredible optimism in the market today. One thing to keep in mind, one of the reasons the Fed may not have been so eager to lift rates is, you remember that U.S. growth is still falling below their 2 percent projection. So there's really no incentive for the Fed right now to raise rates.

COSTELLO: All right, Cristina Alesci, thanks so much.

I'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Checking top stories for you at 42 minutes past the hour. Three people have died and nearly a dozen others injured after a car struck a crowd leaving a church Christmas concert in Redondo Beach, California. Police say the female driver ran a red light, struck the crowd, then collided head-on with another car. The woman has been arrested for felony DUI and vehicular manslaughter. Police have confirmed two of the people who died were in their 80s. At least two of the injured were children.

More Uber fallout this morning. A Boston-based driver has been arrested and accused of sexually assaulting a woman he picked up back on December 6th. Forty-six-year-old Alejandro Done was arrested Wednesday on charges of rape and assault to rape. The arrest comes as Boston Police investigate three new incidents happening this past weekend, all involving Uber.

Christmas break is starting early for some students, but there's a catch, or rather a bug. The flu is walloping parts of the Midwest and the south. Many schools closing for deep cleaning this week, later announcing they're staying closed until the new year. In all, the CDC says 14 states are under widespread influenza alerts. One of the most startling cases is in Polk County, Georgia, where 1,300 students were out sick on Tuesday. That's more than 30 percent of the district.

Tonight, we all say good-bye to Stephen Colbert.

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Tomorrow, I will conclude my final broadcast, say my fond farewells, angry adioses and my luke warm laters and walk out. And then everything in here will be shredded and sold as industrial meat filler to a national fast food chain. Now, I can't say which one because they are sponsors.

(END VIDEO CLIP)

COSTELLO: The late-night Comedy Central host will sign off for the final time tonight to prepare for his new role as David Letterman's on CBS' "The Late Show." Tonight also will be Stephen Colbert's final show as his ultra ego, Stephen Colbert.

Senior media correspondent Brian Stelter is here. He'll revert to Stephen Colbert.

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I guess he will. I guess the character at least will die tonight. We know The Grim Reaper is a character on the show and it's going to be his only guest, apparently, although there might be some surprise guests.

So I did the dirty work of watching lots of Colbert clips and thought about what he meant to us for about a decade. And here's my look at that.

(BEGIN VIDEOTAPE)

STELTER: Bill O'Reilly is not going to miss Mr. Colbert's character.

BILL O'REILLY, FOX NEWS HOST: Mr. Colbert and others of his ilk have no bleeping clue how to fight the jihad.

COLBERT: Bill O'Reilly is a (EXPLETIVE) ego maniac.

STELTER: But the rest of us might. Colbert was the satirist the cable news age needed. His "Colbert Report" launched in 2005 and followed Jon Stewart's "The Daily Show" on Comedy Central. Colbert didn't just mock the news the way Stewart does. He actually became a mock anchor. He created a whole persona, an arch conservative cable newser who believed he had a whole nation behind him, someone who pretended there was nothing that could change his mind.

O'Reilly, the number one star on cable news, was his model -- or, as he calls him --

COLBERT: Papa Bear Bill O'Reilly! Bill!

(CHEERS & APPLAUSE)

STELTER: Colbert once said of his character, "I think of him as a well-intentioned poorly informed high-status idiot." But here's the thing: it was more than a spoof. It was a media critique. He played a right-winger, but the critique sometimes applied to the left as well.

With every blowhardy joke, Colbert satirized the excesses of the media.

COLBERT: Your reasonableness is poisoning my fear.

STELTER: And believe it or not, he actually educated his viewers, too.

BROOKE BALDWIN, CNN ANCHOR: Researchers at the Annenberg Public Policy Center fond that the Colbert nation not only thought they knew more about something as wonky as campaign finance reform than others, they were actually right.

