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Feds Arrest Hundreds for Mortgage Fraud; Senior Bear Stearns Execs Arrested; Levee Breached on Mississippi, More Flooding Expected; Obama Forgoes Public Money
Aired June 19, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DON LEMON, CNN ANCHOR: Irresistible force meets immovable object. This Midwestern levee, like so many others, didn't move, but it didn't hold either. Thousands more acres of farmland are underwater as the floods push near St. Louis.
KYRA PHILLIPS, CNN ANCHOR: And a flood of foreclosures, a mountain of shaky mortgages, a meltdown in the housing and credit market. And the FBI says there's plenty of blame to go around. Now come the arrests.
Hello, everyone. I'm live in New York. I'm Kyra Phillips.
Hey, Don.
LEMON: And I'm Don Lemon, live here at the CNN World Headquarters in Atlanta. You're live in the CNN NEWSROOM.
PHILLIPS: Well, we've got two big government crackdowns to tell you about, both involving allegations of fraud and the mortgage market. At least 300 people had been rounded up in one case, two former hedge fund managers in -- also taken in. And, of course, our business correspondent, Ali Velshi, has been following it for the past hour and a half.
We're waiting for some live events, actually, to take place to tell us more about the investigations, who's being held accountable, and what it means for you and me and other homeowners and our mortgages.
Now I'm told that Ali Velshi is working his way up right now, as a matter of fact.
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: I'm right here.
PHILLIPS: There he is, straight from...
VELSHI: Let's show them how the sausage is made. I'm right here.
PHILLIPS: This is live television, folks. And we are going to zoom out that camera. Thank you so much, Don, appreciate it.
You just got off your show.
VELSHI: Yes. PHILLIPS: Obviously, this is what we were talking about all morning. The word came across the wires that these investigations are taking place.
VELSHI: Right.
PHILLIPS: They're rounding up real estate agents. They're rounding up hedge fund managers.
VELSHI: There's a lot going on. There are two separate stories. One of them is the FBI and the Justice Department announcing that they've rounded up about 300 people already and are expecting more to come.
Now, this is about mortgage fraud. This is a lot of mom and pop operations that people fell victim to. Things like reverse mortgages, things like wrong information or encouraging people with the wrong information.
PHILLIPS: But we've been talking about that in the past.
VELSHI: Yes.
PHILLIPS: We've been talking about, you know, the mom and pops being taken for granted, getting four (ph) full rates.
VELSHI: These are even mom-and-pop operations, financing and mortgage operations. So these are people who have fallen victim because they decided they don't want to deal with the big banks. They're going out to their own -- somebody in their own community, and those people have been victimizing them.
So the bottom line on story No. 1 is that, if you are doing anything with your money -- your bank accounts, your mortgages, things like that -- you can't just assume that because it's in the neighborhood, because it's a community operation, you're safe from swindle. This is proving that, in fact, people have been swindled in their own communities by small mortgage operations.
PHILLIPS: So what do we do? Obviously, we're waiting for these live events to happen.
VELSHI: Right.
PHILLIPS: These news conferences. And we'll find out more information about these accusations.
VELSHI: Right. And -- just so we don't...
PHILLIPS: Why don't you set this up, real quickly?
VELSHI: All right. So there are two things going on. The other story is that there are two senior executives from Bear Stearns who have...
PHILLIPS: That's these guys here. VELSHI: ... who have -- I haven't seen the pictures of them, so I'm going to assume that we're looking at that.
PHILLIPS: OK.
VELSHI: But there are two senior executives at Bear Stearns. They were hedge fund managers, and they were involved in a lot of these subprime mortgages that were repackaged and reinvested.
Now Bear Stearns was the investment house that was sort of the biggest into this deal. The allegations here are that these two knew there were problems earlier than they told their investors.
Now, as you know, this is -- this is a very tricky thing in the investment world. If you are using other people's money, you have to be very, very transparent and very, very honest.
And we've seen this along the way with companies that said things aren't as bad as they seem. If you really believe that to be true, Kyra, then it's OK. If you know there's more of a problem, whether you are a hedge fund or a mutual fund or the CEO of a company, or you're investing with me in a little business, you have to be forthcoming.
And that's what these charges are, that these two -- and I don't know how far down the road they were thought to have been misleading their investors, but that's what that arrest is for.
So two things come tied to the mortgage industry but at different ends. One of them is people actually getting mortgages. The other one is Wall Street repackaging these mortgages and selling them as investments. Both ends of the spectrum.
