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AMERICAN MORNING

Passport Breach; How the Economy is Messing With Breakfast; Governor Richardson to Back Obama

Aired March 21, 2008 - 08:00   ET

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


KIRAN CHETRY, CNN ANCHOR, AMERICAN MORNING: Passport breach. State Department contractors fired for peeking at Obama's files. The most politics in the morning.
Smear campaign.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm bothered by the higher prices. It's not normal.

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CHETRY: A buck can't even buy a bagel? How the economy is messing with breakfast and everything else, on this AMERICAN MORNING. (INAUDIBLE) engaging the economy based on how much a bagel cost?

ROB MARCIANO, CNN ANCHOR, AMERICAN MORNING: I think so. (INAUDIBLE) Not everybody drives a car around.

CHETRY: What do you do in Atlanta then?

MARCIANO: We talk about peaches.

CHETRY: How about that. And pizza. Welcome. It's Friday, March 21st. I'm Kiran Chetry.

MARCIANO: And I'm Rob Marciano in today for John Roberts.

CHETRY: You forgot him already?

MARCIANO: Never. He's having a good time. He'll be back on Monday.

CHETRY: And we start with some breaking political news overnight, Barack Obama picking up an endorsement, New Mexico Governor Bill Richardson. He has strong ties to the Clintons and he was also a former cabinet member in the Clinton administration, but he sent an e- mail to supporters overnight saying that Barack Obama will be a great president who can quote bring the change we so desperately need. My affection and admiration for Hillary Clinton and President Bill Clinton will never waver, he went on. It is time, however, for Democrats to stop fighting amongst ourselves and to prepare for the tough fight we'll face against John McCain in the fall.

Richardson will be with Obama. He'll be announcing that endorsement at a campaign event in Portland, Oregon this afternoon. CNN's Jessica Yellin has been following the story for us right now with reaction on exactly how this is playing and also, how well do Barack Obama and Richardson know one another?

JESSICA YELLIN, CNN CORRESPONDENT: Kiran, they got to know each other on the campaign trail. Bill Richardson had said in the past that they kind of had a teasing relationship, especially during debates. Rolling their eyes at one another when somebody would say something that he called outrageous or funny during the debate and then after Richardson dropped out on January 10th, Barack Obama has been calling him consistently, as has Senator Clinton, I should note, and former President Bill Clinton, but Obama also calling Richardson regularly to check in and in a what Richardson has described as a non- pressuring way encouraging him to endorse.

All of this means that the Barack Obama campaign has found a way to sort of change the topic or stem the tide of some bad news stories that have been buffeting the campaign lately and Bill Richardson's message is twofold. One that he says as you pointed out, it's time to unify the Democratic party around one candidate and he also said that he was inspired and touched by Barack Obama's speech on "Late" earlier this week. In a statement that came out overnight, Richardson said as a Hispanic, I was particularly touched by his words. I'd been troubled by the dehumanization of immigrants, specifically Hispanics, by too many in our country and Senator Obama has started a discussion in this country that's long overdue.

He believes that Obama is somebody who can unite and bring about change and so he wants to come out and throw his hat and his weight behind Barack Obama, which means that Senator Clinton has a bit more of an uphill struggle now as she encourages other super delegates who are still undecided, that they should not follow suit and not -- and her message is they need to wait until the next state, Pennsylvania, Indiana, Puerto Rico, vote, but that her job in that respect has just gotten one notch harder with Bill Richardson's endorsement this morning. Kiran?

CHETRY: Looks like it. Jessica Yellin for us in Indianapolis this morning, thanks.

MARCIANO: We're also following breaking news about Barack Obama's passport file. An inspector general could be named this morning to investigate three security breaches into that file. Two State Department contract workers have been fired, a third suspended, after Senator Obama's passport file was accessed. Each incident happened within days or sometimes hours of a primary contest, the first incident, the day after the New Hampshire primary. But Obama was not informed of the breaches until just yesterday when senior managers at the State Department say they found out about it themselves. Obama's spokesman calls it an outrageous invasion of privacy. CNN State Department correspondent Zain Verjee covering the story. She's live in Washington. Zain, where do we go from here? I guess we got to have some sort of investigation.

ZAIN VERJEE, CNN CORRESPONDENT: And explanation too. A lot of people are saying, how on earth could senior management in the State Department not know about this? What they're saying is that they were only made aware yesterday afternoon even though the incidents happened on January 9th, February 21st and March 14th. What happened was Rob, a reporter called the State Department spokesman Sean McCormack to ask about the file breaches and the State Department then looked into it. Then they confirmed it happened. And they're telling us that it was dealt with, at such a low level, it was actually never sent up the chain. The State Department saying, yes, it was a big failure and that they informed Obama's Senate office immediately.

