tough enough to withstand another financial shock. >> i think they've injected themselves into a situation that's beyond their comprehension. >> plus a former fed boss paul volcker has a blunt message for the ratings agencies. quit meddling in things you don't understand. we have that candid interview in full. but first, though, we begin with the tide of debt that is causing problems on both sides of the atlantic. this of course with the results of the european banking stress tests out later on today. now, that is seen as one of the -- one of the most debted nations, italy, is of course trying to fight to stave off a bailout to become the fourth euro nation if it were to do so to request one from the imf, the eu and also the ecb. this was the scene just yesterday as lawmakers approved a four year, $57 billion austerity plan. the lower house is expected to adopt some of these measures later on today. and newspapers have been having quite a field day with this situation. let me show you the front page of one of the newspapers owned by the prime minister berlusconi. they're on the bow of the titanic as that fated ship sinks. this is in reference to a comment made yesterday saying the situation of the country finds itself in at the moment is akin to the sinking of the titanic and not everyone the first class passengers are safe. >> you can always count on him for a very colorful sound bite. and another metaphor, the iceberg is all that debt under the surface. meanwhile time is running out to raise the u.s. debt ceiling. lawmakers are still at odds. another warning about a possible downgrade of u.s. debt. this time from standard and poors, has raised the stakes even higher with no compromise on either side, the u.s. stands to run out of money on august 2nd. but perhaps there a glimmer of hope on the horizon. we'll take a look at that a little bit later on in the show. so with all of that going on, investors have plenty on their plate this bring. so let's see what's happening on the stock markets. we start in europe where the they're just over an hour into the trading day and this is how things stand at the moment. all major indices down in negative territory. there's a lot of caution there ahead of the results of the stress tests. those will be released at the end of the day. these stress tests are the third in three years and there's a lot of concern about which banks have the most exposure to debt from greece, ireland and portugal. so that's the main focus right now. and also the recent warning from standard and poors about u.s. -- the u.s. credit rating. nina? >> pauleen, let's bring you new that's come out just in the last couple of hours. credit suisse has not confirmed that it is under investigation by the u.s. department of justice. it issued a statement saying that the investigation is focused on the private banking services that it offered to u.s. citizens and that it will fully cooperate with the authorities to try and resolve queries linked to those particular services. here's what's happening in the asia pacific markets. the markets were mixed on this friday as investors worried about that standard and poors threat to cut its raising on america's bonds. it was a little bit of a mixed bank. shanghai and hong kong, it was a choppy session where property stocks were under pressure. they will limit the number of homes families can buy in smaller cities. china is trying to control housing speculation after selling increased 31% by last month. but by the end of trade, it regained ground and ended the day up by almost a third of a percent there. the main aussie benchmark town by about 0.4%. and stocks on wall street started strong on thursday, but they limped to the finish after ben bernanke weighed in after hinting at what could have been interpreteded as another round of stimulus, bernanke told lawmakers that the fed is not ready at this point to take further action to boost the economy. at the close, the dow was off by half of one percent, the nasdaq had lost more than 1% and the s&p 500 had fallen about two-thirds of 1%. after the bell google was up 36% from a year earlier. as we were giving a hint earlier ouks the banking sector here in europe will be in focus a bit later on today. these european banks have had their second health check. results due out a bit later on today. midday new york time, we'll know an awful lot more about what's on their balance sheets, how he will any or unhealthy some of them are. they'll be telling us more with what's expected from these investigation tests. >> that's right, this is the third health check on the euro zone's banks. analysts expect up to 15 of the 91 lenders tested to fail, that's double the figure last year, but not everyone has faith in the results. last year both irish banks that were tested passed. the bank of ireland and the allied irish bank. we remember what happened to those. both collapsed and needed bailouts. it left the people questioning the viability of tests. so what is the solution? stricter standards this time around. they're looking at reserve benchmark p 5% core capital, the ability of banks to happen contraction in the euro zone in 2011, a 15% slide in euro stock markets and the ability to handle potential trading losses on sovereign debt. not all are taking part. only 90 results are to be released and the german bank withdrew on thursday to avoid public fame you're. they refused permission for the publication of results and the withdrawal has to some extent challenge validity of these tests. so what are the implications if a bank fails? they must show plans to plug the shortfall by the end of the year. they can request tax payer money only if needed. and if it only just passes, it's forced to improve its capital offers. back to you. >> of course where i am in italy, a number of the italian banks hold no less than 3.36%. allegations that news corp journalists hacked in to phones have shocked the world. now it seems they've crossed the atlantic and the fbi says it's launched its own investigation into the claims of september the 11th victims against rupert murdock's media empire. we'll have more on that as world business today continues. when i got my medicare card, i realized i needed an aarp... medicare supplement insurance card, too. medicare is one of the great things about turning 65, but it doesn't cover everything. in fact, it only pays up to 80% of your part b expenses. if you're already on or eligible for medicare, call now to find out how an aarp... medicare supplement insurance plan, insured by unitedhealthcare insurance company, helps cover some of the