PHILLIPS: Now here we are taking such a huge hit in our economy right now. We've been talking about all of the foreclosures. Americans have been very concerned about their homes and being able to keep up with everything with the economy being the way it is.
So how is all of this going to affect us? We're already having a hard time.
VELSHI: Well...
PHILLIPS: OK, so what's the affect going to be on us now with all these arrests and these round-ups?
VELSHI: Well, probably very little. This downturn that we're in was triggered by the housing crisis. But that started a couple of years ago. We've now moved into a place where the economy turned down. We've had -- the Fed reduced interest rates to try and stimulate the economy. It had the effect of bringing the dollar down. That helped to push oil prices up. Commodity prices went up.
So we're in a different world now. The subprime mortgage crisis is working its way through. Maybe we'll be over by next year. Maybe we'll even start to see a recovery in the housing cycle. We've moved into part two of this problem, and that is inflation and oil prices.
So these effect -- these arrests will probably have little effect, except to inform you out there to make sure you're very careful in your financial dealings. If there's one lesson anybody has learned, somebody with a mortgage, read what you can. If you don't understand it, ask a question.
PHILLIPS: All right. And we're going to take a live picture as we wait for the feds to step up to the podium here. And this is with regard to what we were talking about, the two hedge fund guys being arrested.
VELSHI: Right. And they will be hearing from the federal government...
PHILLIPS: What do we expect from this? What do we expect?
VELSHI: Well, we're probably going to have them -- these two gentlemen, by the way, knew they were going to be arrested. They did turn themselves in. We don't know now whether that has worked out into a deal or what's going to happen. We're going to hear now from the Department of Justice about what this arrest is, what this case is, and what they're planning to do about it.
So very busy day for -- for officials in the government today, because they are trying to -- they've been investigating these things for some time. They're trying to bring it to some closure. But it's -- think back to 2000 and 2001 with all those corporate scandals. In the end...
PHILLIPS: Is this like an Enron? Could this be as big as an Enron?
VELSHI: The association is that once you got to the end of Enron, who got anything in the end?
PHILLIPS: Right.
VELSHI: They found a lot of people who were guilty of a lot of things, but the damage had been done.
PHILLIPS: Right.
VELSHI: Those people had been put out of work. They'd lost their savings.
PHILLIPS: Nobody was going to get jobs back, money back. Forget about it.
VELSHI: Very little. Anybody who got any settlement from those corporate scams got nothing.
So in this case, again, there's a company that's out -- that had to be bailed out, Bear Stearns, that doesn't exist anymore. The damage is done.
PHILLIPS: OK.
VELSHI: And we don't know how responsible these two were for it. But they were in some part responsible for it. So, I don't know. Do you think anybody gets anything out of these things? People would like to see justice where they've seen injustice. But I don't know that anybody will benefit.
PHILLIPS: All right. We're going to see that justice taking hold in this live event that we're waiting for. We're going to hear more about these alleged schemes in just a few minutes from the FBI and the Justice Department. You heard Ali mention we're going to bring you their comments and also get the take from CNN's personal finance editor, Gerri Willis.
Ali, thanks so much.
VELSHI: All right.
LEMON: All right, now to the weather. It has happened again: the flood-driven waters of the Mississippi River burst right through another levee. This one -- this one is in Winfield, Missouri, just 50 miles north of St. Louis. Waters surged over 35,000 acres, the latest to be claimed on the raging river that still threatens many other places, including Mark Twain's hometown of Hannibal, Missouri.
Our extreme weather specialists are watching every development. Our Rob Marciano, he is standing by in the CNN severe weather center. And Josh Levs is looking over the videos and photos coming in from our CNN iReporters. And our correspondents are all over the flood zones, including Paul Vercammen. He is in Winfield, Missouri. Reynolds Wolf is in Hannibal, Missouri, and Allan Chernoff is in Oakville, Iowa. We'll get to all of those.
But first we want to start with CNN's Paul Vercammen. He joins us now by telephone from Winfield, the site of the last -- of last night's levee breach. And we hear this levee, the hole has gotten bigger, and the water's rushing through even more.
Is that correct, Paul?
PAUL VERCAMMEN, CNN CORRESPONDENT: That's absolutely correct, Don. And what's more important now is we stand in this field. Off in the distance you can see the white tops of sandbags, and in the foreground, you can see those critical sandbags. They are now fortifying the second levee in Winfield. And they need this levee to hold.