Today a top State Department official Patrick Kennedy is meeting with Obama staff in person. In terms of the investigation, the State Department saying that there is an ongoing review, but they're not giving out any details. It reached out to the acting inspector general and he's going to be taking whatever steps that he decides are actually appropriate. State Department spokesman Sean McCormack told reporters that this is how they were treating it now. At this point in time, it's our initial view that this was a imprudent curiosity on the part of these three separate individuals. So the State Department saying that's their position for now, but they are not being dismissive of anything else and they're not ruling anything out. Rob?

MARCIANO: Do we know anything about these contractors? Two of them were fired and then we have their managers. Do we know anything about them either?

VERJEE: We don't know a whole lot of details about the contractors right now. The first thing is that the State Department employs several thousand contractors to deal with their passport department with all sorts functions. There are about 18,000 passports the State Department needs to deal with, but we don't know any details about the supervisors, exactly who knew what, when and why it wasn't sent up the food chain. The State Department is not revealing which contractors specifically were involved and they're not telling us the names of the two that were fired and the one that was disciplined.

MARCIANO: Before we get all bent out of shape here, Zain, what kind of information are in these files? Is this a huge, huge breach? Is it that important?

VERJEE: Yeah. All the information there, you're in there if you've traveled anywhere, I am. Anyone in this country that's applied for a passport and Senator Obama files are there as well. They're protected by the privacy act. Basically, what you have in these passport files, from my understanding, is relatively routine information. minimal records. The State Department tells me that typically it's got things like scanned images of passport applications that have been made. Things like an emergency contact, Social Security number, an individual's birth date, things like that, a lot of biographical information, photographs, too. There would be passport photographs, but it's still, even though it's routine information and pretty basic, it's still very serious, very embarrassing for the State Department and there are a lot of questions that are going to be asked about this, politically delicate and volatile situation. MARCIANO: Especially with the highly debated and contested political contest going on this year. Zain Verjee, thank you very much, our CNN State Department correspondent.

CHETRY: Senator Barack Obama also finding himself trying to explain some more comments that he made when referring to original comments made about his grandmother during a speech this week where he tried to explain his relationship with his controversial longtime pastor Jeremiah Wright. In that speech, Obama said that his one grandmother also sometimes made him uncomfortable by uttering racial stereotypes and that she may have had a fear of black men. He tried to clarify what he meant during a radio interview yesterday.

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VOICE OF SEN. BARACK OBAMA (D) PRESIDENTIAL CANDIDATE: The point I was making was not that my grandmother harbors any racial animosity. She doesn't. But she is a typical white person who, you know, if she sees somebody on the street that she doesn't know, you know, there's a reaction that's been bred into our experiences that don't go away and that sometimes come out in the wrong way and that's just the nature of race in our society. We have to break through it.

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CHETRY: Well, then that touched off a bit a firestorm yesterday and prompted Senator Barack Obama to back pedal. He appeared on CNN's "Larry King" to explain what he meant.

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OBAMA: What I meant really was that some of the fears of street crime and some of the stereotypes that go along with that, you know, were responses that, you know, I think many people feel. She's not extraordinary in that regard.

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CHETRY: Also a connection this morning between the Reverend Jeremiah Wright and the Clintons. A picture at politico.com Web site shows Wright meeting with then President Clinton at the White House back in 1998. He was there to attend a prayer breakfast that was held hours before the Starr report came out on the Monica Lewinsky scandal and that was made public. Politico says it got the picture from a Web site defending Wright.

MARCIANO: John McCain's campaign suspended a low-level staffer for sending out a YouTube link to a video that raises questions about Barack Obama's patriotism. The video shows snippets of Obama's speeches and interviews and links them to his controversial former pastor, Reverend Jeremiah Wright. The McCain campaign issued this statement, saying, we have been very clear on the type of campaign we intend to run and this staffer acted in a violation of our policy. He has been reprimanded by campaign leadership and suspended from the campaign. Obama responded saying that even though he and McCain have disagreements, McCain has generally operated in honorable ways. Well, former White House adviser "Scooter" Libby gets disbarred from practicing law in Washington, DC. Libby was convicted of lying to a grand jury. A court said that when a member of the bar is convicted of a crime like this, he has to be disbarred. This conviction stems from the outing of Valerie Plame Wilson as a CIA operative and the investigation surrounding it.

CHETRY: You're watching the most news in the morning.

First it was Southwest, now another airline grounding some planes. We're going to tell you why, more details just ahead.

Also, take a look at this, a home sent down the river and smashed, one of hundreds completely damaged or destroyed in the deadly Midwest floods. We're live in the flood zone. A look at what's popular on cnn.com right now.

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MARCIANO: Just in this morning, House Speaker Nancy Pelosi meeting with the Dalai Lama in India. Pelosi, an outspoken critic of China's human rights records, is there condemning the recent crackdown of anti-government protests in Tibet. CNN's Sara Sidner is live in India with the latest. Good morning Sara.

SARA SIDNER, CNN CORRESPONDENT: How are you? Nancy Pelosi did come to Dharamsala. She stood on the main temple steps just a few feet away from his holiness the Dalai Lama, the exiled leader of Tibet and she said to about 2,000 people there, mostly Tibetans and their supporters, she said and a quote, we insist the world know the truth about Tibet.

