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CNN Live At Daybreak

Senator Frist Gets a Subpoena; Another Waterlogged Morning in Northeast

Aired October 13, 2005 - 06:00   ET

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


CAROL COSTELLO, CNN ANCHOR: It is Thursday, October 13. Senator Frist gets a subpoena. Some say this could be a sign of what's to come for the Republican leader in the Senate.
Another waterlogged morning in the Northeast. Now more families could be forced to evacuate their homes.

And residents of New Orleans' hardest hit district return home. What did they find?

ANNOUNCER: From the Time Warner Center in New York, this is DAYBREAK with Carol Costello and Chad Myers.

COSTELLO: And good morning to you.

We'll have more on those stories in just a minute.

Also ahead, a CNN exclusive. At the height of the disaster in New Orleans, one hospital in the depths of despair. What really happened at Memorial? Did doctors consider the unthinkable?

But first, now in the news, Senate Majority Leader Bill Frist must turn over stock records to the Securities and Exchange Commission. Both the "Washington Post" and the "New York Times" reporting the SEC subpoenaed the records as part of its insider trading investigation. The Justice Department also investigating.

The Russian resort city of Nalchik has been sealed off by troops after violence erupted there early this morning. Russian officials say groups of rebel forces attacked government buildings, but were fought off by police. However, local reports from the scene just north of Chechnya say there is still gunfire being heard in the city.

Indictments have now been handed down in one of the country's largest music piracy cases. Three men in California face charges in an alleged scheme to distribute and sell nearly half a million illegally copied CDs and DVDs.

To the Forecast Center now and Chad -- good morning.

CHAD MYERS, CNN METEOROLOGIST: Carol, I actually saw one of those bootlegged CDs one time. You really, you can't tell.

COSTELLO: No, you can't.

MYERS: No, it's really bizarre. COSTELLO: And they're cheap.

MYERS: Yes, well, of course they are. They're cheap to make and then they're obviously ripping off everybody else who actually made that music. Anyway, rain showers -- I digress.

(WEATHER REPORT)

COSTELLO: Up first this hour, the investigation into Senate Majority Leader Bill Frist's July stock sale. The "New York Times" and "Washington Post" report the SEC has now issued a subpoena for Frist's records and documents in the case. Frist sold his hospital corporation shares shortly before the release of a financial report that sent the stock tumbling. Both the Securities and Exchange Commission and the Justice Department are investigating.

For more, let's check in with CNN Radio's Dick Uliano -- good morning, Dick.

DICK ULIANO, CNN RADIO CORRESPONDENT: Good morning to you, Carol.

COSTELLO: Does this come as a surprise to Mr. -- actually, he's known about this for some time, it just hasn't been made public.

ULIANO: You've got it exactly right. Frist, of course, is the top Republican in the Senate. And, Carol, he's under investigation by the SEC, the Securities and Exchange Commission, over the summer sale of stock in Hospital Corporation of America. He sold the stock days after the company warned investors of weaker than expected financial performance and the stock price plunged.

Now, Frist says he did nothing wrong, and he sold the stock in the company -- which, by the way, was founded by his family -- to eliminate conflicts of interest in case he should run for president.

But he's under the investigation by the SEC. And, Carol, this investigation is really not all that much unlike what sent Martha Stewart to jail. I mean she had privileged information about public stock that she held which she sold. And this is what Frist is accused of, the top Republican in the Senate.

But, again, he denies any wrongdoing.

COSTELLO: Interesting.

So when might he testify under oath?

ULIANO: Well, the investigation continues. He's under investigation not only by the SEC, but also by federal prosecutors at the Justice Department.

And, Carol, you know, one of the big -- certainly one of the major significances of all of this is that this investigation goes on as the second highest ranking Republican in the House, Tom DeLay, is under investigation in the Texas case for finance laws and the president's approval ratings are down. So it's a tough patch for the Republican Party, as they look toward midterm elections coming up next year.

