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CNN BREAKING NEWS

President Bush to Name Sachs CEO Henry Paulison as Treasury Secretary; Latest on Investigation of Alleged Massacre of Iraqi Civilians by U.S. Troops

Aired May 30, 2006 - 08:00   ET

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


MILES O'BRIEN, CNN ANCHOR: A CBS journalist arriving in Germany overnight for more critical treatment. She is in intensive care. Two colleagues killed in that attack. We'll have fan update on her condition shortly.
JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: I'm Jamie McIntyre at the Pentagon.

How did the alleged massacre at Haditha happen? I'll have a timeline, coming up.

SOLEDAD O'BRIEN, CNN ANCHOR: An increased military presence in Kabul, but U.S. troops are staying out of sight. Anti-American rioting there is now quieting down, but only after a curfew is imposed.

M. O'BRIEN: Critical aid finally arriving for those earthquake victims in Indonesia. But there's still so many needs. We'll bring you up to date on that.

S. O'BRIEN: And time to pay up -- higher interest rates now hitting homeowners squarely in their checkbooks. Your financial survival guide, just ahead on this AMERICAN MORNING.

Good morning.

Welcome back, everybody.

I'm Soledad O'Brien.

M. O'BRIEN: And I'm Miles O'Brien.

Thanks for being with us.

S. O'BRIEN: As we've been mentioning all morning, we are expecting an update, really at any moment, on the condition of CBS reporter Kimberly Dozier. She was flown to the U.S. military hospital in Landstuhl, Germany. She's reported to be in critical condition this morning. She was wounded by a car bomb in Iraq. Kimberly is a veteran war correspondent who took risks, her colleagues say, to report the story.

She was here in the U.S. last weekend and on each trip home, her family pleaded with her to please be careful.

(BEGIN VIDEO CLIP)

MICHAEL DOZIER, BROTHER OF WOUNDED JOURNALIST: It was one of those things that you think about but hope will never come. Every time Kimberly comes, we remind her, stay out of harm's way. But we know that she won't. She'll go after the story wherever it is and whatever risks she has to expose herself to. She knew that she was taking that risk, but I so wish it hadn't happened.

(END VIDEO CLIP)

S. O'BRIEN: Cameraman Paul Douglas, sound man James Brolan, an American soldier and an Iraqi interpreter all were killed in the attack. Paul Douglas was 48 years old, British. He leaves behind a wife and two grown daughters and three grandchildren. A former CBS producer describes him as an amazing human being who got out of many dangerous situations by using body language or the right words.

James Brolan was 42 years old, also British. He leaves behind a wife and two children, aged 18 and 12. They called him the best dad, the best husband and the best mate to be with in a tight spot.

We're going to bring you that medical briefing on Kimberly Dozier's condition from Landstuhl Medical Center as soon as it happens. You can see there the cameras are set up and we're just waiting for them to come out and begin talking to us. We're going to hear from a colonel, the commander at Landstuhl, in just a little bit -- Miles.

M. O'BRIEN: U.S. Marines may face murder charges after that alleged massacre at Haditha, Iraq. Sources telling us the Pentagon is warning lawmakers about a possible harsh outcome in that investigation.

Our senior Pentagon correspondent, Jamie McIntyre, with us now with a fact check -- good morning, Jamie.

MCINTYRE: Good morning, Miles.

Well, sources close to the investigation tell us it's substantially complete and that criminal charges, including possible murder charges, could be filed some time in June.

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): When CNN caught up with the 3rd Battalion, 1st Marine Regiment in Haditha last October, the unit was thick in the fight against insurgents, capturing weapons and uncovering roadside bombs.

Just over a month later, these civilians, videotaped by an Iraqi journalism student, would die in what U.S. military investigators now strongly suspect was a rampage by a small number of Marines who snapped after one of their own was killed by a roadside bomb.

GEN. PETER PACE, JOINT CHIEFS CHAIRMAN: And there are two ongoing investigations. One investigation has to do with what happened. The other investigation goes to why didn't we know about it sooner than we knew about it?

MCINTYRE: At first, the U.S. military simply refused to believe villagers, who accused the Marines of murdering unarmed civilians, even when presented with credible evidence assembled by "Time" magazine in February.

BOBBY GHOSH, "TIME" MAGAZINE: They were incredibly hostile. They accused us of buying into enemy propaganda and they stuck to their original story, which was that these people were all killed by the IED.

