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AMERICAN MORNING

Plan for Iraq; Air Strike in Somalia; Malibu Wildfire; 'Words That Changed a Nation'

Aired January 9, 2007 - 08:00   ET

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


SOLEDAD O'BRIEN, CNN ANCHOR: A developing story. The United States launches an attack against al Qaeda militants in Somalia.
We're live with more on the prime suspects.

MILES O'BRIEN, CNN ANCHOR: Devastating flames. A wind-driven wildfire destroys beachfront mansions in California, including one owned by a famous actress.

S. O'BRIEN: And the words that changed a nation. How Dr. Martin Luther King faced down violence with words in one of America's most racially-divided cities. A page from his private library, only on this AMERICAN MORNING.

M. O'BRIEN: Good morning to you. It is Tuesday, January 9th.

I'm Miles O'Brien.

S. O'BRIEN: And I'm Soledad O'Brien.

Thanks for being with us.

Lots of action in the fight for Iraq. Here's what's new this morning.

One thousand U.S. and Iraqi troops, backed by air support, shooting it out with insurgents in the heart of Baghdad.

In Washington, Democrats in the new Congress are ready to start their first 100 hours clock, and they're planning a counteroffensive on President Bush's plans for more troops in Iraq.

The president is talking to members of both parties today, trying to build support for his strategy. Senator Ted Kennedy is going to introduce a bill to block sending more troops without authorization from Congress.

More on the president's day with CNN's Elaine Quijano. She's live at the White House for us.

Elaine, good morning.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Soledad.

Well, even as Democrats continue to voice their opposition to the idea of sending additional troops to Iraq, some Republicans are also now openly voicing their skepticism about the president's plans for some 20,000 troops to help quell sectarian violence.

Now, President Bush yesterday met privately with a group of Republican senators to try to build support for his idea. One GOP senator, Gordon Smith, who sharply criticized the president's Iraq policy last month, expressed doubt that 20,000 more troops would be enough, but he also warned against the Democratic-led Congress using the power of the purse to oppose the president.

(BEGIN VIDEO CLIP)

SEN. GORDON SMITH (R), OREGON: It would not be right for the Congress to cut off funding for bullets when their commander in chief orders them to remain in harm's way. And this is the crux of the question that Congress and the executive are going to wrestle with.

I'm not for the surge. I'm not for cutting off funding. I believe that would be dishonorable.

(END VIDEO CLIP)

QUIJANO: Now, a senior Bush administration official insists that the White House views a so-called surge as not a strategy in and of itself, but rather part of a larger, broader political and economic strategy. And as we know from sources familiar with the president's deliberations, that policy will include a jobs program and a focus on reconstruction.

Now, meantime, President Bush today continues his outreach to members of Congress. One day, of course, Soledad, before he is set to unveil his new Iraq plan in a primetime address -- Soledad.

S. O'BRIEN: Elaine Quijano at the White House for us.

Thank you, Elaine.

And as the new leaders of Congress start their so-called first 100 hours today, CNN's going to keep a track of just what the Democrats are getting done.

In the corner of your screen -- which corner is it going to be? Oh, I can't see it because the feed I have doesn't show it, but we have the first 100 hours clock. It's going to be starting up at noon today.

Now, at the top of the agenda for new House speaker, Nancy Pelosi, adopting more recommendations from the 9/11 Commission, like air cargo screening -- Miles.

M. O'BRIEN: Now to Somalia and the first acknowledged military action there by the U.S. since the deadly Black Hawk Down incident back in '93. At least one American air strike on al Qaeda operatives near the border with Kenya.

Our Pentagon correspondent, Barbara Starr, is in Nairobi with more.

Hello, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hello to you, miles.

Well, a U.S. Air Force Special Operations AC-130 gun ship has conducted an air strike inside Somalia against an al Qaeda training camp. U.S. intelligence and African intelligence services had been keeping an eye on al Qaeda for many months now.

(BEGIN VIDEOTAPE)

STARR (voice over): U.S. officials here in East Africa tell CNN that al Qaeda operatives were developing the ability to attack U.S. targets just as they did in 1998 when U.S. embassies were bombed in Kenya and Tanzania, killing hundreds. Intelligence shows that after an Islamic militia took power in Somalia in June, al Qaeda stepped up its operations there. Camps taught radical Islam to young men, weapons flowed in from East European arms dealers, and money from the Middle East.

One official said, "We just couldn't live with it anymore. We were worried."

REAR ADM. RICHARD HUNT, COMMANDER, TASK FORCE HORN OF AFRICA: And that's what we were really concerned about, is there seemed to be much more recruiting, much more training going on. They were positioning themselves to expand their area of influence beyond the Somali borders.

STARR: Three al Qaeda operatives accused in the embassy bombing have been hiding in Somalia for years. The U.S. believes they were closely tied to the Islamic group the ICU.

