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CNN Live At Daybreak

President Bush Lays Out Reconstruction Plan for Gulf Region; Mississippi Files Suit Against Insurance Industry for Waffling on Coverage

Aired September 16, 2005 - 05:00   ET

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


CAROL COSTELLO, CNN ANCHOR: "Now in the News": Condoleezza Rice has a message for North Korea: Get on with it. The secretary of State says time is running out for something positive to happen in those stalled six-party nuclear program talks. She says the United States could freeze North Korea's assets if some kind of progress is not made within a week.
Across the nation today, many of you will take part in a National Day of Prayer for all of the people affected by Hurricane Katrina. President Bush will take part in an 11:00 a.m. Eastern service at Washington's National Cathedral.

And it's back to the disaster area today for Homeland Security Secretary Michael Chertoff. He's visiting Gulfport, Mississippi and will attend services this afternoon as part of the National Day of Prayer.

To the Forecast Center. Is Ophelia out of here now?

(WEATHER FORECAST)

COSTELLO: It will be a long and probably hard road to recovery for New Orleans and the Gulf Coast, that from President Bush in his address to the nation. With the statue of the former President Andrew Jackson in the background, the president spoke about new efforts to rebuild the devastated region. Dana Bash has more for you.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice over): Not only did the president take responsibility for inadequate government response to Katrina, he conceded he failed his own test.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Four years after the frightening experience of September the 11th, Americans have every right to expect a more effective response in a time of emergency. When the federal government fails to meet such an obligation I, as president, am responsible for the problem and for the solution.

BASH: That stunning statement in a relatively pristine French Quarter of an otherwise devastated New Orleans, part of his first formal address in attempt to regain Americans' confidence. He learned a lesson from the ill-coordinated government response.

BUSH: It is now clear that a challenge on this scale requires greater federal authority and a broader role for the armed forces.

BASH: Mr. Bush struck a hopeful tone promising the government will pay for what he called one of the largest reconstruction efforts the world has ever seen.

BUSH: We will do what it takes. We will stay as long as it takes to help citizens rebuild their communities and their lives.

BASH: No new price tag, but the president asked Congress to pass several new initiatives, including a Gulf Opportunity Zone, tax relief for small business, worker recovery accounts, up to $5,000 for training, education, and child care for Katrina victims looking for jobs. And an urban homesteading act to help lower income victims rebuild.

The chief White House goal of this speech? To turn around the perception the president was initially detached from the tragedy. He delivered his own instructions for families trying to reunite.

BUSH: Please call this number, 1-877-568-3317. That's 1-877- 568-3177. And we will work to bring your family back together.

BASH: And tried to move past allegations from some that race played a role in the slow response.

BUSH: Poverty has roots in a history of racial discrimination, which cut off generations from the opportunity of America. We have a duty to confront this poverty with bold action.

BASH (on camera): The president set a goal of mid-October to get evacuees out of shelters and ordered the Department of Homeland Security to review emergency plans for all major American cities. Dana Bash, CNN, Washington.

(END VIDEOTAPE)

COSTELLO: Bit more information for you now. House Speaker Dennis Hastert has picked Republican Tom Davis, of Virginia, to head up a select committee on Katrina. Davis' committee will review the emergency preparations and how those agencies responded. That report is due by February 15.

The Louisiana Governor Kathleen Blanco says she liked what she heard from the president. And she issued this statement, she says, "I'm greatly heartened by President Bush's strong words tonight reaffirming the nation's commitment to rebuilding southeast Louisiana. I believe the president was sincere when he said, 'There is not way to imagine America without New Orleans and this great city will rise again.' "

People in New Orleans and around the world had mixed reactions to the president's address. Some say the speech was too little, too late. Others applaud his comments. Jim Roope of CNN Radio joins us now live, in New Orleans, with more.

Good morning, Jim. JIM ROOPE, CNN RADIO CORRESPONDENT: Good morning, Carol.

COSTELLO: There weren't many people in New Orleans to really receive the president's speech. He was very lonely standing there in Jackson Square.

ROOPE: But I did see in heading back to the hotel last night, I did roll by a couple of people. Maybe five or six folks in two different places. And all of them sitting on their front stoops, drinking beer, I guess returning to as much normalcy as possible in Louisiana, specifically in New Orleans. And they were very impressed with what they heard. They had little radios outside their homes and listened to the president's speech.

And what they really loved to hear was when the president said, you can't imagine America without New Orleans. And it will be rebuilt, it will rise again. So they were very pleased with that, very happy with some of the things the president said.