COSTELLO: Yes. In the latest NBC poll, the president's approval rating is at 39 percent, the first time it's slipped below 40 percent.

Dick Uliano, reporting for us live Washington.

Thank you.

A possible new dimension in the investigation into the leak of a covert CIA operative's identity. "New York Times" reporter Judith Miller testified before the grand jury for more than an hour. Sources close to the case say she gave details about a previously undisclosed conversation that she had back in June of 2003 with "Scooter" Libby, who is the vice president's chief of staff.

The conversation is significant because, according to one source involved in the case, the special prosecutor, Patrick Fitzgerald, didn't even know about it until after Miller was released from jail two weeks ago and turned over her notes.

Now to New Orleans and the heartbreak many are facing as they go home, or try to get there. The city's mayor, Ray Nagin, visited evacuees staying at a shelter in Shreveport on Wednesday and he got to hear loud and clear the frustration some are feeling.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I want to go home.

MAYOR RAY NAGIN, NEW ORLEANS: Well, we're going to...

UNIDENTIFIED FEMALE: I want to help the people of New Orleans.

NAGIN: We're going to get you home.

UNIDENTIFIED FEMALE: But I can't do it if you're going to give us all these all pretense. We want everything legit and come to the table. It's people like us that's going to make the city flourish, not promises or false hopes.

NAGIN: That's what we're trying to do.

(END VIDEO CLIP)

COSTELLO: He got an earful.

Carrie Lee is in New Orleans this morning and she joins us with more about what's going on there today -- hello, Carrie.

CARRIE LEE, CNN CORRESPONDENT: Good morning, Carol.

Well, cleanup efforts are continuing here in New Orleans, with some residents returning for the first time since hurricane Katrina struck six weeks ago.

(BEGIN VIDEO TAPE)

LEE (voice-over): Wednesday was the first day residents of New Orleans Ninth Ward were allowed to return to their homes. But the afternoon brought mostly silence. Few people took part in the Look and Leave plan. Some had nothing to salvage.

After a seven hour drive from Houston, this woman had to leave empty-handed. The National Guard deemed the house she rented with her two children too unstable to enter.

They said I can't go in there. They don't suggest that I go in, because they said I could get killed.

LEE: Others surveyed the damage, recounting what they were seeing to friends and neighbors. Some, like this man, determined to rebuild his boyhood home; others vowed never to return.

Meanwhile, the 64-year-old man beaten on Bourbon Street by police officers Saturday pleaded not guilty to four charges, including resisting arrest. The three officers have been charged with battery, released on bond and suspended without pay after pleading not guilty. Their attorney says two of the officers saw retired teacher Robert Davis stumble into a police horse and approached him out of concern for his safety.

His speech was slurred. He was belligerent. He told the officers to go F themselves.

LEE: At his arraignment, the judge set a trial date of January 18 for Davis.

(END VIDEO TAPE)

LEE: Of the four counts against Robert Davis, one of them is a count of public intoxication, yet no Breathalyzer test was ever given -- Carol, we'll see what happens at the trial on January 18.

COSTELLO: We will.

I'm interested in the building behind you.

Are you across the street from the bureau, from the CNN bureau?

LEE: Yes, I am. Yes, I am. This is outside of the French Quarter on the western, more western part of town.

COSTELLO: And the reason I bring that up is because that wrecked house clearly has to be torn down. And it's been, what, six weeks since the hurricane? And it hasn't been touched. LEE: It hasn't been touched. And I'll tell you, Carol, this really -- this area really pales in comparison to the Ninth Ward area, where we were yesterday. You've been to this area. You've seen. It's just street after street of homes that really, it seems like, need to be razed. And over half of the Ninth Ward area isn't even available for people to go visit.

COSTELLO: Yes.

LEE: People just started to go to their homes yesterday, but that includes less than half of the area. The cleanup efforts still have a long way to go.