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REP. NANCY PELOSI, (D) HOUSE SPEAKER: Nothing surprises me about the use of violence on the part of the Chinese government, but I would hope that world opinion will come down heavily on them saying, please don't act in a violent way. Please let monitors in to see what is happening there.

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SIDNER: She also said that journalists and aid workers should be led in, aid workers because, of course, of the violence that has happened there to help heal anyone who was maimed or hurt in that violence and journalists to show the truth to the world about what exactly is going on in the former Tibet. She also mentioned something that the Chinese said. She scoffed at the Chinese accusation that the Dalai Lama instigated the recent violence in Tibet and said the U.S. Congress might do something to that effect. She said they are interested, the U.S. Congress, in having a resolution passed that forces an investigation into whether or not there was any association between his holiness the Dalai Lama and that violence there.

MARCIANO: CNN's Sara Sidner live from India. Thanks Sara.

CHETRY: Veronica de la Cruz joins us now. She's following other stories developing this morning. Good to see you Veronica.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Nice to see you Kiran. Good to see you Rob and good morning to all of you. Here's what's new this morning, Vice President Dick Cheney is in Saudi Arabia today meeting with King Abdullah after meeting with Hamid Karzai yesterday. Cheney and King Abdullah will discuss high oil prices, but it is not clear if Cheney will ask him to increase production. Earlier this year, OPEC refused to increase oil production to help lower prices. Cheney's advisers say oil is just one of the topics the two will discuss.

The Vatican is on high alert today. New tapes said to be from Osama bin Laden accused the pope of leading a new crusade against Muslims. The Vatican denies the accusations, but is still concerned about the threats on the tapes. The tape also warns about severe reaction to cartoons of the prophet Mohammed. The Vatican says the pope condemns those cartoons.

And a warning now to all Americans heading to the Olympics. You could be under surveillance. The State Department says all hotel rooms could be subject to remote technical monitoring. The warning was part of a fact sheet about traveling to China for the Olympics. It said that although the terror threat in China is low, large events can always be targets.

To carefree, Indiana now, 26 people there have been hospitalized after an explosion at an engine plant. More than 300 people evacuated from a factory after workers mixing chemicals accidentally unleashed a cloud of hydrochloric acid. A hazardous materials team was sent to the plant. None of the injuries are believed to be life threatening.

United Airlines has grounded a portion of its 747s. The total of seven planes haven't been maintained to the airlines standards. United expects that the problem was caused only by a minimal disruption to its flight schedule and things should be back on track.

Finally, March madness kicked off last night. We almost saw a major upset. Gerald Henderson (INAUDIBLE) by grabbing a loose ball and racing down court making what proved to be the game-winning lay up. Number two seed and perennial power Duke beat 15th seeded Belmont by one point, all thanks to Henderson's moves. Very close game there, 71-70 and I'm sorry, Rob. I think Cornell (INAUDIBLE)

MARCIANO: That's true, first time in 20 years you're in the tournament, the only team in the tournament not to give out athletic scholarships, still kudos.

DE LA CRUZ: Hope you taped it. You can watch it again for the next 20 years. No, I'm just teasing. Congrats.

CHETRY: The tournament, it's exciting when there's upsets like that. It's exciting when the little guy gets to knock off a big school.

DE LA CRUZ: And 1.5 million people watching in front of their computers at the office. CHETRY: Not Rob, though.

MARCIANO: Very busy.

DE LA CRUZ: He's got it all on tape.

CHETRY: Thanks, Veronica.

Rising gas prices, stumbles in the stock market, but the business news is not all that this morning. There are jobs springing up in some parts of country. We're going to tell you where they are coming up next on AMERICAN MORNING.

POPPY HARLOW, CNN CORRESPONDENT: Coming up what impact the economic slowdown having on Mall of America and plans for a $2 billion expansion. That's ahead on AMERICAN MORNING.

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MARCIANO: Money, money, money. With gas prices soaring and home prices falling, Americans feel like they have less cash to spend on other things. So what kind of impact is that having at the mall? Poppy Harlow from cnnmoney.com joins us from the Mall of America in Bloomington, Minnesota, Poppy, any more action now, people spending money? What's going on?

POPPY HARLOW, CNN CORRESPONDENT: People are spending money here. We talked to a lot of shoppers yesterday and it came to a surprise to us, they are spending money. More than 40 million people visit this mall every year. A little later on today, when it opens up, there will be upwards of 100,000 people in here and as I said, we talked to bunch of them yesterday and they said to us, they are actually spending money. Take a listen to what they had to say.

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UNIDENTIFIED FEMALE: We're spending more than I would normally spend.

UNIDENTIFIED MALE: We average maybe, within last three, four days, about $1,500 to $2,000.

UNIDENTIFIED FEMALE: I don't think it's much difference for us. Is it?

UNIDENTIFIED FEMALE: No. Not really.