Neighboring Ethiopia was also worried by the prospect of a hard- line Islamic regime next door. Its invasion to oust the Islamic militia met with no objections from Washington. The new Somali foreign minister says his country now wants U.S. troops back more than a decade after they withdrew.

ISMAEL HURREH, SOMALI FOREIGN MINISTER: More than anything else, we want the Americans -- Americans to help us to train an efficient security force.

(END VIDEOTAPE)

STARR: Miles, you know, these al Qaeda operatives had already been on the run for several weeks since the Islamic militia had been thrown out of power in Mogadishu. There are about five, actually, that there is a manhunt on for, but even if they find them, even if they capture or kill them, here in East Africa, nobody really thinks al Qaeda is gone.

There is still money and arms flowing into this region. And here in Kenya, of course, they have already experienced an al Qaeda attack. People here tell me today they are very pleased that the U.S. has taken this action. They really want to see al Qaeda gone, but nobody's counting on it -- Miles.

M. O'BRIEN: Barbara Starr in Nairobi.

Thank you.

Firefighters in southern California this morning are working to keep more of the nation's most expensive real estate from going up in flames. It's happening in Malibu. The fire destroyed four beachfront mansions.

AMERICAN MORNING'S Chris Lawrence is there with the latest.

Good morning, Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Good morning, Miles.

You know, no matter if your home is worth $200,000 or $2 million, no family would want to see a scene like this: your home literally burned down so far that the foundation barely even has a record that it was once here.

The fire here is still smoldering in places. Most of the big flames have been knocked down. And what we've been able to determine is that that fire literally just came sweeping in over the slopes, right down to the homes that were built right here on the shoreline.

And we can see those flames just boiling out of the skeletons of those homes late last night. It was just an incredible sight. A lot of people were evacuated. Firefighters here tell us that they had to move a lot of people out.

And we talked to some of the residents about what it's like to live in what is normally one of the most beautiful places in the country.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's a tragedy for the people involved, no matter how rich they are. It's their personal space. It's their personal belongings, their personal mementos. So it's a tragedy for them, even if it's just one home.

UNIDENTIFIED FEMALE: We've seen it all. We've seen it all.

But I'm down here directly. Cher's up above on this side, and I'm down below. And in 1993, the fire burned down to the street again, and we almost lost a House that time. So it's -- you know, we always say welcome to paradise, you're in Malibu. So it's frightening.

(END VIDEO CLIP)

LAWRENCE: Yes.

A fire captain here on the scene told me that he believes one of the homes here belonged to actress Suzanne Somers. Back in 1993, actor Sean Penn lost a home here in Malibu during the firestorms of that year -- Miles.

M. O'BRIEN: So, Chris, there is a certain cycle here, then, of these wildfires causing problems in Malibu, isn't there?

LAWRENCE: Yes. Malibu has some of the most combustible brush anywhere in the country, and it also has this unique alignment of the coastal canyons with those dry, hot Santa Ana winds. So the winds rush through the canyons. That oily brush just ignites.

It happens about every two or three years. They get a fire. Every 10 years they're going to get a major firestorm that will really burn off a lot of the area here.

M. O'BRIEN: Chris Lawrence in Malibu.

Thank you -- Soledad.

S. O'BRIEN: This morning along Mississippi's Gulf Coast, some possible good news for Hurricane Katrina victims. Sources say that State Farm Insurance and the Mississippi attorney general are negotiating a settlement for thousands of Katrina victims.

CNN's Sean Callebs is in Long Beach, Mississippi, for us this morning.

Good morning, Sean.

SEAN CALLEBS, CNN CORRESPONDENT: Good morning, Soledad.

You know, more than 16 months after the storm and still, when you come to this area, it is simply jaw-dropping. I want to show you inside this home behind us, what's left of it.

It belonged to the -- it belongs to the Tipkers (ph). If you look, just some sand over the foundation here. And you know how much money the Tipkers (ph) got from their insurance company, State Farm? Absolutely nothing.

The Tipkers (ph) were not happy. They were among the people who joined in a lawsuit, saying that they should be paid for wind damage. Well, now there could be some good news on the horizon.

(BEGIN VIDEOTAPE)

CALLEBS (voice over): There are thousands of people along Mississippi's Gulf Coast who say they were victimized twice by Katrina. First by the storm, then by their insurance company.

People like John Oakes. He says State Farm denied his claim, alleging flood from the storm surge, not hurricane winds, devastated his home. This is at the heart of the dispute, what was destroyed by wind, which would be covered by insurance, and what was devastated by flooding, excluded from homeowner policies.

DR. JOHN OAKES, HURRICANE KATRINA VICTIM: A lot of what they'll say is really unbelievable. I mean, I wouldn't have expected the reasonable, intelligent person would tell me that water would shake a tree and it would break. But it did.

CALLEBS: Now CNN has learned from someone close to the negotiations, State Farm is on the verge of working out a settlement that could affect as many as 35,000 policyholders, and the deal could cost the insurance giant hundreds of millions of dollars.