Including the commitment that he has to helping them rebuild their lives, the initiatives for the housing initiatives, the job training initiative, the business incentives for Gulf Coast residents displaced by the hurricane, to get jobs. They're very, very pleased with what they heard last night.

COSTELLO: You know, we all know that in the aftermath of this hurricane that federal, state, and local officials didn't exactly work well together. The president called for a great working relationship in the future. Let's listen.

(BEGIN VIDEO CLIP)

BUSH: The federal government will be fully engaged in the mission, with Governor Barbour, Governor Blanco, Mayor Nagin and other state and local leaders will have the primary role in planning for their own future.

Clearly communities will need to move decisively to change zoning laws and building codes in order to avoid a repeat of what we've seen.

(END VIDEO CLIP)

COSTELLO: So, they're all going to work together, Jim. But local and state officials are going to have a big say in how the new New Orleans will emerge. How exactly is that going to work?

ROOPE: That will be interesting. Because there is a lot of ego involved in this local government, from what I've witnessed, especially by Mayor Nagin. So for him not to be ahead of what's going on, or in charge of what's going on, I think will be a little difficult.

And he has really said some things that I can't possibly see that being reality, including opening up the French Quarter in the next week or two. There is so much trash and debris and mounds of rotting garbage on the streets still I can't possibly see that getting done. So, it is nice that the president says, basically, he will be in charge, but everyone will have a say. It's how well they work together that is the key and Mayor Nagin has been critical, early on in this, albeit emotionally, because in the early stages of this disaster he was pretty candid with his comments. It will be interesting to see how they play together once all of this starts to settle down and things actually begin in the rebuilding process and the recovery process.

COSTELLO: Yes, because you wonder if they're talking, because Mayor Nagin has really taken control. I mean, he held a press conference, as you said, calling for people to come back into the city; opening up the French Quarter and other parts of New Orleans for business. So he's already taking a leadership role.

ROOPE: But is that -- I don't know realistic his leadership role is. He is saying some things and promising some things that I -- from witnessing what I see -- it can't happen. And I think he needs to set back and take a cue from Governor Blanco, step back, take some responsibility for what's happening on the local level here. And then let the president lead this charge. It's OK to be one of the top soldiers, you don't have to be the commander all the time.

COSTELLO: Jim Roope live in New Orleans. We'll check back with you at 6:05 Eastern.

President Bush did relate a hotline number for you to call to help reunite family members separated during the hurricane. That number, 1-877-568-3317. The president says the government will work to bring families back together. All you need to do is call that number.

By now you know about the battle between the insurance companies and victims over the definitions of the words "hurricane" and "flood". Well, the state of Mississippi has now filed suit against the insurance companies. Here is CNN's Allan Chernoff with more.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN FINANCIAL CORRESPONDENT (voice over): Marion Williams insurance adjustor looked at his home's damage and said, it's the result of a flood, not a hurricane.

MARION WILLIAMS, BILOXI RESIDENT: It was driven by the wind. The hurricane is wind, you know, strong winds that blow, it pushed the water in here.

CHERNOFF: Williams has no flood insurance, neither does his neighbor, 82-year-old Bill Veerling, still waiting for his insurance adjuster, Veerling fears he'll also hear the damage came from a flood.

BILL VEERLING, BILOXI RESIDENT: Boloney.

All the way through here, from the beach all the way through diagonally across here, there's evidence, right on down the line, of some low pressure sucking things up. Flood didn't do that. CHERNOFF: In a lawsuit filed Thursday, Mississippi's attorney general charges insurance companies with illegally trying to get out of paying compensation to Katrina's victims.

UNIDENTIFIED MALE: If we don't get this stopped, what insurance companies are trying to do, it's going to bankrupt the Gulf Coast of Mississippi, Louisiana and parts of Alabama as well.

CHERNOFF (on camera): The insurance companies in their standard policies exclude damage resulting from water, even if that water is driven by wind. The companies say homeowners need to buy separate flood insurance offered by FEMA. But relatively few people in this area bought such insurance because this is not a designated flood zone.

(Voice over): Named in the lawsuit are State Farm, Nationwide, All State and other insurers. State Farm said, "The attorney general's actions threatens to undermine the insurance industry's financial stability."

Nationwide said it was "deeply disappointed with the attorney general's charges."

All State said, "It's unfortunate that a lawsuit has been filed so early in the recovery process."

The industry's trade groups says the policies are clear.

JEANNE SALVATORE, INSURANCE INFORMATION INSTITUTE: The insurance industry is did not charge premium for flooding, and flooding is not covered under standard homeowner's policy.