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HARLOW: Keep in mind, the amount of people that visit here every year is more than the combination that visit Graceland, Disneyland and the Grand Canyon combined and a lot of those are tourists. Keep in mind, half of the money that comes in here, the more than $400 million every year that comes into this mall comes from tourists and people are really cashing in on that weak dollar, Rob, making the most of that weak U.S. dollar. MARCIANO: What kind of things are they buying? They saying anything? What kind of things are you seeing flying out of the stores?

HARLOW: They're buying everything from going on these rides, the roller coaster behind me, the Ferris wheel to dining in the restaurants and also it's prom season. We talked to the owner of a store that sells a lot of prom dresses this year and she said, you know what, business is really good right now, but what's interesting, is she says that the manufacturers of those prom dresses have been sending less and less and making less because they were scared they weren't going to sell those. She said she's nervous about the few months ahead, but right now business is pretty solid for her.

MARCIANO: All right, cnnmoney.com's Poppy Harlow joining us live from Minnesota, thanks Poppy.

CHETRY: (INAUDIBLE) Don't have to worry about what to wear to the prom, just go rent a tux.

MARCIANO: The only thing that's funny is that you know, foreigners, the cheap Europeans like to mock Americans for all our strip malls, our big malls, they're coming into the big mall and now spending money.

CHETRY: It's the roller coaster that drags them in though. They just can't resist.

ALI VELSHI, CNN CORRESPONDENT: They keep doing it and Americans can hold out through a lot of things, including the oil prices, the high mortgage rates, even the high energy prices. The bottom line is, you can't hold out against not having a job. That is the number one concern. Now the unemployment rate in the country is 4.8 percent. That is actually pretty low and people say, what are you worried about? January and February we lost jobs in this country. The average in 2007, the average increase in jobs in America was less than 1 percent. So there were fewer than 1 percent more jobs at the end of 2007 than there were at the beginning.

I wan to take a look at few states where in fact the unemployment rate is lower than the national average and the job creation is faster. Texas. I just spent a lot of time in Texas and was fascinated. It's got the second largest work force in the country. The job creation in Texas is more than three times the national average. There are lots of professional and business-type jobs. Trade and transportation, obviously it's a border state, a lot of trucks go through there. That is a big industry generally and a lot of leisure and hospitality, tourist destinations.

Wyoming, another state, again, lower than average unemployment rate and higher than average job growth, almost 3 1/3 times the average job growth, again, professional and business, trade, transportation and utilities, same as Texas. Here's something interesting, construction work. That is something we've not seen in many of the states. There's a growth in construction work in Wyoming.

North Carolina is the third one we're looking at. That is, again, lower than average unemployment, more than double the national average in terms of job growth, professional and business services. That's a very broad area, which is why you'll see that showing up on anything with the Bureau of Labor Statistics on it, education jobs. Education is another big industry in the United States that is seeing growth, and government jobs. That's not fantastic. You don't really want to see your job growth necessarily coming from government jobs. You want them coming from the private sector, but Texas, Wyoming and North Carolina are states where from the job perspective, opportunities seem to be there as opposed to other states where we're seeing job losses.

MARCIANO: All lovely states to relocate.

VELSHI: They are all lovely states to be in.

CHETRY: (INAUDIBLE) Thanks, Ali.

You're watching the most news in the morning. The mortgage mess has now spread to student loans. Three banks in fact pulling out of the Federal loan program. It will probably make it harder for kids to get loans for college. Gerri Willis though has some advice for us coming up.

And we're also following big political news. Senator Barack Obama picking up the endorsement of New Mexico Governor Bill Richardson. Why did Richardson go with Obama over longtime friend Hillary Clinton and Bill Clinton? That and the rest of the day's top stories when AMERICAN MORNING returns.

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CHETRY: Welcome back to AMERICAN MORNING. I'm Kiran Chetry, 8:30 Eastern time this morning, got a little snow today Rob.

MARCIANO: Just a little bit to keep you honest on this first full day of spring. The tulips are right around the corner. John Roberts is off. He's right around the corner too. He'll be back on Monday. I'm Rob Marciano filling in.

CHETRY: Good to have you with us this week. Meanwhile, we have some breaking political news this morning, a big endorsement for Senator Barack Obama. New Mexico Governor Bill Richardson, he is the nation's only Hispanic governor, a super delegate with close ties to the Clintons, in fact a cabinet member in the Clinton administration. But still decided that he was going to throw his support behind Barack Obama, e-mailing supporters overnight to announce that decision calling him a quote, once in a lifetime leader. The formal announcement will come at a rally this afternoon in Portland, Oregon. You can watch it live, 12:30 Eastern time right here on CNN.

MARCIANO: We are also following breaking news about Barack Obama's passport file. An inspector general could be named today to investigate why three State Department workers accessed the file three times in the last two months. Each incident happened within hours or in some in cases days of a primary contest. The last just a week ago. Two of the government employees have been fired, a third suspended. Senior managers at the State Department say they just found out about the incidents yesterday and immediately informed the Obama campaign. Obama's spokesmen calls this an outrageous invasion of privacy and demands a full explanation.