State Farm told CNN, "At this point, we have no settlement. We continue to talk and to search for ways to bring these events to a resolution. If you ask me: would we like to bring closure to these matters? The answer is absolutely."

Well-known attorney Dickie Scruggs, who took on big tobacco in the 1990s and won, is leading the legal fight against State Farm and other insurance companies. Scruggs lost his Mississippi beach-front home in the storm and was denied wind coverage.

DICKIE SCRUGGS, ATTORNEY: It is as personal as anything in my life that's ever happened to me.

CALLEBS: Any settlement between homeowners and State Farm would have to be approved by Mississippi's attorney general, Jim Hood. Hood has filed a civil lawsuit against State Farm for refusing to cover damage from Katrina's storm surge.

Hood says -- quoting here -- "I am working day and night attempting to get our coastal residents a fair shake in the insurance litigation. It would not help our negotiations to disclose any details at this time."

(END VIDEOTAPE)

CALLEBS: Now, a couple of items worth noting here.

The insurance industry overall claims it's done a great job settling cases with people along the coastline, saying about 90 percent of the three million claims have been successfully resolved. And also, this deal only affects State Farm.

Now, Dickie Scruggs is leading litigation against five insurance companies, State Farm being one of those. So, Soledad, the information we're hearing is, this settlement could come as early as today.

S. O'BRIEN: Well, that would be some good news for some of those folks.

Sean Callebs for us this morning in Mississippi.

Thank you, Sean.

You saw the Tipkers' (ph) home or whatever's left of it. Sean's standing right there on their foundation, pretty much. Ahead, we're going to talk to them later about this latest news about a potential settlement. That's coming up in our 8:30 half hour.

Coming up next, words that changed a nation. I'll examine more of the private papers from Dr. Martin Luther King Jr.,, including his famous letter from Birmingham Jail.

And a controversial treatment for a little girl who will never learn to walk or talk, will never even sit up. We'll tell you about that straight ahead on AMERICAN MORNING.

The most news in the morning is right here on CNN.

(COMMERCIAL BREAK)

M. O'BRIEN: Developing stories we're watching for you.

At least one U.S. air strike against al Qaeda operatives in Somalia.

And President Bush talking to Democrats and Republicans today, trying to build support for his new Iraq strategy that he'll announce to the country tomorrow night.

Quarter past the hour. Let's get a quick check of the traveler's forecast. Chad Myers with that.

Hello, Chad.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Miles.

(WEATHER REPORT)

S. O'BRIEN: All this week we're looking at "Words That Changed a Nation," a rare glimpse at the actual words of Dr. Martin Luther King Jr. The King family allowed CNN access to Dr. King's private access now kept at his alma mater, Morehouse College.

And we pick up his journey for civil rights in Birmingham, Alabama, which was often called Bombingham because so many businesses and homes owned by blacks were targeted. It's where Dr. King wrote one of his most famous letters ever, where the movement and Dr. King himself confronted a dangerous turning point.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Segregation now, segregation tomorrow, and segregation forever.

DR. MARTIN LUTHER KING JR., CIVIL RIGHTS LEADER: I'm sorry, Mr. Wallace. God has placed a responsibility on myself.

S. O'BRIEN (voice over): In 1963, Dr. Martin Luther King Jr. came to Birmingham, Alabama, one of the most racially-divided cities in America. Andrew Young came with him.

DR. ANDREW YOUNG, FMR. U.N. AMBASSADOR: Going to Birmingham was to him the possibility of an imminent death.

S. O'BRIEN: Dr. King went anyway and was arrested for marching without a permit. In solitary confinement, he read a newspaper article in which eight white clergymen called the demonstrations "unwise and untimely."

CLARENCE JONES, SO. CHRISTIAN LEADERSHIP CONFERENCE: He's very agitated. He says, "We've got to write a response. I've got to write a response."

S. O'BRIEN: Clarence Jones was Dr. King's attorney.

JONES: The only paper he had until I got there was, you know, the edges (ph) of newspaper.

S. O'BRIEN: Under his shirt, Jones smuggled in paper. Dr. King's writings became the famous "Letter from Birmingham Jail."

UNIDENTIFIED MALE: "When you have seen hate-filled policemen curse, kick, and even kill your black brothers and sisters..."

YOUNG: He loved language. You can see where he crossed out words until he got exactly the right rhythm.

UNIDENTIFIED MALE: "When you have to concoct an answer for a 5- year-old son who is asking, 'Daddy, why do white people treat colored people so mean?' Then you will understand why we find it difficult to wait."

S. O'BRIEN: When the efforts to desegregate Birmingham stalled, the movement tried a new strategy. Dr. Dorothy Cotton, Dr. King's director of education, helped recruit teenagers.

DR. DOROTHY COTTON, SO. CHRISTIAN LEADERSHIP CONFERENCE: And the aim was to really fill the jails, if we could.