medical expenses... not paid by medicare part b. that can save you from paying up to thousands of dollars... out of your own pocket. these are the only medicare supplement insurance plans... exclusively endorsed by aarp. when you call now, you'll get this free information kit... with all you need to enroll. put their trust in aarp medicare supplement insurance. plus you'll get this free guide to understanding medicare. the prices are competitive. i can keep my own doctor. and i don't need a referral to see a specialist. call now to get a free information kit. plus you'll get this free guide to understanding medicare. and the advantages don't end there. choose from a range of medicare supplement plans... that are all competitively priced. we have a plan for almost everyone, so you can find one that fits your needs and budget. with all medicare supplement plans, there are virtually no claim forms to fill out. plus you can keep your own doctor and hospital that accepts medicare. and best of all, these plans are... the only medicare supplement plans endorsed by aarp. when they told me these plans were endorsed by aarp... i had only one thing to say... sign me up. call the number on your screen now... and find out about an aarp medicare supplement insurance plan. you'll get this free information kit... and guide to understanding medicare, to help you choose the plan that's right for you. as with all medicare supplement plans, you can keep your own doctor and hospital that accepts medicare, get help paying for what medicare doesn't... and save up to thousands of dollars. call this toll-free number now. welcome. i understand you need a little help with your mortgage, want to avoid foreclosure. smart move. candy? um-- well, you know, you're in luck. we're experts in this sort of thing, mortgage rigamarole, whatnot. r-really? absolutely, and we guarantee results, you know, for a small fee, of course. such are the benefits of having a professional on your side. [whistles, chuckles] why don't we get a contract? who wants a contract? [honks horn] [circus music plays] here you go, pete. thanks, betty. we're out of toner. [circus music plays] sign it. come on. sign it. [honks horn] ...homes around the country. every single day, saving homes. we will talk it over... announcer: if you're facing foreclosure, make sure you're talking to the right people. speak with hud-approved housing counselors free of charge at... from hong kong, and rome, this is world b"world business." rupert murdock's news corporation is facing new investigations into whether its journalists allegedly tried to hack into the voice mails and phones of crime and terror victims in the united kingdom. and on the other side of atlantic, the fbi has now said that it is looking in to allegations that murdock controlled news outlets tried to tap into the voice mails and phones of september the 11th victims and also their family. and now there's also cause for congress to investigate. brian todd reports from washington. >> reporter: a law enforcement source tells cnn looking into the news corporation is now a high priority, so high that the fbi has already launched an investigation. the source says the probe is focusing on allegations that murdock's employees or associates may have hacked into phone conversations and voice mail of september 11th victims and their families. anyone acting on behalf of news corporation is being looked at the source says from the top down to janitors. frank loudenburg also believes news corporation violated federal law. >> would you want to hold hearings? >> certainly that would be a serious consideration. i'm waiting now for a return from the justice department. >> reporter: in canvassing capitol hill, we've learned of growing sentiment for congress to delve into the activities of rue further murdock. most of those calls are from democrats. murdock is a big backer of republicans. if more momentum builds for probes, there are cautionary tales for lawmakers, reports that the tabloids sometimes turn the tables on those who investigate them. most of those accounts date back to well before this scandal ploou up in the media in recent weeks. martin moore of the media standards trust tells us when british parliamentary looked in the tabloid press a couple years ago, he heard of allegations that they were discouraged from repeatededly inviting rebecca brooks to testify. >> the allegation was they were told, members of that committee were told, do not invite her again. do not press this one, do not push it, because if you do, you'll regret it. that was made very clear. >> reporter: a news corporation spokesman would not comment on that allegation. are you concerned that they might hit back at you and dig into your personal life or whatever? >> i'm not worried about my personal life nor am i worried about my next term. i've been here 27 years. when you grow up in a poverty stricken area and poverty stricken household, you develop a thin skin. i don't scare that easily. >> reporter: a news corporation spokesman would not comment when we asked him about the possibility of congressional hearings, would not comment on the fbi investigation. but in an interview with his open paper, the "wall street journal," rue further murdock defended his company's handling of this crisis and vowed to establish an independent committee that will investigate every charge of improper conduct. brian todd, cnn, washington. rupert murdock and his son, james, say they will testify before a british parliamentary committee on tuesday. their decision is a reversal coming after they had said they couldn't make to parliament for weeks. but the house of commons issued a summons demanding that they appear and committee chairman john whittingdale says the murdocks would be in contempt if they didn't show up. a formal summons may apply only to british citizen, but both rupert murdock and his son say they will answer questions. however, in a letter to the committee, james murdock said he's concerned that the grilling they're expected to receive from legislators might affect separate judicial investigations now under way. the committee chairman agrees, but says he won't hold back when it comes to getting the information he wants. >> we want to know from them how far in their organization the involvement and knowledge went. james murdock has stated publicly that my committee was misled by senior executives who gave that evidence to us two years ago. we'll want to know when he discovered that, who they were and in what way we were misled. >> news international's chief executive, are a we can came