Well, CNN security analyst Clark Kent Ervin is a former State Department inspector general. He's live in our Washington bureau right now.

Good morning again, Clark. As a former investigators, what do you say is the first steps to this investigation?

CLARK KENT ERVIN, CNN SECURITY ANALYST: Well, I have a lot of questions, Rob and of course the first question is the obvious one. Why is it that these three contract employee was accessing Senator Obama's files? Was it merely imprudent curiosity, as the State Department spokesman put it late night or was there a nefarious political purpose? The fact that according to the State Department senior managers learned about this from a reporter and the fact that the dates in question all have some political significance, as you just pointed out, suggests to me there was a political motivation for this.

MARCIANO: Why do you think it took so long? I mean a statement from the State Department says that the senior management knew about this afternoon, meaning yesterday, they briefed the Obama campaign. Why would it take over two months to filter up through the ranks?

ERVIN: It shouldn't have. The very first incident ought to have been reported promptly to senior management. If it had been appointed to senior management, the inspector general should have been promptly informed, an investigation should have been conducted and presumably the other two incidents, the one in February and the one last week would not have happened, had that been done. That, too, will be part of the inspector general's investigation surely.

MARCIANO: OK. These incidents seemingly came very close to some primaries and other political events yet they say it's curiosity. Do you buy that? Do you think this is more politically motivated? You've been through this once before.

ERVIN: Of course we don't know. That's what the investigation is for. But again, I'm really skeptical of the fact that you know a reporter apparently had access to this information before senior people in the State Department did, if that's true, the dates in question, all of that suggest political motivation.

And the irony I would point out is presumably if this was access for political reasons, it would be to hopefully find out that the senator had traveled to some Arab or Muslim countries. If that's true, if he actually did, I would think that would be a good thing. This is the time when we need our political leaders know more about the Muslim/Arab world. There should be imprudent curiosity about that, it seems to me, rather than the senator's passport file.

MARCIANO: Did these guys break the law? And if so, are they going to be facing criminal charges? ERVIN: Well this information is protected by something called the privacy act and certainly there could be criminal penalties attached here. This goes back to the 1992 incident when then candidate Bill Clinton's files were accessed by people in the State Department for political purposes. A special prosecutor actually was involved in that, did conduct an investigation. Ultimately no one charged but it was serious enough to be referred to the Department of Justice and serious enough for a prosecutor to be involved. That may well happen here. We'll have to see.

MARCIANO: Quickly, haven't there been stop gaps since 1992 to prevent this from happening? Where do these things fall through the cracks?

ERVIN: Well, that's right. In fact, the State Department says they institute add system after this 1992 incident to have a trigger alert if employees improperly access passport files. That's apparently what alerted lower level managers to this incident in the first place, but, again, apparently there are still breaches because it can be done and this was not promptly reported up the management chain if what we learned from the State Department last night is to be believed.

MARCIANO: Lots of questions yet to be answered. Clark Kent Ervin, our CNN security analyst, thanks, Clark.

ERVIN: Thank you, Rob.

KIRAN CHETRY, CNN ANCHOR: We've been talking about this freak accident that happened in the Florida Keys where an eagle ray, an animal not known for being aggressive, leaping up out of the water and colliding with a woman who was on a boat, killing her. That ray weighed about 75 pounds. Officials say they think the woman fell backward, hit her head on the boat deck and that could have been what cost her life.

Earlier we spoke to Ray Davis of the Georgia Aquarium who said the eagle ray was not on the attack.

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RAY DAVIS, GEORGIA AQUARIUM: This was just a tragic accident, and people enjoying the ocean, and despite an eagle ray doing its normal behavior, probably evading a predator or possibly trying to dislodge parasites. It's not uncommon to see spotted eagle rays jumping in the Florida Keys.

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CHETRY: Davis says you don't need to completely avoid rays if you see them, but should avoid them in the ocean, especially if they're in a large school together.

To extreme weather now hammering much of the middle of the country. We have some amazing video. This is out of St. Louis, Missouri. It looks like a massive waterfall. It's not, though. These are floodwaters pouring over the road and causing a massive chunk of concrete to collapse. You know Rob, that's been a site that we've seen a lot over this past week. A muddy river rushing into a lake and parts of Missouri getting a foot of rain. A lot of those roads just simply cannot handle that much water.

MARCIANO: And it's widespread. It seems like state after state after state, we're seeing scenes just like this.

CHETRY: And look at this. This is from Illinois where most roads are completely impassable in Waltonville. Anyone who attempted got stuck. A truck submerged up to its rooftop, the cab filled with water. Some of the worst flooding to hit that region in decades.

And this is video out of Arkansas. Backyard decks, debris, even entire homes swept away in the strong currents. There's Calico Rock, Arkansas. That's a house making its way down the water and wasn't able to clear that highway bridge as you see it there.