S. O'BRIEN: Police responded with dogs and fire hoses. Carolyn McKinstry, just 14 years old, is seen here caught in the melee.

CAROLYN MCKINSTRY, 16TH STREET BAPTIST CHURCH: That hose hurt. We were pinned against the building, we couldn't move.

S. O'BRIEN: These images of brutality awakened the American conscience. In May of 1963, businessmen agreed to integrate their stores. But the victory was short-lived.

Sunday morning, September 15, 1963, the unimaginable. A bomb explodes at the 16th Street Baptist Church.

MCKINSTRY: You came to church, you had friends who by the afternoon were dead.

S. O'BRIEN: The lives of four little girls stopped at 10:22 a.m.

YOUNG: Most of those days, he was in a deep depression.

S. O'BRIEN: Before eulogizing the little girls, he jotted down his deepest thoughts.

UNIDENTIFIED MALE: "These precious children of God say to each of us, we must substitute courage for caution." JONES: I observed tears, crying as he was speaking.

(END VIDEOTAPE)

S. O'BRIEN: Tomorrow we're going to take a look at how Dr. King upped the ante on the Kennedy White House and how his "I have a Dream" speech at the march on Washington, D.C., almost didn't happen. That's in part three of our series "Words That Changed a Nation."

M. O'BRIEN: To hear Andy Young say he was in a deep depression, Dr. King was in a deep depression, and he was able to still rally and accept that leadership role, it's amazing. What kind of torment must have been going on behind the scenes?

S. O'BRIEN: You know, they talk a lot about how many conversations he had, certainly as a clergyman himself, Reverend King, with God. And he was often questioning his path and his role, and was he doing the right thing. And then he'd talk about and write about how he had had a conversation with God and that would often set him on the path that he knew he had to take.

M. O'BRIEN: There was so much, too, in his writings that foreshadows his own death, doesn't it?

S. O'BRIEN: Yes, he talks a lot about it.

M. O'BRIEN: He really had the sense that that could happen.

S. O'BRIEN: He wasn't going to make it to 40 is what people would say. He talked a lot about how he thought he was going to die young.

When we talked to Andrew Young about that, he said, "But it was such a dangerous time, we all thought we weren't going to make it to 40." You know, they chose not to carry any weapons because so many people were armed in the South that they knew that if they -- it was to carry -- to be heavily armed or be not armed at all.

M. O'BRIEN: Right.

S. O'BRIEN: You couldn't do a nonviolence movement and have a couple of people carrying weapons. And so they always felt like they were in danger, really could lose their lives at any time.

It's fascinating. I mean, we talked to Andrew Young for hours, and you could talk to him for 24 hours straight and have more to cover with him. What a fascinating man.

M. O'BRIEN: And tomorrow, imagine if that "I Have a Dream" speech didn't happen.

S. O'BRIEN: It wasn't called "I Have a Dream," you know. It was called "Normalcy Never Again." Who heard of that?

M. O'BRIEN: And it just came out, right? It just...

S. O'BRIEN: Totally adlibbed. It's a great story behind the story.

M. O'BRIEN: And anybody who -- I invite anybody here to take the time to listen to that whole speech in its entirety. It is truly poetry.

S. O'BRIEN: And now everything's online. You can get the actual transcript.

M. O'BRIEN: Yes.

All right. Excellent. Fascinating. Looking forward to that tomorrow.

Coming up, thousands of Gulf Coast residents still waiting for satisfaction from their insurance companies. They may have some reason to celebrate soon. We'll hear from a Gulf Coast couple who lost their home in the storm.

Plus, one coffee maker, $245 million. You heard me right. Ali Velshi has more on who has to pay up. He's "Minding Your Business" ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

S. O'BRIEN: This just in to CNN. Turkey's foreign minister is reporting that 30 people are dead in a plane crash. Apparently, the plane was carrying 30 Turkish workers from Turkey into Iraq. Apparently, it disappeared from the radar screens near Baghdad on Tuesday.

That word from the Turkish regional governor.

It's an Antonov 26 plane. It left in the morning and then disappeared from the radar screens when it was about 60 miles outside of Baghdad. They were unclear if it had crashed or what exactly the difficulty was in trying to land.

As you know, U.S. forces have been battling the insurgents in downtown Baghdad. Arwa Damon is embedded with some of those U.S. forces there, and you're looking at some live pictures.

We've been covering this -- this fight that's been going on in excess of 10 hours today. So it is unclear exactly what the implications and the impact of that fight would potentially be on this plane crash.

We're tracking both of these stories for you this morning. We're going to have a live report from Baghdad straight up.

M. O'BRIEN: Yes. Worth pointing out that 60 miles away from the airport, the standard operating procedure there is to stay very high until the last minute, then do a steep decline.