brooke, has also agreed to be present at tuesday's hearing. ordering a witness to appear before a house parliamentary committee is a rash event. t rare event. the last time it happened was in 1992. nina? well, as brian todd was just saying there from washington in his piece, rupert murdock has already been speaking out. and let's bring you a little more about what he's saying about the escalating scandal. now, murdock told the wall street journal, which of course news corporation owns, that the company will conduct its own investigation into the phone hacking allegations. he also said that he believes the company has handled the crisis extremely well so far, making only might minor mistake. and when he asked how he was handling the negative press attention, he said it's annoying, but i'll get over it. he added i'm tired. we're talking about a man who has built a media empire from australia to all four corners of the globe, but he is 80 years old after all. >> and after all this, anyone would be tired, nina. the whole saga has hit news corp shares on the sided any stock exchange. let's take a look at this graft to see how it's been doing. the share price was on the rise until july 67th right here where you see that peak. that was the day before news corp said it would shut down the news of the world and then after this announcement, you see the slide there. it shed more than 14% in a week. and the latest numbers show that it's still down by about the same amount from that july high. it closed today down another 2.4%. and news corp shares have taken a similar on the nasdaq. well, a frustrated president, a bitterly divided conditioning, and a looming deadline that could trigger a global economic upheaval. just business as usual in washington these days. we'll get you up to speed on the efforts to raise that u.s. debt ceiling right after this. [clucking] [clucking] [ding] [clucking] announcer: separate raw meats from other foods by using different cutting boards. 3,000 americans will die from food poisoning this year. keep your family safer. check your steps at foodsafety.gov. welcome back. you're watching wo"world busine today." in just a few hours, barack obama will hold his second news conference on the still unresolved issue of raising the u.s. federal debt ceiling. a warning from standard and poors have added a note of urgency to the proceedings. s and p says it now may down grade the u.s. credit rating even if they don't miss any interest payment, but if all fails, that's a so-called plan b being developed that might actually say the day. congressional correspondent kate bolduan has more. >> reporter: the federal reserve chairman on capitol hill repeated his stern warning that default could cause chaos. >> i think it would be a calamitous outcome, would create a very is severe financial shock that would have affects not only in the u.s. economy, but global. >> reporter: and the top money man reminded lawmakers of what's at stake. >> we looked at all available options and we have no way to give congress who are time to solve this problem and we're running out of time. the eyes of the country are on us. >> reporter: despite the ominous words, talks are stuck and the finger pointing continues. >> if the president wants to threaten seniors or veterans or rattle the world economy by pretending he can't pay our bills, he of course can do that. but he's not going to implicate republicans in these efforts. >> reporter: democrats singled out the up in two house republican, eric cantor, even calling him, quote, childish. >> leader cantor has yet to make a constructive contribution to these discussions. more than anything else, he is holding up an agreement at this point. >> reporter: meantime, top republican leaders sought to prevent a unified front amid talk of a rift between boehner and cantor, leading to one of the lighter moments of these negotiationses. >> let me just say is that we have been in this fight together. and any suggestion that the role that eric has played in this meeting has been anything less than helpful is just wrong. >> reporter: and as the meetings continue at the white house, it could be, if there's a light at the end of the tunnel, it's on capitol hill. senators mitch mccon nell and harry reid working on a possible way out of the debt stalemate. >> we don't have it worked out yet, but it's something we're looking to. hopefully we can come up with this big robust deal we've been trying to get, but until we do that we have to look at other alternatives. >> reporter: it's a complex plan that would allow the president to raise the debt ceiling and also allow congress to vote against it. it may also set up a commission to recommend spending cuts and may include some of the spending cuts already agreed to in these debt talks. the idea got a big boost thursday from house speaker john boehner who said in the absence of anything else, it's a worthy option. kate bolduan, cnn, capitol hill. china is one of the countries is that is quite worried about a possible downgrade on u.s. debt. it's the u.s.'s biggest creditor with more than a trillion dollars of american debt. answering a question about .warnings to washington from the credit rating agencies, a chinese foreign ministry spokesman said we hope that the u.s. government adopts responsible policies and measures to guarantee the interests of investors. and here's what our own if a re fahreed said. >> i think the chinese government is being very responsible. if they would be playing this insane game of political partisan ship, we would be complaining. the chinese have been very quiet so far and by the way, one of the reasons they're quiet is no one wants to drive those interest rates up. this is the crucial thing to understand. once we drive those interest rates up, they will not come down easily. the global financial system restses on one sort of bedrock and that is that u.s. treasury bills are the safest most lick i had wid cheapest form of debt in the world. if that changes, who knows what it means. people talk about lehman brothers and this being like lehman brothers. actually this is 100 times more complex and potentially lethal. lehman brothers was a relatively small investment bank that had a big balance sheet. here talking about the full faith and credit of the united states of america, the holder of the reserve currency of the world. who knows what this could mean. >> and we want to give issue results of some new polls out. it seems that house republicans who are refusing to consider revenue increases as part of a debt ceiling deal are out of step with most americans.