COSTELLO: Yes, I know Mayor Ray Nagin says about 50,000 to 60,000 homes have to be bulldozed.

Can your photographer pull out for us and show us that house?

LEE: I'm sorry?

COSTELLO: Can your photographer...

LEE: They'd like to see the back of the house?

COSTELLO: Yes. Could he pull out so we can see it?

LEE: Sure. Yes. This house has had some -- has sustained some serious damage, as have a few others in the area. You can see it's really just a bit of a shell, a couple of remnants, chairs and a couple of hanging lamps, things like that. But this house clearly a very precarious situation and I'm sure that this will be leveled at some point in time -- Carol.

COSTELLO: I'm sure it will be. But it looks so strange, like a dollhouse. It's just interesting that it hasn't been torn down...

LEE: It looks like...

COSTELLO: ... if you walk by it, it's...

LEE: ... a giant dollhouse, you're exactly right.

COSTELLO: Right. It's dangerous, too.

Carrie Lee live in New Orleans this morning.

LEE: It is.

COSTELLO: Thank you.

It has been six days now since the killer earthquake hit Pakistan and relief teams still have not reached some remote villages. In a televised address, Pakistani President Pervez Musharraf says at least 23,000 people were killed by the quake in Pakistan alone. Another 50,000 were injured. President Musharraf also said his nation is in dire need and he appealed for more international help. Secretary of State Condoleezza Rice visited Pakistan. She says the U.S. will likely add to the $50 million it has already committed to quake relief.

Relief for quake survivors is, of course, very welcome. But the true toll of the disaster is being measured in human lives.

Our senior international correspondent, Matthew Chance, reports from the capital of Pakistani-controlled Kashmir.

(BEGIN VIDEO TAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Imagine being the only kid in class to survive -- friends, teachers all buried beneath the rubble.

MOHAMMAD WASEEM, SCHOOL SURVIVOR (THROUGH TRANSLATOR): We were taking our exams when the whole building started to shake and collapse. I think a few on the ground floor scrambled out, but the students on the upper floors all died.

CHANCE: Crushed in a school turned concrete tomb are hundreds of its children. All that remains are painful reminders of what could have been -- the drum kit from the music class, a young scientist's microscope. In a few violent minutes, Waseem told me, this earthquake shattered far more than just buildings.

WASEEM (THROUGH TRANSLATOR): We were all hoping to be engineers or doctors, but now we can't even think about our futures. We have nothing left.

CHANCE (on camera): Children like Waseem are among the few who escaped this destruction. All over this area, hundreds of crowded schools like this have been laid to waste. And across this disaster zone, it seems almost an entire generation has been lost.

(voice-over): But survivors are now crucial to the recovery effort. Waseem guides rescue workers to where he last saw his classmates. So many days after the quake hit, though, there's little hope.

WASEEM (THROUGH TRANSLATOR): If they had come on the first day to help, maybe they could have saved my friends. But they didn't come till now, and they can't even find their dead bodies.

CHANCE: It is a missed opportunity that may have cost more young lives, one Waseem says he'll never forget.

Matthew Chance, CNN, Muzaffarabad, Pakistan-controlled Kashmir.

(END VIDEO TAPE)

COSTELLO: Still to come this hour, the Delta blues. Will the bankrupt airline have problems paying its employee pensions? Our airline expert explains what it could mean for the industry, and for you, too.

Six straight days of rain, and it's only going to get worse, in the Northeast.

Plus, a CNN exclusive from New Orleans -- a troubling accusation. Was euthanasia considered an option at the height of one hospital's distress?

But first, here's a look at what else is making news this Thursday.

(COMMERCIAL BREAK)

COSTELLO: The war in Iraq will be the focus for President Bush this morning. The president will take part in a teleconference, where he will be speaking with U.S. troops stationed in Tikrit. CNN will provide live coverage. That will start at 9:45 a.m. Eastern.