The reason being is what you're looking at right now may look just like a farmer's field, but if the second levee is breached or overtopped, the water will flow completely through this field, swallow up that truck that you see right in front of you, and then continue all the way into the city of Winfield.
So right in front of us right now, townspeople and National Guard troops working side by side, using muscle to go ahead and pile up and fortify that second levee. One firefighter here joked, "I think we can lift this thing about a foot." What did he mean? They want to top this levee off with the sand bags at about 40 feet even. He thinks that the water may crest up at about 39 feet. And that's that foot that they're talking about here in Winfield.
Amazing to think that it's a matter of 12 inches when you're talking about a town and farmer's field and not wanting that water to get on in here.
It's quite a story here. There's three major pressure points, and we're looking at the one that they might be most concerned with in Winfield right now. But all along the Mississippi River here, pushing closer towards St. Louis, you can see the efforts of National Guards, troops, and townspeople working together to save these farmer fields.
LEMON: We can see that. And Paul Vercammen -- Vercammen, our CNN producer, we appreciate that excellent reporting there. We appreciate it, Paul.
The Mississippi River is expected to crest tomorrow in Hannibal, Missouri, near the record set there in 1993. Now parts of Hannibal already are flooded. And CNN's Reynolds Wolf, he joins us now live.
Reynolds, what can you tell us? Yesterday you were helping out. Today you're in the water.
REYNOLDS WOLF, CNN METEOROLOGIST: Yes, great segue there, Don. You know, yesterday we were at a sandbagging center, and right behind me, you can see some of the people who were able to benefit from those very sandbags.
The water continues to rise there, expected to crest sometime tomorrow around 31 feet, a little higher, perhaps, a little bit lower.
You can see at this area, we're at the intersection of Fulton and Sycamore, where the water's rising very slowly, as I've mentioned. And although these homes are safe due to the elevation, due to the sandbags, some other spots that I'd like to show you over here. You can see there appears to be a -- I guess it's either a gas station or it might be a mechanic shop. The water there is (AUDIO GAP).
Now, on one of the windows, you can see the sign. You might be able to see it at home. It says, "No trespassing." Well, obviously, people have been paying heed to that, but not the Mississippi River, as the water continues to push in there and it continues to rise.
This is actually kind of an area of confluence, where you have a creek, the Bear Creek, and you also have the Mississippi River kind of teamed together. Normally, this is a tributary here. You have that water that goes into the Mississippi. But today it's kind of a reversal, if you will. A lot of the flood waters have been pushing into here, have been spreading out right here in this small floodplain.
And we're going to show you some other communities coming up fairly soon that have been experiencing widespread flooding. More of this. Certainly, the city of Hannibal in great shape. We've got a nice berm, nice levee that separates the city. So they're fine for the time being. But still, the water's rising, many people concerned, and rightly so.
Let's send it back to you, Don.
LEMON: All right, Reynolds. Thank you very much for your reporting, sir. We're going to be relying on you throughout the afternoon.
And on the ground in the air, in briefings from local officials, President Bush is taking the measure -- taking in the measure of the catastrophic losses in Iowa.
Mr. Bush arrived in the flood zone within the past half hour or so. Sandwiched around s helicopter tour, the president's visiting ravaged Cedar Rapids and Iowa City, as well. There you see him, walking down the steps and on the tarmac there at Iowa -- Eastern Iowa Airport in Cedar Rapids, Iowa.
Before he arrived, several state officials said they hoped he'd learned some lessons from Hurricane Katrina. So we'll find out exactly what the president sees and what he has to say in just a little bit.
But we want to get now to our Rob Marciano, our meteorologist here at the CNN severe weather center. He is checking in on all of this.
And Rob, the big question is, there are still folks down river. Are they going to get this surge, as well? And is this going to be just as bad?
ROB MARCIANO, AMS METEOROLOGIST: You know, the sad part of this story, Don, is -- is that the folks who live down river, every time there's a breach up river, they kind of breathe a sigh of relief.
LEMON: Yes.
MARCIANO: So it's a bad news situation that one person's bad deal is, you know, somebody else's relatively good deal.
Here's a look at the river gauges, all of which are still in major flood stage, even where we've seen crests, which pretty much everything north of Canton has crested, but they're still in a major flood stage at the moment.