STELTER: But Colbert is not Colbert. When he's not on Comedy Central, he's a father of three, a Sunday school teacher, and a big nerd who loves "The Hobbit" and "Lord Of The Rings".

JAMES FRANCO, ACTOR: Name me just two, two of the valar.

COLBERT: Do you want the valar of water, Ulmo, or do you want the hunter of the valar, Orome? Or do you want the valar of the trees, Yavanna?

(CHEERS & APPLAUSE)

COLBERT: You come into my house! You come into my house!

STELTER: He's been a writer, actor and comedian for almost 30 years.

Now, you might say he's graduating from Comedy Central to "The Late Show" on CBS, but his character is not.

COLBERT: Yes, a victory lap because Obamacare is dead!

STELTER: Somewhere, I'm sure, Papa Bear is laughing.

(END VIDEOTAPE)

STELTER: I'm laughing, too, Carol. But you know, he really did bring up a lot.

COSTELLO: He was twerking with the Grim Reaper. No, he did, seriously.

So what do you think he'll be like on CBS?

STELTER: Yes, I'm a little nervous to see it. I don't think we know -- his CBS show won't premier until next August or September. So he's got nine months to actually figure out who is he going to be? And is he just going to be himself or is he going to play a somewhat different character?

COSTELLO: It's just difficult for me to believe that he'll, like, totally throw away his schtick. Because that's what made him famous. That's what got him the job at CBS.

STELTER: Even President Obama last week, he dialed it back but he still had some of it, and it made for very fun television.

COSTELLO: So who's going to take his place on Comedy Central?

STELTER: Larry Wilmore and it's going to actually -- in the same way that Colbert mocked O'Reilly ten years ago, Larry Wilmore is mocking all of those panel shows like "The Five" and "Outnumbered" on Fox News. He's calling it "The Minority Report" and it's going to be a panel of lots of guests every night.

COSTELLO: I can't -- well, I'm sure that will be good. I can't really imagine.

STELTER: Comedy Central always giving us something to watch and always parodies --

(CROSSTALK)

COSTELLO: Yes, they should thank us for all of that money that they are making. That's right.

STELTER: Without us, we wouldn't have them.

COSTELLO: And vice versa.

STELTER: And vice versa.

COSTELLO: Brian Stelter, thank you so much.

Still to come in the NEWSROOM. Was investigation number two too much for the San Francisco 49ers? The team finally drops Ray McDonald. CNN's Andy Scholes is following that story for us.

ANDY SCHOLES, CNN SPORTS: Yes, Ray McDonald is now under investigation for sexual assault and he's no longer a member of the 49ers. We'll hear what his teammates, or former teammates, I should say, have to say about his release when NEWSROOM continues.

(COMMERCIAL BREAK)

COSTELLO: Ray McDonald facing a new criminal investigation, but a different response from his team, the 49ers -- or should I say his former team. San Francisco 49ers released the defensive end after police searched his home in response to a possible sexual assault. You'll remember the Niners previously allowed McDonald to play while authorities investigated a domestic violence case which was ultimately dropped. So why the change in policy?

CNN's Andy Scholes joins me now. Good morning.

SCHOLES: Yes, good morning, Carol. The entire season has been just a complete mess for the 49ers on and off the field. The team took a lot of criticism for, you were saying, standing by McDonald while he was under investigation for domestic abuse. They let him play in every game this season. And it wasn't until the latest allegation that they decided to finally cut ties with him. Now, McDonald has not been charged in this case but 49ers still decided to release him, citing a pattern of poor behavior.

Yesterday after practice, quarterback Colin Kaepernick, he reacted to McDonald's departure.

(BEGIN VIDEO CLIP)

COLIN KAEPERNICK, 49ERS QUARTERBACK: This is an organization, it's a franchise. You want to have a high standard and we do around here. You have to be able to abide by that.

(END VIDEO CLIP)

SCHOLES: So McDonald's quick release could be the sign of a new era in the NFL. Teams likely aren't going to wait for the legal process to play out in situations like these, and second chances are probably going to be harder to come by in this new NFL.