CHERNOFF: The Red Cross estimates Katrina damaged more than one- third of the homes along Mississippi's Gulf Coast. Residents like Bill Veerling hope the state's lawsuit will get insurance companies to soften their stance. He said his only other hope is a bailout from the federal government.

Allan Chernoff, CNN, Biloxi, Mississippi.

(END VIDEOTAPE)

COSTELLO: Now keep in mind that dozens of people in Louisiana have filed suit against some of those insurance companies. They claim the flooding damage there was caused by negligence with the levees. But if it is ruled an act of God, then they are not covered under standard insurance policies.

And as we learned earlier this week, those policies cover water damage, if the water comes through the roof, but not through the walls, which is what happened with the 35-foot storm surge. And that brings us to our DAYBREAK e-mail question of the morning.

MYERS: It's a very tough one, Carol. Because, you know, if the insurance companies weren't charging you premiums for that, then they really shouldn't have to pay for that. But I'll tell you what, I have a home in Florida, that my parents live in. And it is a very difficult thing when you try to separate wind and flood and rain. Did it come in from the outside, from the roof? Did it come in from a water pipe, whatever it could be. Many of those homes were probably totally destroyed by wind, even before the storm surge came in. But how would you even know, right?

So, here's our question of the day. Hurricane versus flood, wind, whatever, should insurance companies be forced to pay for that damage along the Gulf Coast? And well, if they're forced to, will it completely bankrupt the system? It could. Daybreak@cnn.com, let us know what you think.

COSTELLO: You know, we're going to have a segment in the 6 o'clock hour of DAYBREAK, Chad, and we're going to talk to someone from the insurance industry. He says if all these lawsuits go through, all of our premiums will go up 40 percent.

MYERS: Oh, at least.

COSTELLO: But a lot of people say that's not exactly true. Also keep in mind that the insurance industry isn't exactly hurting. I mean, they're some -- I mean, they're doing great.

MYERS: But no one ever thought that there would be a $100- billion storm this year.

COSTELLO: Well, it will be interesting to see what happens, Daybreak@cnn.com.

Still to come, we're going to visit one of the smaller towns devastated by the hurricane. Also, have those dolphins made it home? We will update you on an amazing post-storm rescue effort.

And we'll visit the set of a TV show that's finally getting its due after five years of making you laugh. But first, here's a look a what else is making news.

(COMMERCIAL BREAK)

COSTELLO: International markets mixed this morning. Tokyo's Nikkei down 28 points, the London FTSE higher by 6, the German DAX is up 35.

OK, let's check on the oil, so to speak, the price is down a smidge, but it is still above $64 a barrel in futures trading this morning.

Your news, money, weather and sports, it's 5:16 Eastern. Here's what's all new this morning.

President Bush will lead the nation in a Day of Prayer and Remembrance for the victims of Hurricane Katrina. The president will attend a prayer service at the National Cathedral. That will happen this morning at 11:00 Eastern. President Bush has approved a plan to close 22 major U.S. military bases and realign 33 others. The closure is designed to save the Pentagon more than $4 billion a year. The plan becomes final in 45 days, unless Congress rejects it.

In money news, in the wake of Wednesday's bankruptcy protection filing, Delta Airlines won't be making it's next pension fund payment. The federal pension agency says Delta is required to make that contribution. Pension plans at Delta are under funded by more than $10 billion.

In pop culture, the world wind romance and marriage is over for Renee Zellwegger. Court papers list fraud as the reason, but provide no elaboration. The actress is asking to have her marriage to the country star Kenny Chesney annulled. They were married just four months ago.

In sports, the most recent doping allegation against Lance Armstrong have been traced to cycling's governing body. The head of the organization admits to supplying testing documents to a French newspaper. Armstrong says he's been stung by the allegations, but has no plans to make a comeback -- Chad.

(WEATHER FORECAST)

COSTELLO: That's a look at the latest headlines for you this morning. Our coverage of the aftermath of Hurricane Katrina continues, but as we go to break, from CNN's victims and relief desk, some of the missing and their contact information.

(COMMERCIAL BREAK)

MYERS: And our e-mail question of the day, Hurricane versus flood, should insurance companies be forced to pay these premiums? Be forced to pay, for these -- whole buildings got knocked down by storm surge. Mississippi is filing a lawsuit, what do you think, Daybreak@cnn.com -- Carol.

COSTELLO: We're getting a lot of interesting responses and we thank you for them.