All right. Let's talk about what happened this morning or late last night, I should say. The breach here in Winfield lock, or just south of Winfield, a lock (ph) about 300 feet in width. And then flooding these fields and threatening the town of Winfield, itself, where secondary levees will hopefully hold as this water continues to make its way towards the west.
We do have Highway 79, which is acting kind of as a barrier. Folks who live on the west side of town should be OK.
This is all very, very close. Just up river from St. Louis, and this is an area that folks are concerned about who live in St. Louis. But they're also -- you know, if something else releases north of them, then they kind of breathe a sigh of relief.
There's a number of facilities on the river itself, including a river boat casino there that is threatened by some of this. And they're not going to be happy come Sunday and Monday.
This is the forecast crest as it lines up now. Canton tonight, Quincy tonight and tomorrow, Hannibal tomorrow, Clarksville Saturday, and St. Louis on Monday. Moderate to major in some cases record- setting flood forecasts over the next several days.
Don, that's how it shakes down.
LEMON: Not good news either way you -- either way you cut it there. OK. Rob Marciano, we appreciate that.
And, of course, CNN is your severe weather center. We'll be following this throughout the afternoon right here in the CNN NEWSROOM.
Meantime, public money funding campaigns for the White House. A sudden about-face for Barack Obama that's shaken the political world.
PHILLIPS: All quiet today along Israel's border with Gaza. A welcome brush with peace as the Israelis and Hamas begin observing a truce.
(COMMERCIAL BREAK)
PHILLIPS: Well, it might sound like a technicality, but Barack Obama's decision not to accept federal campaign financing is a huge deal. And it could have a big impact on the election.
Our senior political analyst Bill Schneider live in Washington.
Bill, tell us about the impact.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, this has become a real campaign dispute. The Obama campaigns says they will be the first campaign since 1976, when public financing began after Watergate, not to accept public financing of their general election campaign. Candidates have done it before in the primaries, but never before in a general election.
About $85 million is available from the public treasury if the candidate agrees not to raise any additional money or spend any additional money in the campaign.
Earlier, back last year in November, Barack Obama said that he would agree to accept that public financing if his opponent did, as well. But he added, "If I'm the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly-financed general election."
And there's a dispute going on right now over whether, in fact, the Obama campaign did aggressively pursue that negotiation with John McCain. Obama says he did; John McCain said he didn't.
But the bottom line is, the Obama campaign will not accept the public financing, and therefore, will be free to raise and spend as much money as it can and wants to in the general election campaign. That hasn't happened since 1976.
PHILLIPS: So, Bill, why do you think he's doing this? Is it because he hasn't had tremendous difficulty raising money? I mean, Hillary Clinton, you know, she was constantly coming forward saying HillaryClinton.com, feel free to donate. Why do you think -- what do you think? Let's read between the lines here. What do you think?
SCHNEIDER: Well, two things: one is that he can. He's doing it because he can. He's raised an incredible amount of money, about $265 million, all of it from individual contributors, often in very small amounts.
That's the kind of financing that the American people like. They're not real enthusiastic about public financing, because the idea of taxpayer money being used to pay for political campaigns doesn't meet with widespread public approval. Very few people, only about 1 in 10 check off that box on their tax return directing $3 of their tax money to go to finance campaigns.
So he's doing it, No. 1, because he can. And No. 2, if he has all of this money and he can continue to raise it, then he can throw John McCain on the defensive all over the country and compete with him even in states likely to go or stay Republican, just to tie McCain down, because McCain has not been able to raise nearly as much money as Obama has.
PHILLIPS: Bill Schneider, live from Washington. Thanks, Bill.
SCHNEIDER: Sure.
LEMON: Here's something new. No rockets, no tanks, no gunfire. It's day one of a ceasefire between Israel and Hamas, and we'll go live to the Israel-Gaza border.
PHILLIPS: Another levee breached and even more threatened. We'll have the very latest on the Midwest flooding.
(COMMERCIAL BREAK)
LEMON: A lot of news coming from the business world today. A call for the most comprehensive reform of the financial system in over 70 years. Our Stephanie Elam is at the New York Stock Exchange with the latest on how the government wants to keep a sharper eye on what Wall Street is doing.
Big news, Steph. STEPHANIE ELAM, CNN BUSINESS NEWS CORRESPONDENT: Yes, definitely is, Don. And take a look at the news we've been talking about all day here on CNN. Criminal charges being filed against two former Bear Stearns officials in a case that's contributed to the credit crunch that has caused so many problems and filtered all the way down through the financial markets.