The cost of this cleanup, as well, going to be in the millions of dollars but a lot of time and money spent to repair the damage.

MARCIANO: That roof just gets unzipped by that bridge. Dramatic video for sure.

CHETRY: Let's go to Jacqui Jeras. She's live in Pacific, Missouri this morning.

And Jacqui, earlier you showed us as well just how that water was rising. You put a stick down and when you came back about an hour later, it was already submerged.

JACQUI JERAS, AMS METEOROLOGIST: Yes, it is. In fact, our cone is starting to get submerged as well. I'll show that in just a second.

We're actually here now in Eureka, Missouri. Pacific is just downstream a little ways. They've got flooding. They're worried about their downtown here.

There you can see behind me some of these flooded homes already. We're talking about the first floor, several feet deep. Most of these people have actually evacuated their homes but I was just talking to the public information officer and he tells me this home right over here, there's actually a gentleman that's staying in his home. The water rescue boats took their boat up to it yesterday and they said when standing in the boat, they were eye level with this man in his home in his attic. And he's up there with his dog. He said he's got nowhere else to go. He'll stay up there and wait it out.

Now also up this way, you can see some campers, perhaps, and there's a group of people here that are also trying to stay safe and stay in the high ground, but the river is coming up from both sides here. This is where the big and the Merrimack Rivers come together. You can't even tell the difference between the two. Normally you can't even see water in this area at all. It's really covering it.

Another big issue, for people not even directly impacted by the floodwaters, by their home, is the roadways. This is highway W, behind me. You can't even see where that road goes. It's the road to nowhere, right? There are just dozens and dozens of roadways which are closed off.

The water continues to rise, and now it's starting to threaten Interstate 44. At least two lanes of that interstate have already been shut down. The ramp at 141 has also been closed, and they're worried they're going to have to shut down the thing entirely.

The river's not even expected to crest now until tomorrow afternoon or evening. So we're talking 24 hours from this time, and we're already having big problems.

Downtown Eureka they've been sandbagging there. More than 300 volunteers came out to fill up sandbags. They're going to be doing that again later on this morning.

And to just show you how quickly the water's been rising, guys, here's our cone. Our stick was a couple feet behind it earlier. Look how far this water goes up. In fact, we're going to have to move our equipment very closely. We think we can probably only stay here maybe another hour or two before we're going have to get out as well so we don't have to be evacuated or rescued ourselves.

Rob?

MARCIANO: All right, Jacqui. Rising water there. Stay dry.

Three banks dropped student loans because they're not making enough money off them. Well, will this make it harder for students to cover their tuition bills? We're going to ask personal finance editor Gerri Willis about that.

And even the price of a bagel bites. Economic news that could send New York City into a tailspin. Why breakfast is getting a lot more expensive. That story ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

MARCIANO: Three large banks dropping out of the federal student loan program which means if you or your child is counting on student loans, well there could be some problems.

CNN's personal finance editor Gerri Willis joins us, issue number one, our in depth look at the economic issues affecting you.

Gerri, this doesn't sound good. Why are these banks dropping out? I assume they're not making money.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, the real problem is that congress not too long ago cut subsidies to these lenders to save money on college loans. That means the lenders were in a box because they really can't raise their prices. They can't raise interest rates. Interest rates are capped. So some of them are getting out of the program altogether.

The largest of those, HSBC, it provides 50% of loans to four small schools. So this is a big deal for those kids who have those loans. Also the other problem, the mortgage meltdown. You know student loan debt is pooled and then cut up into small pieces and sold to investors just like mortgage debt is. That stock market is gone. So these folks are having a hard time making money on these loans

MARCIANO: And if you are a kid that has a loan now, though, by dropping them, do I still keep the loan?

WILLIS: It's all about underwriting new loans. That's the problem right now and of course kids are always in the market to try to get this new money. It's a very big problem.

If you're in the situation, you've really got to shop around, look for other lenders. It's not like everybody is getting out of the business or even cutting the special perks a lot of kids rely on to be able to make their bills.

Also, you should know, there are a lot of parent loans out there that are having problems, because of the foreclosure crisis. People are not paying on their college loans, the plus loans. If you're in that situation, you are entitled to extra money from the Stafford plan. This is a plan that lends to kids who are paying for college themselves.

And finally, if you're in a school where the lender has walked away altogether, I mentioned HSBC, don't worry. The colleges themselves are looking for other lenders. Obviously they don't want college students not to be able to get money. They will be out there trying to help you. You may have a delay in the process, but that doesn't mean you won't be attending classes.

MARCIANO: So it's just a little warning blast there, and just more reason --

WILLIS: More work. More work for college students.

MARCIANO: And more reason for parents to pressure kids, study harder so you can get an academic scholarship.

WILLIS: That's right. Absolutely.

MARCIANO: It didn't happen for me. We had to pay. Thanks, Gerri.

WILLIS: Thank you.

