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St. Bernard Parish Destroyed; Response to President Bush's Speech; Looking at Insurance Companies Contracts; Hurricane Ophelia May Strike Again

Aired September 16, 2005 - 07:30   ET

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

SOLEDAD O'BRIEN, CNN ANCHOR: Used to live there, satisfied with what they heard from the president last night. A look at that's ahead on AMERICAN MORNING. Stay with us.
(COMMERCIAL BREAK)

S. O'BRIEN: Welcome back, everybody. It's just about half past the hour on this AMERICAN MORNING.

We have a split show this morning. Miles just outside of New Orleans in Chalmette, in St. Bernard Parish, which is to the east of New Orleans.

Miles, good morning to you.

Wow. What are we looking at?

MILES O'BRIEN, CNN ANCHOR: Good morning, Soledad.

About four miles or so from the French Quarter. And right beneath my feet sort of tells the story. Look at this mud. And as it dries out, look at the way it kind of cakes. It almost looks like some sort of weird moonscape.

As the day goes on, and as the sun heats this up, it starts bubbling and oozing. It's filled with methane because there was a big oil spill here. This is really, if you think about it, toxic waste, all this mud. About 10 feet of water came through here. And this mud is everywhere over this city. It's hard to even imagine how they're going to be able to clean up this mess here.

Thirty thousand structures here in the parish of St. Bernard. There may be a handful, if that, that will be able to be saved. Otherwise, we're talking about a huge demolition operation.

Joining me now is the parish president, Henry "Junior" Rodriguez.

Mr. Rodriguez, good to have you with us.

First of all, I want to talk about what's going to happen tomorrow. You're going to start allowing residents to come back here. And you've had some real warnings from them because I think they think they understand what a hurricane's all about. They haven't seen this.

HENRY "JUNIOR" RODRIGUEZ, PRESIDENT, ST. BERNARD PARISH: No. You know, the last bad hurricane we had was Betsy and that was really a powder puff compared to this. This thing has devastated the whole parish, the entire parish. Even though we told people what they need to expect, when people see this, it's going to be emotional, very emotional for all of them.

M. O'BRIEN: How concerned are you about this and are you going to provide some sort of counseling for folks? I mean you've got your hands full with so many other issues but there is going to be a tremendous amount of grief as people realize the calamity.

RODRIGUEZ: Right. And Saturday is going to be our trial period and we're going to see what's happening. We had anticipated having people on every two days and we were going to have a different section in. But that's put on hold for the time being. We're going to see how everything works Saturday and we may just hold off for another week before we let anybody else in. We basically are trying to see what, you know, what's the emotional reaction to the people that come in.

M. O'BRIEN: I heard you talking to residents of your parish. And you said, you know, all you have are your memories.

RODRIGUEZ: That's it. I mean, people aren't going to they're just not going to believe their eyes when they come to this parish. All, you know, when sometimes normally when you evacuate, you just don't take everything, you know. Sometime you leave pictures behind. And I don't think there's going to be a lot of people are going to have pictures that's going to be that hasn't been damaged by this storm.

M. O'BRIEN: The amount of time it will take to rebuild here is tremendous. So much so that the people will have to move elsewhere and begin lives elsewhere. Are you concerned, in the long run, St. Bernard Parish will cease to exist?

RODRIGUEZ: No. St. Bernard Parish, we're going to build back and we're going to get we're going to be bigger and we're going to be better. This is a strong parish. People their roots are here. They'll be back. And we are going to have temporary housing that's going to allow people to come back and work on their homes as soon as possible. We're going to put up some trailer cities and things of that nature.

They'll have an opportunity to come back and build. And it's not going to be that long. Of course, you can, obviously, you can see the clean-up that we have to get done. But I think once people come back and they see what they have and what they don't have more, I guess, is more what they're going to see. But we're going to have trailers and everybody's going to have an opportunity to come back.

M. O'BRIEN: In the meantime, though, you lost a crucial storm levee, which puts you very susceptible. Hurricane season isn't even over. Puts you very susceptible even to a mild tropical storm to more flooding. That's going to take some time to fix as well.

RODRIGUEZ: What can we lose? We've lost it once. I mean, I don't see any hurricane that comes in now, she better bring her own damage with it because we're going to cheat her. There's nothing here for I mean, look around you. What can it do?

M. O'BRIEN: Henry "Junior" Rodriguez, parish president, wish you well here.

Back to you, Soledad.

S. O'BRIEN: Oh, those pictures are tough to see, Miles, and I know that they're even worse seeing them in person. They don't really even translate over the television set as they do when you see them face-to-face. We'll check in with you again.