All right, in NBA last night, we had an instant classic. Grizzlies and Spurs taking three over times to decide the winner. In the end, it was Memphis coming out on top 117-116. And if you didn't think the Grizzlies were for real before this week, you do now. They ended the Warriors' 16-game winning streak on Tuesday and they beat the world champion Spurs last night. Impressive back-to-back wins. They are now 21-4 this season.

Tonight, on our sister station TNT, we have a doubleheader -- the woeful New York Knicks and their record of 5-22 are going to travel to take on the Bulls. And the nightcap should at least be a good one. We got Kevin Durant and the Thunder putting their seven-game winning streak on the line against the first place Warriors. Looking forward to at least the second game tonight, Carol.

COSTELLO: Exactly. We'll be watching that one. Andy Scholes, thanks so much.

The next hour of CNN NEWSROOM after a break.

(COMMERCIAL BREAK)

COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me.

One former lawmaker says Americans have just faced their first cyber war and the U.S. lost. And what makes it even more chilling, federal investigators believe this was the work of North Korea. At any time now, Washington is expected to accuse North Korea's government of going rogue and trying the snuff out a film that makes light of assassinating its Supreme Leader, Kim Jong-Un.

Evan Perez is CNN's justice correspondent. He joins us now with more. Good morning.

EVAN PEREZ, CNN JUSTICE REPORTER: Carol, the idea of this being an act of cyber war is one that's very serious. And that's the reason why I think you see the White House being heavily involved. You have all the U.S. national security agencies, the intelligence agencies have been working on this around the clock.

This is almost unprecedented. We have this hack, which was discovered only a few months ago, and now the government is getting ready to say we know who did it and we're going to point fingers. It's never happened this quickly before. We had another case earlier this year in which the government accused the Chinese PLA, the Chinese military, of hacking into U.S. companies and stealing economic secrets. That's a different thing and that took years for the U.S. to even get to the point of pointing fingers. So this is unprecedented.

COSTELLO: Well, here's the thing, Evan. North Korea supposedly has this Bureau 121, the cyber warriors who are trained to carry out these cyber attacks. And the United States government knew about Bureau 121. So why didn't it do anything before? Could it not do anything? Is it helpless?

PEREZ: The problem with North Korea is their isolation, actually. In some ways, it helps them because there's not a lot of things we can do. And I think you pointed at talking to Ed Royce, the bank -- the Foreign Relations Chairman in the House. He thinks one way to go after them is to go after their banks. Their banks -- they need to be able to trade in dollars at some point. And so you go after the banks that are doing business with them in China, which is usually the place that they do business with, and that's the way you can get -- you can hurt their military, which is really the only thing that matters there. And so that's going to affect their economy and perhaps that's going to make them behave better.

COSTELLO: In fact, Congressman Royce told me that President Obama, when he makes his remarks about North Korea, should just come out and say we're placing these sanctions on you. Let's listen to Congressman Royce.

(BEGIN VIDEO CLIP)

REP. ED ROYCE (R), CALIFORNIA: I think it's time we do respond with something like those types of sanctions which say to the banking community, look, we're going to -- you either bank with United States or you bank with North Korea. We're going to -- freeze their accounts now. Freeze their accounts and cut off their ability basically to function, and give them a choice between compromise on these kinds of policies or economic collapse.

(END VIDEO CLIP)

COSTELLO: Of course, it's good to hear that, but it seems like nothing's ever that easy.

PEREZ: Nothing's ever that easy, and especially because this is such a reclusive country. They don't travel outside the country. One of the ways that you sometimes can sanction is to say their military leaders or anybody from Bureau 121, anybody who has a ties to this, whenever they go on vacation somewhere, well, we're going to grab them. Well, that doesn't happen here. This is a country that doesn't really let its citizens go anywhere.