Well, because all this -- taking a look at stories like this, now Treasury Secretary Henry Paulson is calling for Wall Street reform. He's pushing for speedy approval of proposals made back in March. The controversial JPMorgan bailout of Bear Stearns is what aided -- was aided by federal regulators. And Paulson's plan is basically the boldest proposal to reform Wall Street since the Great Depression.
So obviously, when you see moves like this, it just points out just how important they think this is.
LEMON: All right. So what is -- what is the secretary proposing?
ELAM: Well, basically the plan would completely overhaul the regulatory system. And it would give more power to the Federal Reserve as the prime regulator of Wall Street.
And it would consolidate regulatory bodies, thus shrinking bureaucracy. The plan would also merge the Securities and Exchange Commission and the Commodities and Futures Trading Commission into one, so stock trading and commodities trading would be controlled by one agency.
It would also create a new agency to oversee mortgages while uniting insurance companies under a federal charter instead of confusing state-by-state variations.
Now, right now, it is unclear how the Treasury Department would implement changes. It could be done administratively to avoid congressional approval. Which right now, the way things stand, that's what would have to happen.
Now Paulson also said soaring oil prices could delay the nation's economic recovery, but hey, got some good news on that front. Oil is on the slide, down more than $3 a barrel today.
Even so, stocks not doing too much. I mean, they're definitely green, but it's not like some huge moves. The Dow up six points, 12,035. NASDAQ on the upside by 17 points at 2,447. We've done a lot of flip-flopping back and forth over the flat line here today.
And drivers are reacting to soaring gas prices by doing more than just complaining. They're making real changes in their driving habits. And Don and Kyra, I'll have that story in the next hour of NEWSROOM, fill you in on that one.
LEMON: When it comes to the Dow, though, glass half full. It is on the plus side, Steph.
ELAM: We will take the green. That's right.
LEMON: We'll see you in a bit. Thank you.
ELAM: OK. Thanks.
LEMON: Kyra.
LEMON: Well, straight ahead, doctors tell your baby -- well, they tell you that your baby needs shots. But do they need all those vaccines all at once? Elizabeth Cohen will be here to talk to us about what you should ask your doctor.
(COMMERCIAL BREAK)
LEMON: Hello, everyone. I'm Don Lemon live at the CNN World Headquarters in Atlanta.
PHILLIPS: All right. Let's see if I can get this right, Don.
LEMON: Yes.
PHILLIPS: And I'm Kyra Phillips, live in New York. You're live in the CNN NEWSROOM.
And it's about 1:28 Eastern Time. Here's some of the stories that we're working on for you right now.
People up and down the Mississippi River filling sandbags, shoring up levees and hoping those flood waters will stop rising soon. Broken levees are the big problem in parts of Iowa, Illinois and Missouri. And President Bush has arrived in Iowa to see the damage for himself now.
Also, the FBI has arrested more than 300 people in a federal investigation targeting mortgage fraud. Arrested in a related case, two former fund managers at the New York investment bank Bear Stearns.
And strong criticism of Zimbabwe's leader today by Secretary of State Condoleezza Rice. Speaking at the U.N., Rice says that Robert Mugabe is sponsoring efforts to intimidate and even kill supporters of his political opponent so he can win an upcoming election.
LEMON: Meantime, we have some developing news and it concerns that flooding. Take a look at this video just into the CNN NEWSROOM. This is coming to us from Old Monroe, Missouri, five miles due south of Winfield, where our producer there, Paul Vercammen, joined us just about 30 minutes ago where that levee broke and then at least 300 feet wider, a gap there and water was just pouring through.
This is new video. Take a look at this. These aerials, of course, courtesy of one of our affiliates, KMOV, which is located in St. Louis, Missouri. But again, new video just into the CNN NEWSROOM, Old Monroe, Missouri, five miles south of where we have that huge levee break from this morning. Take a look at that.
In the meantime, they are still wading through flood waters in Iowa. CNN's Allan Chernoff is in Oakville.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: You can see just how powerful the current is right over here. We're near the Iowa River, a levee broke there on Saturday and still right now, the water flowing very, very rapidly.
The economic impact of this is just absolutely devastating. I'm standing right now on a gravel road, but behind me are acres and acres of farmland now covered over. The Iowa Farm Board is saying that the losses here in the state of Iowa alone, $3.3 million acres, translating into $3 billion of crops lost.