Last night, President Bush committed to what he called one of the largest reconstruction efforts the world has ever seen. Mississippi lost a quarter million homes a quarter million homes, some of its most critical businesses and more than 200 people to Hurricane Katrina. Allan Chernoff is live for us in Biloxi this morning.

Allan, what was the reaction to what the president proposed last night?

ALLAN CHERNOFF, CNN CORRESPONDENT: Soledad, much of what the president said is exactly what people here in Mississippi wanted to hear. That the federal government is standing behind the state, that the Gulf Coast is going to come back. Also, of course, the opportunity zone to build businesses and up to $5,000 per person to help find a job.

But especially compelling right here in Biloxi was the president's imagery that lovely homes, once again, will line the streets of Biloxi. However, for the people who have lost their entire home, they're wondering exactly how is that going to happen, especially if insurance companies are saying you may not be covered.

Of course, there's also a housing crisis here. More than 100,000 people in this state are now without homes. They are entirely displaced. The governor, speaking on "Larry King Live" last night said he welcomes the federal aid but he's concerned about the idea of more federal control in the event of another disaster.

(BEGIN VIDEO CLIP)

GOV. HALEY BARBOUR, MISSISSIPPI: I like the sound of the Gulf opportunity zone, the home ownership, the work force training. But we don't need the military to come in to Mississippi or Florida or New York or any of those states. When if a disaster comes, we do need the federal government's help. We need them to be a good partner, but we don't need a takeover.

(END VIDEO CLIP)

CHERNOFF: So a very proud response here in Mississippi and, of course, still plenty of hope.

Soledad. S. O'BRIEN: Allan Chernoff for us this morning.

Allan, thank you.

Mississippi's attorney general is suing to force major insurance companies to pay for flood damage. Flooding is not covered by standard home owners policies. Joseph Annotti is the spokesman for the Property Casualty Insurers Association of America. He's in Chicago this morning.

Thanks for talking with us.

JOSEPH ANNOTTI, INSURANCE INDUSTRY SPOKESMAN: Good morning. Thank you for having me.

S. O'BRIEN: Explain to me the basic question. Where is the line? When you see a house that is completely devastated, as we've seen in all the pictures we've been looking at this morning, what makes you say that something is hurricane damage and something is flood damage? Why is it not all hurricane damage?

ANNOTTI: Well, it's not hurricane damage. It's either wind damage or flood damage. Those are the covered those are the terms used in the policy. I don't think you'll ever see a hurricane damage listed in the policy.

And there is a science to this, Soledad. Adjusters are trained to know what wind damage looks like. Damaged shingles, roofs blown off, things like that. Flood damage typically leaves a water line, like the ring around your bathtub.

Where there are disputes, you can bring in engineers, forensic engineers, that can determine how the bolts are bent was that caused by the force of wind or the force of water. Forensics is pretty advanced. You can reconstruct a murder scene from blood splatters. There's a lot of evidence of homes being blown down or floods washing over them that can determine exactly that caused that damage.

S. O'BRIEN: The attorney general in Mississippi, as we mentioned, Jim Hood, said that your practices are and I'm quoting him here, deceptive, you exploit loopholes, you take advantage of people. How do you respond about what he said about your industry?

ANNOTTI: Well, I think the attorney general is trying to it's a classic case of robbing peter to pay paul. I'm sure his intentions are good. He wants what's best for the citizens in Mississippi and, frankly, so do we. But voiding contracts, rewriting contracts arbitrarily would have potentially as devastating an impact as the storm would on the rebuilding process and on the economy in Mississippi.

S. O'BRIEN: Your industry has $400 billion in capital. I think last year, you made just under $42 billion in underwriting profit alone. So when people write their checks monthly to keep their coverage, can you understand how they feel betrayed by their insurance companies in the wake of the biggest disaster we've ever had in this country?

ANNOTTI: Well, insurance companies and adjusters were some of the first people on the scene. We were out there writing checks every single day. We are going to honor every word of our contracts, pay every covered claim.

But for the attorney general to say that not only do you have to pay covered claims, but you have to pay all claims because I'm going to rewrite your policies to force you to pay all that, puts the tab on every other policyholder. Flood insurance has been available from the federal government for 40 years. Forty years. It's not a surprise that hurricanes strike the Gulf Coast. The coverage is available. And for those that don't have coverage, President Bush outlined a comprehensive rebuilding structure where they're going to get the assistance they need.

S. O'BRIEN: You know the slogans of the three major insurers that are now named in this lawsuit, Nationwide is on your side, Allstate, our good hands are here to help, State Farm, like a good neighbor State Farm is there. At the end of the day, is really the goal to make billions of dollars in profit or is the goal to help people?