S. O'BRIEN: Right.

M. O'BRIEN: So they would have been at fairly high altitude. So it will be interesting to see how this one plays out.

Kraft spending $245 million on a coffee machine. Sounds like the Pentagon must be involved in this one.

Twenty-six minutes past the hour. Ali Velshi "Minding Your Business."

ALI VELSHI, CNN CORRESPONDENT: Coffee. On-demand coffee machines, these single-cup coffee machines, they've been a big deal, they've been growing over the last few years. About a $1.5 billion a year business.

Kraft got involved with Braun in the Tassimo market. There are a lot of these different machines. The idea is Braun makes these machines, Kraft sells the coffee in these little pods.

You have to make some commitment before you buy one of these machines, because once you buy them, you're stuck buying the coffee of the coffee maker. It isn't working out so well for Kraft. The company is writing off $245 million, its commitment to this thing, and says it's going to scale back on the production of this.

M. O'BRIEN: So people aren't buying this.

VELSHI: You know, I don't know if people are buying -- aren't buying all of them. It's expensive.

M. O'BRIEN: Yes.

VELSHI: It's useful if you're one person and you're making coffee and no one else drinks coffee. You don't want to waste a pot. But it's -- you really have to be pretty committed to it.

So that is the story with Kraft. We'll see what happens. I want to track this coffee industry and see what goes on with it.

M. O'BRIEN: All right. Another caffeinated report from Ali Velshi.

VELSHI: That's right.

M. O'BRIEN: Thank you very much -- Soledad.

S. O'BRIEN: Top stories of the morning coming up.

A firefight in the streets of Baghdad. We've been talking about it all morning, and we'll bring you the very latest on that.

Plus, we'll talk to a couple who lost everything in Hurricane Katrina but could finally be getting something from their insurance company.

AMERICAN MORNING, we've got the most news in the morning right here on CNN.

(COMMERCIAL BREAK) S. O'BRIEN: Developing story this morning. U.S. troops and attack helicopters are in a major battle with insurgents in Iraq. We're live in the middle of it, straight ahead.

M. O'BRIEN: A legal storm, a settlement apparently in the works by State Farm Insurance. Could thousands of Hurricane Katrina victims in Mississippi finally be getting some checks?

S. O'BRIEN: And controversial care. A closer look at one couple's effort to keep their mentally-disabled daughter from growing into an adult. It's still igniting debate on this AMERICAN MORNING.

M. O'BRIEN: Good morning to you. Tuesday, January 9th. I'm Miles O'Brien.

S. O'BRIEN: And I'm Soledad O'Brien. Thanks for being with us.

M. O'BRIEN: Happening this morning -- President Bush is working on his plan to change strategy in Iraq. He'll announce the plan on national TV tomorrow night. He's meeting today with Republicans and Democrats, both sides of the aisle, voicing concern about sending more troops to Iraq.

At noon today, the clock starts ticking on the Democrats' first 100 hours in Congress. During last year's election campaign, they promised to pass six major pieces of legislation in 100 hours. First up today, a bill to implement many recommendations of the 9/11 commission.

From North Korea now, news -- another nuclear test is likely. The U.S. commander in South Korea would not say how soon it could happen. South Koreans noted activity near one of the North's suspected nuclear test sites.

Firefighters and arson investigators on the scene of a destructive fire in Malibu, California this morning. Four sea side mansions burned to the ground, one of them the home of actress Suzanne Somers. The fire moved fast last night. People had just minutes to escape as flames 150 feet high in some cases incinerated everything in their path.

S. O'BRIEN: A fierce firefight is raging this morning in Baghdad. 1,000 U.S. and Iraqi troops are battling insurgents in the heart of the city.

CNN's Arwa Damon is live for us. She's on the phone from Baghdad. Arwa, good morning.

ARWA DAMON, CNN CORRESPONDENT: Good morning to you, Soledad. The battle here lasted ten hours. Right now in the last 20 minutes, the streets have been relatively calm, a sound that has brought much relief to U.S. and Iraqi forces that are involved or were involved in this very fierce firefight, very intense for the soldiers.

It started at about 6:00 in the morning. U.S. and Iraqis troops moved onto Haifa (ph) Street in the heart of the capital under the cover of darkness and battling against what they are calling a Sunni- dominated insurgency.

They say that here in the heart of Baghdad, they are fighting against Sunni extremists and will fight to the death. We did see the gun battle lasting for ten hours. Now the streets are relatively quiet, but all who were involved in this firefight are exhausted by it.

They do say that they believe that they have dealt a blow to the insurgency here, killing perhaps up to and wounding, killing and wounding up to about 60 insurgents. They are also saying this is a big step for the Iraqi security forces. This is in fact an area that is controlled by the Iraqi security forces.

They requested American backup for this operation. There are about 500 Iraqi army soldiers involved, some 500 U.S. soldiers involved in this as well -- Soledad.

S. O'BRIEN: Arwa Damon joining us on phone from Baghdad with the battle that went on for ten hours today. Arwa, thank you.