MCINTYRE: But that story has fallen apart in the wake of an investigation that sources tell CNN will likely result in charges of murder against some Marines and dereliction of duty against others.

Sources say between four and eight Marines from Kilo Company were directly involved. But some Marines from different units say they knew what happened, because they helped document the aftermath.

Lance Corporal Ryan Briones told the "Los Angeles Times" he took pictures of at least 15 bodies and is still haunted by the memory of picking up a young girl who was shot in the head: "I held her out like this," he said, demonstrating with his arms extended, "but her head was bobbing up and down and the insides fell on my legs."

Briones's mother told CNN he is now suffering from post-traumatic stress.

SUSIE BRIONES, MARINE'S MOTHER: That's what affects Ryan the most, is that he had to pick up this child's body and put her in a body bag.

MCINTYRE: A time line put together by "Time" magazine and confirmed for CNN by Pentagon sources shows the sequence of events in Haditha on November 19th.

After a roadside bomb killed 20-year-old Lance Corporal Miguel Terrazas at 7:15 in the morning, the Marines immediately suspected four Iraqi teenagers in a taxi and shot them, along with the driver, when the Marines say they failed to lie on the ground as ordered.

The hunt for bombers moved to a nearby house where seven people, including two women and one child, were killed.

Then eight people, including six women, were shot next door while a group of women in a third house were not harmed. But in a fourth house, four men were killed.

(END VIDEO TAPE)

MCINTYRE: And you heard Congressman John Murtha say earlier this morning on AMERICAN MORNING that he believes there was a cover-up. Sources close to the investigation tell us that the investigators believe there was a cover-up, as well. But they won't say if it extended beyond the small number of Marines who were involved in the incident -- Miles. M. O'BRIEN: Well, this is the interesting point. In talking yesterday -- you heard that conversation with the chairman of the Joint Chiefs of Staff, Peter Pace, he says the Pentagon was unaware of this until February, which, so does that in some way give us a sense of how high up it went?

MCINTYRE: Well, we don't, because essentially there was, for lack of a better term, a cover story that was put out at the time. And that stood, really, until "Time" magazine really pressed the case.

And so the question is was that cover story only known by a small number of people involved or did others higher up in the chain of command know about it and choose not to say anything about it? And that's what a second investigation is attempting to determine.

M. O'BRIEN: Some key questions there.

Jamie McIntyre at the Pentagon.

Thank you -- Soledad.

S. O'BRIEN: In Afghanistan, the streets of Kabul are quiet after an overnight curfew and Afghan troops are patrolling. They're trying to keep the peace after widespread anti-U.S. rioting. The riots among the most violent since the fall of the Taliban in 2001.

CNN's Barbara Starr is in Kabul this morning.

BARBARA STARR, CNN CORRESPONDENT: It is the day after the violence and rioting broke out across Kabul, stunning many of the people who live here, who thought this city was relatively peaceful.

Overnight, over 800 Afghan National Army troops arrived in the city to assist the local police here in trying to keep order. The day after this, it appears, at this point, that the city is relatively quiet. But the assessment is yesterday's violence was organized by those who are opposed to Afghan President Hamid Karzai.

There are people in this city who feel Karzai is politically vulnerable and apparently after the rioting and violence broke out after that traffic accident in which U.S. troops were involved, a good deal of cell phone traffic erupted across the city. People were being telephoned, organized to come out into the streets. That is when the mob of several hundred people began to move across the city. There was additional rioting, violence. Some facilities were torched.

And that is when the Afghan troops were called in.

Barbara Starr, CNN, Kabul, Afghanistan.

M. O'BRIEN: Happening in America, chaos at a crowded park in Milwaukee. Ten shots fired, two people killed, three wounded. A melee during a Memorial Day picnic. Police are looking for the shooter. They say it wasn't random.

In Richmond, Virginia, a deadly fire in a nursing home. Two elderly women died. Witnesses heard a loud boom before the fire broke out. An investigation underway. It's the third fatal fire at that nursing home in the last three decades.

The bills are piling up like dirt as the FBI keeps digging for the remains of Jimmy Hoffa at a horse farm in Michigan. The second week of digging begins today. The FBI won't say how much they're spending so far, but more than 40 FBI personnel, plus demolition experts, archaeologists, anthropologists are on the scene and they'll have to pay for a new barn to replace the one they torn down.

Homeland Security Secretary Michael Chertoff headed to New Orleans today. He'll get a look at the hurricane evacuation plans there and take a bus tour of the city. Hurricane season starts this Thursday.