In addition of course, we've got lots of infrastructure hit. Here's just one little example, a mailbox just knocked right over. But we're talking about roads, bridges, rails. To rebuild all of this, to repair, it's going to take hundreds of millions of dollars and a lot of time.
Now, for the farmers, of course, who have lost this land for the year, it is really, really difficult, especially after all the hard work they put in.
DAVE LENZ, FARMER: Fourteen hour days for quite a few weeks to get it in. And it's all gone now.
CHERNOFF: That's got to be devastating.
LENZ: Yes, it is. We're fortunate we didn't lose our house, that you know, if we had lost our house, that'd be pretty much starting from scratch.
CHERNOFF: These lands are lost for the year, there's no question about that. But in some areas of the state, the sunshine is helping to dry the situation and so, farmers are going to try to replant, replant some fast-maturing corn and soybean to at least, perhaps, limit their losses for the season.
Nonetheless, consumers, we're definitely going to be paying more. The price of corn right now well above $7 a bushel. We're going to feel that in the supermarket. And it hits us for all sorts of products: corn chips, sodas, energy drinks, there's lots of corn syrup in here. That's why it tastes so sweet.
And, of course, soybean, as well, because these are soybean and corn fields. And soybean is in so many products: soy milk, soy yogurt, how about a candy bar? Yes, there's plenty of soy in this, as well and in many industrial products. So, the impact will be felt not only here in Iowa, but also at our local grocery store.
Allan Chernoff, CNN, Oakville, Iowa.
(END VIDEOTAPE)
LEMON: All right, thanks very much for that, Allan. Meantime, our i-Reporters in the flood zone, they are sending in some fresh material to us. With a look at what we're getting, CNN's Josh Levs. He joins us now from our Flooding Desk.
Josh, very good i-Reports we've been getting.
JOSH LEVS, CNN CORRESPONDENT: Yes, they are, and I'll tell you something. When I piece through then and try to decide which ones to show you on the air, I look for drama and I look for some still shots that give you a strong first person perspective, what it feels like to be on the ground, which is why I'm going to start with this from Ft. Atkinson, Wisconsin.
I'm going to ask the control room to take it full. This was taken by Steven Stearns, who joins us now. Steven, are you with us?
VOICE OF STEVEN STEARNS, FT. ATKINSON, WIS.: I am, Josh.
LEVS: Yes, Steven are you there?
STEARNS: Yes, I'm here.
LEVS: OK, great, thanks for joining us. So, tell me about this photo. Is this a major residential area? And are homes being flooded near you?
STEARNS: Yes, this is in an area of Ft. Atkinson where there's a dozen homes in a cul-de-sac that have been totally cut off by the Rock River. And the waters there are actually pushing these dikes up another foot or two. There's about a dozen homes in there, and one person has already taken their house back from the river three times.
LEVS: So, as a rule in your area, you're seeing neighborhoods really piecing through this. You can see here the truck. I know that those trucks are trying to get through.
Let's go on to the next shot as well, because I find this one really striking, this third one you sent us. What we're going to see here, that's a Hummer. You're telling me these are volunteers who drove their Hummer into that much water and you say the car is now destroyed?
STEARNS: Yes, this was down in that neighborhood on Milwaukee Street where about 12 of the 800 to 1,000 homes that have been affected by flooding in Ft. are really getting hit hard. I took this standing right in the edge of the flood water with a long telephoto lens. This individual volunteered their Hummer to drive in and bring sandbags up to the wet side of a dike so they could hand them over to homeowners who had been cut off by the rising Rock River.
LEVS: Yes, I mean, that's what's really striking about that picture. These are local volunteers.
I want to take everyone to a map quickly because I want to show you where Ft. Atkinson, Wisconsin is, so you have a sense of what's going on there. There it is, you're seeing it down there in the southeast.
And Steven, before I let you go, I want to show everyone one more picture that I think is pretty incredible. Amid the horror, amid the devastation, look at that: up towards the left right by his name, you can see there a rainbow, and Steven, you're telling me this is your backyard?
STEARNS: This is our backyard that's 400 feet deep and the river's up 370 feet into it. And we're lucky, but we're worried about our friends and neighbors.
LEVS: Sure.
STEARNS: We want to see that rainbow come again on Saturday and just wanted to send our prayers downstream to everybody, too as well.