Now, the U.S. is going after al Qaeda operatives in southern Somalia, too. American forces attacking a remote island by air. The first acknowledged U.S. military action there since that deadly Blackhawk Down incident back in 1993.

There's been no confirmation from U.S. sources, but Somalia is saying many terrorists were killed. The targeted camp harboring suspects from the 1998 bombings of the U.S. embassies in Kenya and Tanzania -- Miles.

M. O'BRIEN: A year and a half after Katrina hit the Gulf coast, now it appears the checks may finally be soon in the mail for people who lost their homes and then feel they were let down by their insurance company.

A settlement is in the works between State Farm and some of its policy-holders in Mississippi. Among them, Claire Jo and John Tuepker. They lost their home in Hurricane Katrina. Standing at the home site now, they're part of a suit against State Farm. And they join us from Long Beach, Mississippi.

Good to have you with us. I know you don't want to hex this, and these are sensitive discussions, but what are you hearing about this possible settlement?

JOHN TUEPKER, HURRICANE KATRINA VICTIM: Really not too much, but what we read in the paper. I read a "New York Times" article this morning that it was very close, and it looks like a very good settlement from our point of view.

M. O'BRIEN: And so you're not getting direct information at all from your attorneys or anyone else?

TUEPKER: No, nothing like that. I mean, we talk, but he doesn't, he's working on it, he's working very hard. Dickey Scruggs is a hard-working man. M. O'BRIEN: Yes. He's got his hands full right now getting this thing finalized. Do you know, Claire, at this point, how much potentially you might receive? Do you have any indication?

CLAIRE JO TUEPKER, HURRICANE KATRINA VICTIM: No, no, no.

M. O'BRIEN: How much would you consider enough?

J. TUEPKER: Our policy was $350,000. That is what the total amount that's written on our State Farm policy, and that's what I believe we deserve, that's what we should have had just a few weeks after the storm.

M. O'BRIEN: And anything less than that $350,000, would you take that and walk away at this point with it, or you're not ready to say that at this point?

J. TUEPKER: We need to see it first, I think, but go ahead Jo.

C. TUEPKER: Well, that's a tough question. I'm inclined to say yes. I would like to see justice prevail, and I would think that would be just. It won't take away the stress and anxiety and the loss and all of that, but it would certainly seem like a just thing to do.

M. O'BRIEN: Now, you have moved on ...

C. TUEPKER: So I'll leave it at that.

M. O'BRIEN: You've moved on ...

C. TUEPKER: Well, we do have another house.

M. O'BRIEN: What are you going to do with the house site there? Will you ever rebuild there?

C. TUEPKER: I don't think so, no.

J. TUEPKER: It's too low. The whole area really is too low. It's about 15 feet elevation, and I don't think we could ask for insurance or for any other government help in this area right here.

Perhaps condos might move in here, or perhaps someone might be interested in building a very strong house on concrete piers much higher. Maybe that's what will happen eventually, but not us.

M. O'BRIEN: Final thought here.

C. TUEPKER: We believe in global warming.

M. O'BRIEN: Yes. I bet.

C. TUEPKER: We believe in global warming, yes.

M. O'BRIEN: Yes, final thought here.

C. TUEPKER: Final question. M. O'BRIEN; Yes, final question. Based on what we're hearing about this settlement, State Farm makes no admissions there'd just be checks cut. Does that bother you in any way? Should they be making some sort of admission?

J. TUEPKER: Oh, I don't think you can expect that in a settlement like this. I mean, we would -- sure, we'd like to have it, but insurance is primarily about money, and we paid the premiums and we'd like the check as soon as possible.

M. O'BRIEN: All right. We'll leave it at that. Claire Jo and John Tuepker, thanks for your time. We wish you well.

J. TUEPKER: Thank you.

C. TUEPKER: Thank you very much.

M. O'BRIEN: Soledad.

S. O'BRIEN: Straight ahead this morning, Dr. Sanjay Gupta will pay us a "House Call." He's got more information on that family's difficult decision and controversial treatment for the little girl they call their pillow angel.

You're watching AMERICAN MORNING. The most news in the morning is right here on CNN.

(COMMERCIAL BREAK)

M. O'BRIEN: Some health news this morning for you. A new study shows San Francisco has the most illegal drug users of all major U.S. cities. The national average is about 8 percent. San Francisco has 13 percent of residents who use pot, cocaine, and heroin on a regular basis.

California Governor Arnold Schwarzenegger is calling for universal healthcare in his state. Maine, Massachusetts, and Vermont already offer it in some form or another. Schwarzenegger estimates it would cost about $12 billion to cover the 36 million residents of California, and it would include illegal immigrants.

Well, there's a pill for nearly everything. Now there's one for hypochondriacs. Researchers say the anti-depressant Paxil can help people who only imagine they're suffering a disease or illness, and it's the real Paxil, not a measuring Paxil.