MARCIANO: All right. Be sure to catch Gerri and Ali Velshi for "ISSUE #1" today at noon right here on CNN and you can read up on issue number one any time you like at CNNmoney.com.

CHETRY: Still ahead, some Starbucks baristas may be getting $100 million tip. We'll tell you how they earned it, coming up. And dig a little deeper for that morning bagel and coffee. At least to pay for it. How much more dough you're shelling out on everyday items like bagels ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: "CNN NEWSROOM" is minutes away. Heidi Collins is at the CNN Center with a look at what's ahead.

Good morning, Heidi.

HEIDI COLLINS, CNN ANCHOR: Good morning, Kiran. It is Good Friday in the "NEWSROOM."

State Department contractors getting a peek at Barack Obama's passport file. Bureaucratic busybodies or political villains? We'll talk about that.

And people in Missouri sandbagging today. The Merrimack River expected to flood several towns when it crests tomorrow.

And this soldier among several troops in Iraq electrocuted since 2003. What's going on here? Pentagon correspondent Barbara Starr investigates.

And we'll be talking the weekend politics with a pair of political poindexters.

"NEWSROOM" top of the hour right here on CNN.

Kiran?

CHETRY: Thanks, Heidi.

MARCIANO: We've been sharing success stories in the fight to get fit. Imagine getting up every day before the sun rises and heading to boot camp. Pretty much what we do here. If do you it for exercise, it may not be just to lose weight.

Dr. Sanjay Gupta shows us this morning's "Fit Nation" report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Ten, nine, eight --

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Running drill, push-ups.

UNIDENTIFIED MALE: One -- two --

GUPTA: Sit-ups. All of it before sunup.

UNIDENTIFIED MALE: Let's go, everybody!

GUPTA: "Operation boot camp" is about pushing you to your limits. SHANNON ALEXANDER, BOOT CAMP ATHLETE: By 8:00, I'm off to work and I know I can handle anything. I mean I just handled you know rolling around in the wet grass and doing 800 sit-ups. I can do anything that's going to come after me.

GUPTA: 34-year-old Shannon Alexander couldn't always handle it, but a routine doctor's appointment became an epiphany.

ALEXANDER: I found myself in the doctor's office with lower back pain, and I just kind of had a moment where, I'm 34 years old, I have a 6-year-old son. I should not be feeling this kind of crippled and limited by my own body.

UNIDENTIFIED MALE: Ten, nine, eight --

GUPTA: So Alexander joined this intense 6:00 a.m. boot camp class.

ALEXANDER: I really didn't know what to expect. I was terrified that first morning.

UNIDENTIFIED MALE: A little lower.

GUPTA: Now just six months in, Shannon has lost weight, gained confidence and started training for a marathon. Most importantly, she says she feels happier.

ALEXANDER: It's definitely had a huge impact on just helping me to feel stronger, more capable, more hopeful. You know I can play with my son now and keep up with him. Heck he can hardly keep up with me.

GUPTA: Dr. Sanjay Gupta, CNN, reporting.

(END VIDEOTAPE)

MARCIANO: And you can catch Sanjay this weekend on his own show "HOUSE CALL." That airs Saturday and Sunday mornings, 8:30 eastern right here on CNN.

AMERICAN MORNING will be right back.

(COMMERCIAL BREAK)

CHETRY: Well, it's time to meet another CNN hero, ordinary people making an extraordinary impact and today a man who hit rock bottom that managed to not only turn his own life around but also the lives of thousands of others. Scott Silverman is today's "CNN Hero."

(BEGIN VIDEO CLIP)

SCOTT SILVERMAN, CNN HERO: When you are ready to say good-bye to the world, that is a clear bottom. I didn't think of myself as depressed. My drinking at the end got so bad I felt my life was over. The window's open. It's the 44th floor. I'm thinking, you know what, if I could just push myself back, the pain would be over. And this guy walks in his office and said, Scott, what are you doing? And I started to cry. The next day I checked into a treatment center. And everything after that was sobriety.

I got into volunteerism quickly and I hung out with people who were now in shelters, had lost their homes, had come out of jail and couldn't find a job. I had to find a way to help people get back on track.

My name is Scott Silverman. Every day I offer anyone who wants one a second chance. Second Chance was started to provide jobs and housing for the chronically unemployed. We help get them placed and we follow them for two years because we know what they're trying to do takes time. We go into the jails, introduce ourselves to inmates and then when they transition out, we like to actually pick them up and bring them into our program and put them in our housing.

UNIDENTIFIED MALE: I've been to prison four times. My longest time, five years. I was inside and found a flier. I waited for my home boys on the street read it. I didn't know what was going to be different, but I got there and was like, wow. I almost feel like I know these people, because they were there. They were just like me. That's what kept me there.

Thanks to Second Chance I know I'm going to make it in life, because I believe in myself more than ever.

SILVERMAN: We think we have a model to stop recidivism as we know it. Tell me no. I dare you.