LEVS: Great. Well Steven, thank you so much for joining us. And Don, before I let him go, I just want to show -- or let you go, I want to show you two more amazing pictures we got today. These are from the "Associated Press" that again, put you in the middle of everything.
Look at that: a little girl taking a nap on sandbags. I mean, that's a reality check right there. Little kids caught in this devastation. And also right there, we're seeing that this is a club in Cedar Rapids that's been devastated. People trying to piece through it, having to wear those masks.
Don, we're going to keep piecing through all the photos we get from "Associated Press" and from the i-Report desk. We'll have more for you next hour.
LEMON: Josh Levs, we appreciate it. Working it from our Flooding Desk. Josh, thank you -- Kyra?
PHILLIPS: Well, here's something new, no rockets, no tanks, no gunfire. It's day one of a ceasefire between Israel and Hamas. We'll go live to the Israeli-Gaza border coming up.
LEMON: And doctors tell you your baby needs shots, but do they need all those vaccines all at once? Our Elizabeth Cohen will be here with what you should ask your doctor.
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PHILLIPS: And new video just in for us. This is Quincy, Illinois. You know, forecasters are predicting high crest over the next six days, all the way from Canton, Missouri to Chester, Illinois. We're continuing to get these pictures in from where those breached levees have affected farmlands, residential areas.
At least two of the levees have already overtopped in western central Illinois, causing water to spill over and affect farmlands and forcing residents from their homes. As you're seeing right here, this is an aerial view that we actually got from one of our local affiliates, thanks to them for getting this video into us. Quincy, Illinois, just one more area in the hard-hit parts of Illinois where the flood waters have affected homes, businesses, and farmland. We'll continue to bring you all the new pictures as they come in.
LEMON: OK, so your baby needs shots, lots of them. But you're worried about a possible link between vaccines and autism. And of course, any parent would be.
CNN medical correspondent Elizabeth Cohen is here to explain what you, an empowered patient can do. Of course, you are. We've been hearing all the stories, testimony -- people have been testifying about this. Any parent should be worried about this.
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Like many parents are. And I think it's safe to say that ...
LEMON: Yes.
COHEN: ...if you ask a pediatrician, they say oh no, there's no link between autism and vaccines.
But still, if a parent is worried, it is their right to say to the pediatrician, you know what? I'm concerned. I've heard about, for example, this little girl, Hannah Poling who developed signs of autism shortly after receiving five vaccines when she was 19-months- old.
So, we asked some parents and some doctors what kinds of things are parents asking for? What changes are they asking for in the standard vaccine schedule? And what are doctors doing to accommodate?
So, let's go over two things that parents are asking for that some doctors are making some changes. One is can I spread out vaccines? In other words, instead of receiving say five shots at one visit, can I receive two and then wait a month and then another two? It means more visits for the parents and more shots for the children.
Secondly, some parents are asking does my child need a booster shot? A booster shot is given after the initial vaccination is given months or years later. Some children don't need it. And so you can say to the doctor, is it possible to get my child 's titers checked? And what that means, Don, is that the doctor will do a blood test and will see ...
LEMON: OK.
COHEN: ...if those first vaccinations gave enough immunity. And if they did, maybe they don't need the booster shot.
LEMON: OK, so are doctors willing to make these changes?
COHEN: You know, it's interesting, many of them are. I talked to several doctors who said, look, I don't think there is a link between autism and vaccines, but if a parent comes to me and they're concerned and they want to do things differently, I will see what I can do to accommodate them. So, even if your doctor does give a little push back, you can still talk to them and say you know, this is something that's important to me, it's something I want to do.
LEMON: So, I know that you talked to pediatricians, that's obviously what you do. When you talk to them, what did they talk about the changes that they made for parents, what their concerns is?
COHEN: The most common one that I heard of pediatricians making has to do with the Hepatitis B shot that newborns get when they're still in the hospital. And several pediatricians said, look, you get Hepatitis B mainly from sharing needles and having sex. A newborn baby isn't going to be doing either of those things and so, the doctors that I talked to said, if a parent asks, I'm willing to push that Hepatitis B shot off and not give it right in the hospital.
LEMON: All right, good information for parents. Thank you very much, Elizabeth Cohen -- Kyra?
PHILLIPS: All right, want to talk more about those huge government crackdowns involving our mortgages, the housing crisis. Gerri Willis is our personal finance editor here in New York, been talking about on your show, "ISSUE #1."