And some positive health news for you -- researchers say optimists are healthier people. Put on a smile, folks. Pessimists are more likely to die from heart disease. So is your glass half empty or half full? I know it is half full.

S. O'BRIEN: I'm a total optimist, yes, full all the time.

M. O'BRIEN: Me, I grapple with it. You know, some days ...

S. O'BRIEN: You're really an optimist. M. O'BRIEN: Yes. At my core I am.

S. O'BRIEN: Let's talk about this morning's "House Call." A family's radical decision for surgery for their daughter, who is severely disabled. And what that surgery does is essentially stop her growth. They call this little girl their pillow angel.

Chief medical correspondent Dr. Sanjay Gupta joins us with a "House Call." Good morning, Sanjay.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Good morning, Soledad. I think when the pediatricians who published the article in the "Journal of Pediatrics," they did not expect this sort of reaction from the public.

It's been amazing, really. The story about Ashley. She's 9 years old and she was born with static encephalopathy -- that's a brain disorder that doesn't change, doesn't get better, it doesn't get worse. She will likely live a normal lifespan, but her parents made the radical decision to keep her a child forever.

(BEGIN VIDEOTAPE)

GUPTA (voice-over): Ashley has a mysterious brain impairment doctors can't fully explain. She's never learned how to walk, talk, or even sit up by herself. Nine years later, nothing's changed. Her doctors say nothing will.

DR. DOUGLAS DIEKEMA, SEATTLE CHILDREN'S HOSPITAL: Her cognitive function was the equivalent of that of an infant and always will be. So when you see Ashley, it's like seeing a baby, and in a much larger body.

GUPTA: Ashley spends her days lying down. Her parents call her their pillow angel because she can't move on her own. They worried about how they would care for her as she grew and became less easy to handle.

So three years ago, they made the radical decision to keep her small. Doctors gave her estrogen therapy with a patch to stunt her growth. Surgeons removed her uterus and her breast buds. They say procedures were performed only after careful deliberation by an ethics panel at Seattle Children's Hospital.

The result -- Ashley will be about 4 feet and 5 inches tall and 75 pounds for the rest of her life. She'll never hit puberty. Her parents want Ashley's story told, but they don't want to talk to the media, so they've set up a website.

On it, they wrote this -- "Ashley will be a lot more physically comfortable, free of menstrual cramps, free of the discomfort associated with large and fully-developed breasts and with a smaller and lighter body that is better suited to constant lying down and is easier to be moved around." Some medical ethicists are critical.

DR. ART CAPLAN, BIOETHICIST, UNIV. OF PENNSYLVANIA: I think however using hormones and surgery to permanently keep somebody in a child-like state robs them of their right to kind of grow and develop and become an adult.

GUPTA: But Ashley's parents have cautioned, "unless you are living the experience, you are speculating, and you have no clue what it would be like to be the bed-ridden child or their caregivers."

(END VIDEOTAPE)

GUPTA: You know, it's amazing, just a little bit of a behind the scenes look. Most hospitals have an ethics panel and the ethics panel was exercised in this case as well, actually meeting the family, checking with state laws, figuring out that they're not breaking any state laws to be able to do what they did, performing these operations and giving the estrogen supplements. But obviously, it was after a lot of deliberation and still a lot of public scrutiny, Soledad.

S. O'BRIEN: Now the public certainly is responding. I mean, it's you know, certainly touched a nerve. I'm wondering if ethicists feel like a nerve has been touched as well. Has the debate among the ethicists sort of started up again?

GUPTA: I think so. You know, people always use the term slippery slope when it comes to ethical arguments, and I think it applies here as well. The real question, Soledad, I think a lot of people sort of ask themselves is where do you draw the line.

The estrogen supplementation to restrict someone's growth, so their bones don't grow anymore, is something that may be acceptable to some, but would you do an amputation of legs for example in someone who will never walk to keep them small as well?

Where do you draw those lines? That may sound radical to some people, but not as radical to others. So I think it's really has sparked some debate, lively debate, in the ethics community.

S. O'BRIEN: Sanjay Gupta for us this morning with a "House Call." Thanks Sanjay.

GUPTA: Thank you.

S. O'BRIEN: Miles.

(WEATHER REPORT)

Interesting story from L.A. to tell you about. A couple of disgruntled traffic engineers are now facing felony charges this morning. They allegedly hacked into the city's traffic light system, a system they helped operate and design, and it caused days of gridlock in August. This was in the midst of some union difficulties, shall we say.

CNN's Jacki Schechner is here with word on the allegations of this inside job, as if traffic wasn't bad enough in L.A. The traffic engineers messing with the red lights. JACKI SCHECHNER, CNN CORRESPONDENT: What do you want to do if you make people angry -- you just make the L.A. traffic -- it's like "The Italian Job," you ever see that movie, with Mark Whalberg, where they tie up the L.A. traffic system so they can make their getaway.