Your news, money, weather and sports.

It's 6:16 Eastern.

Here's what's all new this morning.

Investigators are going after the stock records of Senate Majority Leader Bill Frist. The "Washington Post" and the "New York Times" report that the Securities and Exchange Commission subpoenaed the records as part of its insider trading probe.

CNN has learned that Porter Goss will become the new spy master. The Bush administration approved a plan that puts the CIA chief in charge of all human intelligence gathering. He'll watch over intelligence gathering operations from the Defense Department and 13 other government agencies.

In money news, iPods are quickly moving beyond just music. Apple now has video iPods so that you can download and watch your favorite TV shows and music videos. Shows like "Desperate Housewives" and "Lost" would be available the day after they air no regular TV.

In pop culture, look at that. Chubaka is becoming an American citizen. It's actually British-born actor Peter Mayhew, who's scheduled to take the oath on Monday. He's usually in the Chubaka suit. He starred in four Star Wars films.

In sports, controversy in the American League championship series. What looked like a missed strike out call actually put the winning run on base in the ninth inning. Chicago went on to win 2-1 over the Los Angeles Angels of Anaheim. That series is now tied at one game apiece.

Actually, I found out a little more about this -- Chad.

MYERS: Yes, I got an e-mail, too.

COSTELLO: The umpire...

MYERS: Yes. Go ahead.

COSTELLO: Yes, go ahead and tell people then.

MYERS: Well, the umpire thought that the catcher did not catch the strike three.

COSTELLO: It hit the dirt behind the plate, right?

MYERS: Yes, but it didn't. And really, from the umpire's angle, he couldn't even tell that. But he thought it did and that was the call and that's the way the ball bounces, so to speak.

COSTELLO: And the White Sox win.

MYERS: Well, there you go. You have no idea what would have happened after that anyway, so there's no way, you know -- and there's lots more games to go.

COSTELLO: Sure.

MYERS: There you go.

Good morning, Carol.

(WEATHER REPORT)

COSTELLO: Coming up next on DAYBREAK, Delta is warning its employees that it may have to default on its pension plans.

Plus, will natural gas prices be heating you up this winter? You will not believe how much extra you'll be paying.

But first, good morning, Boston.

(COMMERCIAL BREAK)

COSTELLO: A little "Business Buzz" for you this morning.

DAL vanishes from the New York Stock Exchange today. According to the "Atlanta Journal Constitution," the move comes after Delta traded under $1 a share for 30 straight days. So Delta closed yesterday at $0.62 a share.

Delta, which filed for bankruptcy earlier this month, is struggling to stay afloat, but it's the company's veteran employees who may have to pay the price in the long time.

Ben Mutzabaugh from Usatoday.com joins us from Washington to explain.

BEN MUTZABAUGH, "USA TODAY": Good morning, Carol.

COSTELLO: They're going to raid the pensions, aren't they?

MUTZABAUGH: It seems likely. Delta says there is a chance, and that's a chance, that that might -- that may not have to happen. But most experts think it looks pretty shaky for the prospects of workers' pensions. One of the things Delta is doing, is they're asking Congress to allow them 25 years to make payments into the pension program and if not, there's -- if Congress doesn't approve that extra measure that would allow them more time to fund their pensions, Delta says we can't do it. We're going to default.

COSTELLO: So what happens to the worker who has worked at Delta for 25 years and is now retired and counting on those checks to come every month?

MUTZABAUGH: Well, you're -- that's an excellent question. And for obvious reasons, a lot of those workers are very, very concerned. If that happens, almost every retiree will see some reduction in their benefits. And the reason that happened is once Delta defaults, if it defaults, on its pension plan, that will get kicked over to the federal -- a federal arm that insures pensions. And they'll guarantee that, but only up until a certain point.

So especially workers who are making a lot of money through their pension plan, some of that is going to be cut.