ANNOTTI: The goal is to honor your contracts and pay your claims and put people back on their feet. That's what we do. We do it very well.

The industry has answered the bell after every hurricane, after the terrorist attacks, after earthquakes, after a fire that burns down one home, we are there. We're going to honor those commitments. But we can't, as an industry or as individual companies, afford to pay claims that were simply not covered for which there was no premium collected. It voids the contract. Moreover, if the Mississippi attorney general can void insurance companies' contracts, why couldn't he void every other contract, mortgages and construction agreements? There's a dangerous precedent that could be set with this lawsuit.

S. O'BRIEN: Joseph Annotti is a spokesman for the Property Casualty Insurers Association of America.

Thank you for talking with us.

ANNOTTI: Thank you.

S. O'BRIEN: There are other stories are making headlines today. Let's get right to those with Carol Costello.

Good morning, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Good morning, Soledad.

Good morning to all of you.

"Now in the News."

President Bush is joining religious and political leaders at the National Cathedral in Washington as part of a National Day of Prayer on behalf of Katrina victims. In a prime time address last night, the president pledged to use government resources to rebuild.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Throughout the area hit by the hurricane, we will do what it takes. We will stay as long as it takes to help citizens rebuild their communities and their lives.

(END VIDEO CLIP)

COSTELLO: Some experts say President Bush's post-Katrina rebuilding program could cost $200 billion or more.

We are just getting in word this morning of a car bombing outside of a Shiite mosque north of Baghdad. CNN now confirming at least 10 people were killed. That's just one of several early attacks across Iraq today. Also in Baghdad, a gunman opened fire killing at least 12 people in the span of an hour. A Muslim cleric among the casualties.

And in the al Anbar Province of western Iraq, U.S. war plans hit a suspected al Qaeda facility. At least nine people killed there.

Authorities in New Jersey say three lab mice infected with the bubonic plague are missing. The animals apparently vanished from a lab at the Public Health Research Institute. The facility is working on a federal project to find new vaccinations to protect people from bioterrorism. Officials say the mice are not a public health threat and they do not suspect any criminal activity or foul play at this point. But the mice are still missing and the FBI is investigating.

Oscar-winning actress Renee Zellweger is untying the knot. The "Bridget Jones" star and country singer Kenny Chesney are calling it quits four months after their surprise wedding in the U.S. Virgin Islands. Reps for both celebrities confirmed the split saying that the marriage is being annulled. It was the first marriage for both.

And North Carolina's most unwelcome guest is refusing to leave. Ophelia dumped up to 18 inches of rain in some parts, lashing out at coastal homes and businesses. The category one hurricane has been downgrade do a tropical storm but it's still packing winds of some 65 miles per hour.

So, Chad, when will Ophelia leave?

CHAD MYERS, METEOROLOGIST: Well, the folks up in New England don't want it to leave, Carol, because it kind of has its sight on up to the northeast. The longer it sits out here and maybe drifts away, the better. But there you see the center of circulation and that's Cape Hatteras. So it's still quite a ways out there.

But the forecast is for this thing to move to the northeast. And that's Nantucket right there. There's Cape Cod. That's too close. The waves, the winds on Saturday are going to be really bad up there across parts of the northeast. And actually tropical storm watches have been posted from Plymouth right on back down to Point Judith. So if you're out there, you're going to have to watch out for rip currents and tides. And if you're trying to sail, whatever out here, it is going to be one ugly weekend up there.

We're watching a couple more little storms out here. No names yet, no depressions yet but the problem is, we may be running out of names. There's Ophelia. Philippe, Rita, Stan Tammy, Vince, Wilma. Then we go to the Greek alphabet, Alpha, Beta, Gamma, Delta. Let's hope we don't get there.

Back to you, Soledad.

S. O'BRIEN: Yeah, you know what, I second that. Let's absolutely, positively hope we don't get there.

Thanks, Chad.

MYERS: You're welcome.

S. O'BRIEN: Still to come this morning, more on Katrina's aftermath. We're going to meet one New Orleans evacuee who says his life is better now than it was before the storm. We'll explain ahead on AMERICAN MORNING.

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M. O'BRIEN: Live pictures now, Chalmette, Louisiana, St. Bernard Parish. No phone, no lights, no water, no sewer. The school shut down. The teachers sent home. The hospital, all of the staff pink slipped.

And tomorrow, residents will return to scenes like this. Imagine coming home and seeing your home look like this. That's what will happen tomorrow when people of St. Bernard Parish are allowed to return and assess the damage.

Of course, many people are nowhere near this place. They've moved on many respects. Kelly Wallace has been following many of the evacuees who have scattered to the four winds. She's been in Salt Lake City where she met one man who's starting a new job and perhaps a new lease on life.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN CORRESPONDENT (voice-over): This is a story about one man's belief in faith.