We've all seen the pictures of damage in New Orleans and Biloxi, but there are dozens of other cities and towns that were just as devastated by Hurricane Katrina. And some of them are still waiting for help from the federal government. CNN's Jason Carroll has that story from Slidell, Louisiana.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice over): This is what much of Slidell, Louisiana looks like; 80 percent of homes in the city east of New Orleans are damaged or destroyed, half of the city's 30,000 residents now homeless. Hundreds lined up Thursday for food stamps.

UNIDENTIFIED FEMALE: Slidell is one of the hardest hit areas over here. CARROLL: So much devastation and yet many here say they are being ignored by the agency that is supposed to help, FEMA.

UNIDENTIFIED FEMALE: They turned our case over three times. I had to keep registering.

UNIDENTIFIED FEMALE: The help line is not up. All I want to know is, where's a house to live? What can I do?

CARROLL: The city's mayor, Ben Morris, just as angry.

MAYOR BEN MORRIS, SLIDELL, LOUISIANA: I am so pissed off about it that I can't see straight.

CARROLL: Morris says his anger comes from FEMA's broken promises. Like when the agency assured him trailers would be sent to house Slidell's homeless.

(on camera): What's happened with that request?

MORRIS: Gone.

CARROLL: What do you mean, "gone"?

MORRIS: Nothing has happened.

CARROLL: What do you mean, nothing has happened?

MORRIS: Nothing has happened.

CARROLL (voice over): FEMA has released a statement, saying "we have contact with the mayor and know he's frustrated. We wish we could have met all their needs already, but these things take considerable time, and effort."

Perhaps, the mayor says, there would be more effort if they saw for themselves jut how bad things are here.

(on camera): From the air you really get a better sense of the devastation that the mayor was talking about. When you look down there, it is literally destruction just as far as the eye can see.

MORRIS: This is the greatest catastrophe that has occurred -- natural disaster -- that has ever occurred in the United States. And we're right in the middle of it. And what we're saying, All right, guys, get out of your hotel rooms, come down here, sleep in your car, sleep in a tent, sleep on the floor with us. And give us some help.

CARROLL: He says Slidell has waited long enough.

Jason Carroll, CNN, Slidell, Louisiana.

(END VIDEOTAPE)

COSTELLO: Let's get right to our e-mail question of the morning. MYERS: They're coming in so fast, Carol. Coming off the printer as fast as -- they're still warm. Hurricane versus flood, should these insurance companies be forced to pay for places like Bay St. Louis, Waveland? Places that were damaged by storm surge alone, 20- foot bubble of water that came in and knocked the houses down? And how do you know that the house wasn't knocked down by the 130 mile- per-hour winds first? Sure it's completely gone from the foundation, but how do you tell?

Paul says, "Here's a simple solution. Have the insurance companies pay half and the government pay half. Maybe it goes into our tax money, but that way everyone's happy, except maybe the taxpayer. But most won't mind helping out the Katrina victims."

And from Sean, "People are so gullible, I'm sure those fires you saw there were not caused by Katrina. Don't worry, I'm a Canadian, they should burn their houses down."

And from Sonny in Florida, "The insurance companies should pay for damages caused by wind driven rain and storm surges. The insurance company should not be required to pay for flooding in the damage that was water caused by New Orleans, caused by the broken levees. That would be the responsibility of someone else."

"Flood insurance," from Harry, "maybe they should read their policies. If they weren't paying for flood damage and they probably weren't on their regular premiums, how can benefits from it be claimed now?"

And from Sean, "Is there any possibility that the wind damage on that said property, then the rain came after the fact, the insurance company should pay. Should not be up to the property owner to prove if the wind damage came first or if the flood damage came first. Again, any possibility that the wind could have caused the damage first? Then you guys have to pay."

Marion says, "Yes, the insurance industry needs to get onto its obligation to its policy holders. As one of your announcers pointed out, how would insurance adjustors know where the winds hit, before or after the flood insurance? How can insurance nit pick people already badly victimized, over which forces caused part of the damage? The hurricane, the wind, or the water, which came first, you never know." Marion in Washington, D.C.

Carol, I don't have you in my ear, so I'm going to toss back to you.

COSTELLO: OK, you do that. And keep them coming, Daybreak@cnn.com.

You know yesterday we showed you an incredible attempt to rescue a pod of dolphins washed out to sea during Katrina. So where are these dolphins now? Well, believe it or not, some of them are at the Holiday Inn right now. We'll explain in our next half hour.

Plus, for a couple of years now, it has made people laugh, but it has done it quietly. Now "Scrubs" may be about to strike gold on Emmy night. Meet the cast, coming up.

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