I saw a report in the "Minneapolis Star Tribune" where it looked at a similar situation at Northwest, where some pilots are making as much as -- who had been with the company for 30 or 40 years -- are making, you know, $88,000 a year in pension payments. But if Northwest defaults, for example, and that gets kicked over to the federal arm that insures pensions, the maximum payment is $45,000 a year.

So, I mean, for people who are counting on, say, $88,000 -- and that's an extreme example, but for people who are counting on $88,000 and that gets dropped to $45,000...

COSTELLO: Well...

MUTZABAUGH: Yes.

COSTELLO: ... you plan your retirement...

MUTZABAUGH: Yes.

COSTELLO: ... according to the money you have.

MUTZABAUGH: If it gets cut in half...

COSTELLO: So you can imagine, how are you going to pay your bills?

MUTZABAUGH: Yes, so...

COSTELLO: You know, I think one thing to keep in mind here is it makes you afraid to work for a company who still offers an old- fashioned pension plan.

MUTZABAUGH: That's right.

COSTELLO: I mean don't you really want to work for a company with a 401K?

MUTZABAUGH: Well, always there's a risk. And I think this is probably one of the problems with pensions over the past few years. I think it's one of the reasons we've seen more employees opt for -- when they have an option -- 401Ks. The difference is a pension is what's considered a defined payout. That means that you're guaranteed, through whatever contract negotiations you've had with your company, usually set up through a union or a group of employees, you're guaranteed a certain monthly payment once you reach the end of the pension program.

401Ks are a little different. It's your own money that you're putting into an investment account. Now, sometimes employers will match it a little bit, but it's your own money that's being put in an investment account. So when you leave the 401K program, that money is yours. It may grow or shrink depending on how well your investments have done, but it's less risky in that you're guaranteed that that's your money.

And, of course, the risk is the investments could do poorly.

COSTELLO: Right.

MUTZABAUGH: But at least you're -- you have access to your own cash.

COSTELLO: I know. And it's so much better to depend on yourself these days, as much as you can.

MUTZABAUGH: It seems that way.

COSTELLO: Ben Mutzabaugh from Usatoday.com.

Thanks for joining us this morning.

Still to come...

MUTZABAUGH: It's always a pleasure.

COSTELLO: Still to come on DAYBREAK, as the hard hit Northeast tries to dry out, more flooding could be on the way.

Also, natural gas prices are on the rise in a big way. How will you react to the costly hikes and what can you do to save money? We'll tell you next.

(COMMERCIAL BREAK)

ANNOUNCER: From the Time Warner Center in New York, this is DAYBREAK with Carol Costello and Chad Myers.

COSTELLO: And good morning to you.

Thank you for waking up with us.

Chad will be along with your forecast in just a minute. And coming up in the next half hour, desperate measures in New Orleans. There are accusations that mercy killing became a part of Katrina's aftermath. We've got a report that you can only see right here on CNN.

And price hikes for home heating -- how can you rest more comfortably this winter, without going broke? We'll have more on that a little later.

But first, now in the news, there is still sporadic gunfire being heard in the Russian resort city of Nalchik. Violence erupted there earlier this morning when groups of rebel forces attacked government buildings in the area just north of Chechnya. State TV reports say as many as 50 of the rebels are dead. Several cleans were also killed in the attacks.

New developments this morning in that stock sale investigation involving Senator Bill Frist. The "New York Times" and "Washington Post" report that the Securities and Exchange Commission has now subpoenaed stock records from the majority leader. Frist is also expected to testify under oath in the investigation.

Tests in Turkey have confirmed they have found the deadly bird flu. Thousands of birds were quarantined due to fears over the virus. Officials there are asking for a million boxes of the vaccine to treat possible human cases of the flu.

To the Forecast Center and Chad -- good morning.

MYERS: That's a little scary.

COSTELLO: Yes, it is.

(WEATHER REPORT)

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