(on camera): So how do you feel? Are you nervous?

JOEY FREY, EVACUEE FROM NEW ORLEANS: I'm pretty excited. Pretty excited, you know. First day going.

WALLACE: (voice-over): Forty-one-year-old Joey Fry says he was a little lost in New Orleans. He wasn't working. Things just weren't going his way. Then came Katrina and a horrendous experience in the Superdome.

FREY: Get me the hell out of here, you know? Everybody was going crazy at the Superdome..

WALLACE: And then, ultimately, a seat on an evacuee flight out of Louisiana.

FREY: The pilot came on and said, oh, well, we're going to my hometown of Salt Lake City. And I went, Salt Lake City?

WALLACE: What did you think when he said Salt Lake City?

FREY: I was shocked.

WALLACE: He and some 500 other evacuees came here to a national guard camp about 30 miles south of Salt Lake City. Within 24 hours of his arrival, Joey, who has lived his entire life in New Orleans, told his family he wasn't going back.

FREY: Like I said to my sister, she didn't understand at first. But when I explained it to her about, look, I probably got a job already. I just filled out, I don't know, 15, 20 applications from all kinds of companies. Everyone wants to help us. You know, why should I come back? And then she understood.

WALLACE: Joey got a part-time job through a staffing agency working in the stock room at a new Cabela's sporting goods store, making $9 an hour. Six other evacuees are also working here.

FREY: Not so pretty, but it will get better.

WALLACE: A job will hopefully lead to an apartment, says Joey.

(on camera): After everything you've been through?

FREY: I feel it's just fate, I really do, that this happened. I believe it was an act of God.

WALLACE: Of course, there are things he'll miss about his former home.

FREY: I've got friends I went to school with that are in California. They all say the same thing, they have great jobs but they miss the food. You know, so...

WALLACE: How's the Cajun food in Salt Lake City?

FREY: Oh, no!

WALLACE: Joey Frey falls in a rare but extraordinary category.

FREY: It's just open here, you know? I mean, it's like it's all in the palm of my hand, you know, and I can just run with it. Whatever I want to do.

WALLACE: A man in a better position after the Katrina disaster than before.

Kelly Wallace, CNN, Salt Lake City.

(END VIDEOTAPE)

M. O'BRIEN: Back live now in St. Bernard Parish. Joey Frey tells us he appeared on local television there with some broken glasses and very shortly thereafter he got a new pair.

I'm having a hard time walking through this muck, by the way, it is that thick. And actually it's much thicker in some places. This is what is in store for people who return here.

The question is, on the point of return is, who will come back? Who will come back for good? It's unclear right now of all those people who have scattered to all those places who will.

Take a look at a poll done by "The Washington Post" and consider these numbers. This is of 680 people they spoke to in Houston, 44 percent of the evacuees said they would permanently relocate there, 43 percent said they would return, 12 percent say they are undecided. So it remains to be seen how many people will return to this part of the world.

Back with more in a moment.

(COMMERCIAL BREAK)

S. O'BRIEN: Turns out that Microsoft is showing some interest in a popular Internet service provider. With that and a look at the markets, Andy Serwer is "Minding Your Business."

A little bit after surprise there.

ANDY SERWER, CNN CORRESPONDENT: Yes. Ran by guess which company.

Let's talk about the markets, first of all, Soledad. Yesterday, a mixed picture on Wall Street. The Dow was up a little bit. The Nasdaq slipped. The S&P up.

So you can see that the president's speech seems to be playing pretty well on Wall Street. Stock futures are up briskly and the price of oil is down.

One stock that could be active today is our parent company, Time Warner. This has to do with a possible business combination with Microsoft, another stock that could be active today. This follows press reports that describe discussions between the two companies. One says that Microsoft could be buying a stake in AOL, which is, obviously, owned by Time Warner. Another suggests that there could be a combination of the sales forces between the companies. That AOL could use Microsoft Search instead of Google and on and on.

Of course, these two companies historically have been fierce rivals but, you know, the technology landscape changes very quickly. Yesterday I ran into Dick Parsons upstairs and he was genial as usual but rather tight-lipped about any discussions.

S. O'BRIEN: Gave you nothing, in other words?

SERWER: Exactly. Yes.

S. O'BRIEN: All right, Andy, thanks.

SERWER: You're welcome.

S. O'BRIEN: Coming up in just a moment, some more reaction to the president's speech last night. He made lots of promises to the Gulf Coast. How are they playing out with the folks who live down there? A look at that's ahead on AMERICAN MORNING.

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