Well, there was no heist here, but what happened was, you're absolutely right, the traffic engineers union was threatening a strike. So the city shut down the entire computer systems, the engineers couldn't get into it.

And two engineers used a laptop, a few clicks, and they hacked into it anyway, and they were able to tie up four major intersections over the course of several days. They also fixed it so that city officials couldn't get back into it to fix it on the tail end.

They ended up causing a gridlock at LAX, an intersection in Studio City, they clogged up the Glendale Freeway, the L.A. Civic Center, so all the areas that have bad traffic anyway.

And they didn't shut off the lights, what they did is they made red lights really, really long, so it just causes this massive amount of backup and traffic.

They were arrested on Friday. They pled not guilty. They've been let out on their own recognizance, as long as they don't go near city computers and they don't go to the department of transportation without their attorneys. This all brings into question the security of the L.A. system though and that's something they're now taking a very close look at.

M. O'BRIEN: And not just the L.A. system. The larger issue here of how do employers in general protect their systems from inside jobs, people who have passwords, access and know the systems intimately? that's a difficult thing.

SCHECHNER: This was so much a top-level thing. There was only access to certain managers and one of the guys had that access. He hacked into and he's like a renowned traffic engineer and then the other one was a computer whiz who helped build the system. So these are guys who knew that system inside and out and they went in and allegedly tampered with it.

M. O'BRIEN: Interesting.

SCHECHNER: They made a good point.

M. O'BRIEN: Yes, Jacki Schechner, thank you very much -- Soledad.

S. O'BRIEN: "CNN NEWSROOM" is just a few minutes away. Tony Harris is at the CNN Center with a look at what they've got ahead for you this morning. Good morning, Tony.

TONY HARRIS CNN ANCHOR: Good morning, Soledad. We have got these stories on the NEWSROOM rundown for you this morning. Baghdad battle, U.S. warplanes and Apache helicopters backing American GIs on the ground. A fierce fight with insurgents in a Sunni neighborhood.

President Bush and Democrats on a collision course. Some lawmakers vowing to block money for a troop surge in Iraq.

Malibu inferno, oceanfront homes of the rich and famous overrun by wildfire. The fire threat this morning still critical.

Join Heidi Collins and me in the NEWSROOM. We get started at the top of the hour right here on CNN. Soledad, back to you.

S. O'BRIEN: All right Tony, thank you very much.

Ahead this morning, that strange order that hung over Manhattan on Monday still has people puzzled. Nobody's afraid to joke about it, though. Late night laughs straight ahead on AMERICAN MORNING.

We're back in a moment.

(COMMERCIAL BREAK)

(NEWSBREAK)

S. O'BRIEN: That is very true. The air this morning is clear in New York City. Still a mystery, though. What was it that sent that foul smell through the streets of New York yesterday? Well, the utilities say it wasn't a gas leak, the mayor, Michael Bloomberg, says it wasn't a health threat. One thing the foul smell was, was fodder for the late-night comics. Take a listen.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN: Welcome to New York City, the city you can smell! The smell was so bad, the Statue of liberty, instead of holding the torch, holding her nose.

JON STEWART: Oh my god! New York's pilot light is out!

Very disturbing! Normally, the city smells like lavender and cinnamon.

My God, the terrorists have odors!

JAY LENO: Went to New York for the weekend, had a gas! Oh, it was unbelievable. It was a gas!

It shows you how strong the odor was, when you can smell it over the stale urine of the subway. In fact, Kevin, you know what they call a bad smell in New York?

UNIDENTIFIED MALE: What's that? What?

LENO: New Jersey! Hey!

LETTERMAN: On the bright side, it's nice to have something on New York City that smells worse than the Jets and the Giants.

(END VIDEO CLIP)

S. O'BRIEN: Ah, so true.

M. O'BRIEN: Poor New Jersey. It was, however, coming from New Jersey.

S. O'BRIEN: Apparently, they were pointing the finger at New Jersey. Yes, it was just wafting across. It's happened before.

M. O'BRIEN: It was interesting when in the midst of this, they called the mayor of Jersey City. He said, oh no, it's definitely New York!

S. O'BRIEN: Well, who wants to be responsible for a big, stinky smell wafting up 70 blocks?

M. O'BRIEN: It could be a Mother Nature natural kind of thing, too. It could be.

S. O'BRIEN: Here's a quick look at what's coming up on NEWSROOM at the top of the hour.

HARRIS: See these stories in the NEWSROOM: Islamist fighters flushed out of Mogadishu. Now we're told the U.S. strikes selected Al Qaeda operatives in Somalia.

And start the clock. House Democrats begin a 100-hour project today. agenda, six key pieces of legislation, they say, the Republicans ignored.

Mac world excitement. Apple's Steve Jobs expected to make a big reveal today. The buzz, an iPod phone.

You're in the NEWSROOM, 9:00 Eastern, 6:00 Pacific.

(COMMERCIAL BREAK)

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