Severe weather sweeping across Texas. In Houston, people are cleaning up, trying to dry out after a very rainy Memorial Day. Get this, 16 inches of rain fell in the Houston area, flooding basements and streets and causing all kinds of problems.

Chad Myers in the Weather Center -- 16 inches of rain. That is nothing to trifle with.

(WEATHER REPORT)

S. O'BRIEN: Hey, you know what? You know, we have Memorial Day here in this country, but in the U.K. they have the annual cheese roll. Yes, indeedy, every year people from around the world, in fact, flock to this little town to roll and tumble down the hill. Every year, people get injured, sometimes badly. Twenty-five people were injured this year, including a teenager who knocked himself out.

M. O'BRIEN: Look at those (UNINTELLIGIBLE).

S. O'BRIEN: Why is the question that comes to my mind. There are five races in all. Each winner in each race wins an eight pound wheel of cheese. One winner says I'm going to take my cheese to the pub and have a cheese party.

M. O'BRIEN: And that pub thing is -- gets you toward the answer to why. There's a pub connection.

S. O'BRIEN: You think they're all drunk as they roll down the hill?

M. O'BRIEN: Well, there's a cheese-pint thing. You know, they love their cheese and they love their pints.

S. O'BRIEN: The cheese roll.

M. O'BRIEN: It's a British thing.

S. O'BRIEN: Yes.

M. O'BRIEN: Bad news if you have an adjustable rate mortgage or an interest only loan on your house. Big rate hikes may be just around the corner. Coming up, some tips on what you can do to survive the payments.

S. O'BRIEN: also ahead this morning, we'll meet an ex-convict who says the group the Black-Eyed Peas helped turn his life around.

We'll explain.

M. O'BRIEN: And here's a sport that takes guts, I guess you could say, expandable guts. This is the fastest growing sport in the nation. We're going to talk to a journalist who has documented the growth of competitive eating.

That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: Thousands of survivors from this weekend's earthquake in Indonesia are in need of medical care, urgent need. This as the death toll there rises to at least 5,400. Emergency workers and supplies are finally beginning to arrive in the region to try to help out the injured survivors and the survivors in general.

Rae McGrath is with the International Medical Corps. He's taken a helicopter tour of the damaged region.

He joins us now on the video from Yogyakarta.

Good to have you with us.

Can you tell us, Mr. McGrath, what you saw in that tour?

RAE MCGRATH, INTERNATIONAL MEDICAL CORPS, YOGYAKARTA, INDONESIA: OK. We have spent two days over flying the worst impact areas and I can tell you that I've been doing this job for 20 years. I've rarely seen such a devastated area. Between 70 and 90 percent of the villages in the area that we're looking at, south of Yogyakarta, are totally destroyed. People are homeless and many thousands of people have been killed, of course.

M. O'BRIEN: Rae, when you assess something like that, it's so overwhelming, where do you begin?

What do you see as the most urgent needs right now?

MCGRATH: OK, the most important things -- and this is what everybody in the villages is saying to us -- shelter. They need tents. They need blankets. They need cooking implements. They also need to have clothing for their children, food, all this is urgently needed. This will be their fourth night, for many people, sleeping under pieces of plastic. This shouldn't be happening.

M. O'BRIEN: And getting that kind of equipment and supplies to the places needed, some of it very remote, it's a big challenge, isn't it?

MCGRATH: It's a huge challenge. But we are actually ready. We have the vehicles ready to take this -- this aid out to these people. We have mobile clinics working on a regular basis. We have partner organizations doing surgery 24 hours a day. We're ready to deliver this aid as soon as it arrives.

But I must send a message to the donors, to the people who are sending this aid -- you're not getting it to us quick enough. We must have it now.

M. O'BRIEN: So, obviously, you've got to pick up the pace.

In the meantime, for people in the region such as you dealing with some people with very critical medical needs -- not enough medicine, certainly not enough doctors, that kind of thing -- what can be done about that?

MCGRATH: OK. The situation now is that there appear to be enough doctors on the scene. I'd say again that the major issue is to get these people who are suffering under shelter, that we need tents. We need people to really care about this situation and get this aid to them more quickly.

The doctors are working around the clock, as I say. Everybody is working hard here. But we don't have the tools to help these people. These must be sent and I know I'm repeating myself, but it needs repeating. The international community is not responding adequately to this situation.