(END VIDEO CLIP)

CHETRY: To be a CNN hero you can nominate them. Head to ... if you want to nominate someone you think can be a CNN hero those CNN.com/heroes.

Meanwhile, we're going to take a quick break. When we come back, why a very popular breakfast here in New York City, bagels, with a little smear of cream cheese, may be costing more. Talk about why coming up.

(COMMERCIAL BREAK)

MARCIANO: This story is one of the most popular on CNN.com this morning. A judge ordered Starbucks to pay its baristas in California more than $100 million in back tips. A former barista complained shift supervisors were sharing the tips. The judge said that was violation of a state law. The money could be spread among as many as 100,000 former and current baristas in California.

CHETRY: They'll be happy they took the lump sum.

MARCIANO: That's right. It's kind of like the lottery.

CHETRY: Exactly.

Well, issue number one is affecting the most important meal of the day, well for some New Yorkers here in New York City. Reach in your pocket for another buck, because inflation is hitting bagel prices.

Our Richard Roth went out to investigate and you brought back the fruits of your investigation.

RICHARD ROTH, CNN CORRESPONDENT: Yes. I went rummaging. Good morning, yes. The simple bagel now hostage to rising grain prices, and you may end up with a whole in your wallet paying for it.

(BEGIN VIDEOTAPE)

ROTH: The bagel. A New York institution with a hole in it but also now a solid inflation indicator.

UNIDENTIFIED MALE: Jumped about 40% in the last couple weeks.

ROTH: Bagel prices?

UNIDENTIFIED MALE: Yeah, absolutely.

ROTH: New Yorkers love their morning coffee with a bagel and are now getting schmeared (ph) due to events far away. Bread prices are soaring because of the wheat shortage.

ELLIOT FREEMAN, BAGEL BASKET OWNER: The cost of flour in the last two to three months has basically doubled in price.

UNIDENTIFIED MALE: Cream cheese and lox, please.

ROTH: Elliott Freeman had to raise prices at his Bagel Basket store in Manhattan. Some customer are seeing pink. Rachel Hane (ph) was buying bagels to bring to friends in Florida who long for their New York bagels.

RACHEL HANE (ph): I'm bothered by the higher prices. It's not normal.

ROTH: But despite having to fork over more dough, many customers are not bellowing over the bagel bump.

UNIDENTIFIED MALE: It has no affect on me, really. I mean a bagel's a bagel for me.

UNIDENTIFIED FEMALE: Yeah. Eat bagels all the time. It's not going to stop you from buying them, if the price goes up.

ROTH: More money in the morning for bagels means payback later in the day.

UNIDENTIFIED MALE: If I do a job for you I'm going to charge you more money, if bagels go up.

ROTH: Even poppy seed, a bagel accessory, are going up. Will there come a day when it's too expensive to buy a bagel?

UNIDENTIFIED MALE: I believe so. I hope I never have to get to that point.

(END VIDEOTAPE)

ROTH: Americans, especially New Yorkers, may just have to roll over in the morning and go back to sleep.

MARCIANO: That's a solution.

CHETRY: Wonderful.

ROTH: Basically this is what it's come to, which will cost more? This gold bar or this New York bagel in the future?

CHETRY: You're so strong that you can just hold up a gold bar like that.

ROTH: I have carpal tunnel already. So hold on. Gold tunnel, something.

MARCIANO: Are you offering, can we choose which gift we can have?

ROTH: This is more tasty. This will get you some more restaurant reservations while here in New York.

MARCIANO: That doesn't feel quite as heavy.

CHETRY: It's Styrofoam.

MARCIANO: Through your experience covering the U.N., do the international diplomats enjoy bagels as much?

ROTH: No. But the world food program can certainly use those for anyone willing to contribute. Diplomats don't eat bagels. That's the subject of my next book.

CHETRY: Love it. You have a working title already. Take your bar of gold what is this made out of?

ROTH: Bread, of course.

MARCIANO: Sure looks like it.

CHETRY: Thanks, Richard.

MARCIANO: Can we have these?

ROTH: Sure.

CHETRY: A couple dollars. Price is going up.

That's going to do it for us today. Thanks so much for being with us all week. We've had a great time and we're glad you joined us for a lot of news.

MARCIANO: A lot of news. John Roberts back on Monday. Meanwhile, "CNN NEWSROOM" with Tony Harris and Heidi Collins begins right now.

TONY HARRIS, CNN ANCHOR: And good morning. Good Friday to you, everyone. Welcome to the CNN NEWSROOM. I'm Tony Harris.

COLLINS: Hi there, everybody. I'm Heidi Collins. Watch events come into the NEWSROOM live Friday March 21st. Here's what's on the rundown.

Political motives or just curious? Barack Obama's passport file eyeballed by nosy workers at the State Department.

HARRIS: Rising fast, communities across Missouri get ready for major floods when rivers crest this weekend.

COLLINS: Unbelievable. An eagle ray flies up out of the sea and kills a boater. Fatal fluke, in Florida, in the NEWSROOM.

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