M. O'BRIEN: Really?

Why not, do you think?

MCGRATH: I think what it is is that people just simply aren't doing their jobs properly. When we have a situation when young people, when children, when old people are sleeping out in the open -- this will be their fourth night -- this has got to be wrong. This can't be right. Like I say, we're ready to deliver these commodities to the people. They're ready to receive them.

All we're waiting for them -- is for them to arrive. We've got the vehicles. We've got everything ready. We've done the survey. We're still waiting.

Somebody is not doing their job. That has to be the only answer.

M. O'BRIEN: Rae McGrath with the International Medical Corps, thank you very much.

An urgent appeal from there. Hopefully the right people are listening -- Soledad.

S. O'BRIEN: Coming up this morning, we'll have much more on wounded CBS reporter Kimberly Dozier and the dangers for journalists in Iraq. We'll talk to a reporter who lost his hand in an attack back in 2003.

Plus, you'll meet an ex-convict this morning who says he turned his life around thanks to music and the Black-Eyed Peas. We'll explain, just ahead.

Stay with us.

(COMMERCIAL BREAK)

M. O'BRIEN: This just in to CNN.

We are being told the long rumored, long discussed departure of the treasury secretary of the United States, John Snow, may, in fact, be happening.

Ed Henry joining us now from the White House with word on a successor -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right.

Good morning, Miles.

CNN has confirmed the president will have a 9:15 a.m. Rose Garden ceremony where he will officially announce finally, after all of the speculation, John Snow is stepping down at Treasury. Henry Paulson being nominated as the new treasury secretary, of course, the chairman and CEO of Goldman Sachs, a powerhouse on Wall Street.

John Snow, really, as you know, has been hanging out there for months, Republicans openly speculating about his departure. The problem was that the White House couldn't find someone to take the job. They had been reaching out to so many people like Henry Paulson, for weeks and months.

This is a job that has really been a prestige job in the cabinet for many years. But in the Bush administration, some have felt that it's been downgraded, that the White House really has made the job more of a salesman rather than a policy shaper and that instead economic policy is being shaped right here at the White House.

And then the treasury secretary, John Snow, and Paul O'Neill before him, had basically been told to then go out and be the salesman to Capitol Hill, to the markets here in the United States and all around the world. And that's why a lot of powerhouses on Wall Street have not been interested in this job.

But now Henry Paulson will be nominated just over about 40, 45 minutes from now, in the Rose Garden -- Miles.

M. O'BRIEN: All right, we will see that at 9:15 Eastern time.

Of course, CNN will bring that to you as it happens.

Henry Paulson, head of Goldman Sachs, to be the next treasury secretary. And that announcement coming shortly.

Stay with us.

(COMMERCIAL BREAK) S. O'BRIEN: With mortgage rates at their highest in four years, millions of homeowners holding a variety of adjustable rate loans will soon be paying the piper, in the form of interest rate hikes.

Cybele Weisser writes about it in the June issue of "Money" magazine.

You've got a lot of warnings for people, because, of course, you can be left holding the bag.

CYBELE WEISSER, "MONEY" MAGAZINE: Absolutely. I mean you've looked at years of very low rates and now suddenly, uh-oh, higher rates are here.

S. O'BRIEN: Who are the people who should be the most concerned? You say anybody who has done the interest rate only sort of mortgage.

WEISSER: Right. If you've got -- if you took an interest only mortgage a few years ago and you're looking at higher payments that include interest and principal within the next couple of years, it's time to be concerned. Ditto for people who have an adjustable rate mortgage that was fixed for a few years but within the next one to three years they're going to be seeing an adjustment and they're going to be seeing an adjustment upward.

S. O'BRIEN: Yes, not the adjustment you like.

WEISSER: No, no.

S. O'BRIEN: It almost never is the adjustment you like.

WEISSER: The wrong kind of adjustment.

S. O'BRIEN: So the first thing you really need to do is figure out when your adjustment is going to hit you?

WEISSER: Exactly. So, you know, you want to dig out that paperwork and figure out not only when your adjustment is going to hit you, but what the higher payments might be. So you want to -- you can go to one of the online calculators. There's a nice one at cnnmoney.com where you can plug in the numbers and figure out what is your payment going to look like down the line.

S. O'BRIEN: So you say people who need to be concerned are in that one to three year range.

WEISSER: Right.

S. O'BRIEN: But people who really should -- panic is such a strong word, but really should be looking closely at changing things, they're in a much smaller window, the one month to 12 month range?

WEISSER: One to 12 months. If you're looking at an adjustment in that time, you're going to be paying more money within the next year, I would say you are a very good candidate for refinancing right now. S. O'BRIEN: All right, now, how do you -- where can you get the money from? I mean if you're the kind of person who says, OK, I could just make the old payments, but now, by doing my recalculation, I'm not going to make it, what do you do?

WEISSER: Right. Well, you know, the money is going to have to come from somewhere in your budget. And, you know, you are going to have to be able to try to build up a cash cushion, cut elsewhere. You know, you're going to need a new loan, very likely, so...

S. O'BRIEN: So you should do the math, also, on whether or not it's time to get a new loan?

WEISSER: Yes, definitely. And the first call, we say, should be to your current lender, because your current lender may be able to offer you a slight discount. They've got your paperwork, you know? They may be able to do a new loan without having to redo some of the application fees and appraisal fees. So you might save a little bit that way.

S. O'BRIEN: Yes, knowing what you're already spending, because obviously that's going to cost you, as well. You've got to make sure that the payment difference is going to be worth it.

WEISSER: Right.

S. O'BRIEN: There is a strategy of just staying the course. And I imagine a lot could happen over the next couple of years here.

WEISSER: Well, that's the thing. You know, if you've got a -- if you've got five or seven years before your interest rate and you're looking at that adjustment, you know, this is not the time to panic. You don't...

S. O'BRIEN: (UNINTELLIGIBLE) even panic now.

WEISSER: You don't know where interest rates are going to be at that time. You know, yes, there's a good chance they'll be higher than they are now, but there's a good -- hey, they could be lower. We just don't know. So, you know, enjoy that nice low rate for a little bit longer.

S. O'BRIEN: If your fixed rate loan is below 8 percent?

WEISSER: And then you should just hang out and be very glad that you (UNINTELLIGIBLE) below 8 percent. Enjoy it.

S. O'BRIEN: You don't want to (UNINTELLIGIBLE)?

WEISSER: Don't worry.

S. O'BRIEN: Do you think it's a bad idea to get an adjustable rate mortgage or is it a good idea or does it sort of depend?

WEISSER: It depends. Adjustable, there's nothing terrible about an adjustable rate mortgage. The reality is that American homeowners move frequently. The average is seven years. And if you know that you're not going to be in a house for very long and you can get a discount on the rate by taking a shorter term fixed rate loan, go for it. There's nothing -- there's nothing wrong with that.

S. O'BRIEN: But if you stay?

WEISSER: If you stay, you're going to have to rethink. So, you know, that should always be in the back of your mind, what if?

S. O'BRIEN: Sometimes that five years comes up super fast.

WEISSER: Really fast. And, you know, people who took these loans a few years ago, you know, they thought oh, five years, that's a long time. Well, you know, that's...

S. O'BRIEN: I'll pay it off.

WEISSER: I'll pay it off, I'll move, I'll, you know, who knows what will happen?

Well guess what? You know, now they're looking at like, gosh, that's only a year away.

S. O'BRIEN: Right. Right.

WEISSER: What are we going to do?

S. O'BRIEN: It won't take -- it doesn't -- how long does it take, usually, to do all of that, to refinance it, to change from an adjustable rate to a set rate?

WEISSER: You can refinance very quickly.

S. O'BRIEN: Oh you can.

WEISSER: And then (UNINTELLIGIBLE)...

S. O'BRIEN: No panicking.

WEISSER: Don't panic about that.

S. O'BRIEN: The moral today is no panicking.

Cybele Weisser, thank you very much.

Of course, she's from "Money" magazine -- Miles.

M. O'BRIEN: Thank you, Soledad.

Coming up on the program, hope you had a light breakfast because we're going to dive head first into the world of competitive eating.

We'll talk to the author of a new book, "Horsemen of the Esophagus."

And actor Ben Affleck driven home from the hospital by his brother. We'll tell you what sent him to the emergency room.

That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

S. O'BRIEN: Good morning.

Welcome back, everybody.

I'm Soledad O'Brien.

M. O'BRIEN: And I'm Miles O'Brien.

We're glad you're with us this morning.

We've got some news headlines to check in on.

Carol Costello is off today.

Carrie Lee is in the newsroom -- good morning, Carrie.

CARRIE LEE, CNN CORRESPONDENT: Good morning, Miles and Soledad.

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