Why don't we talk about first of all these mortgage fraud arrests. How many, how concerned should we be about this?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: This is a very big deal. It's about 700 people. I don't know if you know this, this is sort of under the radar. But mortgage fraud for many years has been the fastest growing crime in the country. Believe it or not, fastest growing white collar crime. So, this is a big round up. It's very important, but I have to tell you, the damage has been done.
PHILLIPS: So, long-term effects, you were saying kids aren't going to go to college, people are going to go bankrupt.
WILLIS: Look, this could be the end game for mortgage fraud and criminal prosecution, right. We're in the last few days of this. But the impact of what's been going on out here is going to go on for years. People have been financially devastated by what's gone on. They've lost their homes, some kids will never go to college because their parents won't have the savings, other people will go into bankruptcy. 8,000 people every single day going into some state of foreclosure. So many people, so many houses affected by this.
PHILLIPS: And I asked you, OK, should I call my mortgage company? Should I do some sort of investigation? And you said no, call mom and dad.
WILLIS: Call mom and dad because one of the favorite gimmicks of these fraudsters is they go after your mom and dad with a reverse mortgage. But it's not really a reverse mortgage. They get hurt, they get their house taken away. Call mom and dad, make sure they're not working with somebody unsavory that they shouldn't be talking to.
PHILLIPS: Any other advice, anything else we should know as consumers as we are following these investigations and what happened today. The Justice Department actually just wrapping up its live news conference with the FBI talking about the investigation, by the way. And we're going to bring some sound from that coming up pretty soon. But anything that we should be thinking about that maybe I haven't asked you about?
WILLIS: Well, look, if you are in the business of getting a mortgage for yourself right now, you have to read the details, you have to understand what you're signing. It's up to you, the responsibility is on your shoulders. I don't care what your mortgage broker is telling you, I don't care what your banker is telling you, it doesn't matter. At the end of the day, you're the person on the hook for that monthly payment each and every month. So, make sure you understand what you're signing.
It's difficult to do. You can also go to HUD, hud.gov or call them and get a counselor to look over your finances, make sure you're spending as much as you should and not a penny over.
PHILLIPS: That is fabulous advice. FBI Director Robert Muller speaking in that news conference that just wrapped up a few minutes ago.
Let's take a listen.
(BEGIN VIDEO CLIP)
ROBERT MULLER, FBI DIRECTOR: Fraud, Operation Malicious Mortgage focused on three types of mortgage fraud: lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes.
Through this operation, more than 400 defendants have been charged and we have obtained 173 convictions in crimes that accounted for more than $1 billion in estimated losses.
(END VIDEO CLIP)
PHILLIPS: Could this be compared to an Enron?
WILLIS: I think it's worse than an Enron, frankly.
PHILLIPS: Wow.
WILLIS: You know, we have the criminal investigators speaking today, right, where were the regulators? This hasn't -- it didn't start last week, it didn't start last month, it didn't start last year, it's been going on for years and we really haven't seen the regulators come into play. And that's who needed to curb these excesses, the excess of greed, the practices that were way out of bounds. Those were the folks who's feet should be held to the fire right now.
PHILLIPS: That sounds like my next interview. Looks like I'm going to have to work something up on that. Hold the regulators accountable. There we have it.
Gerri Willis, thanks a lot.
WILLIS: My pleasure.
PHILLIPS: All right -- Don.
LEMON: Kyra Phillips, always working the angles. All right, Kyra and Gerri, thank you very much.
Here's something new. No rockets, no tanks, no gunfire. It's day one of a ceasefire between Israel and Hamas. We'll go live to Israel to the Gaza border there.
PHILLIPS: Neither rain nor snow, nor gloom of -- well, wait a minute, what about skyrocketing gas prices? We're going to tell you how the Post Office is actually trying to adapt. That's straight ahead.
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PHILLIPS: An explosion this weekend, Afghanistan was doubly painful for British troops there. Not only were four soldiers killed, but the UK's biggest single death toll from hostile action. And today has confirmed that one of the dead was the first female British soldier to die in combat in Afghanistan.
She was Sergeant Sarah Bryant (ph), 26-year-old, an intelligent specialist with two tours of duty in Iraq. She was due to go back to the UK next month. Bryant and three other British troops died when a road side bomb or a mine struck their vehicle on Tuesday in Afghanistan's Southern Helmand Province.
LEMON: Well, when the sun rose over Gaza and Israel this morning, so did hopefully a lasting period of calm, trust, and security. A brokered ceasefire began today.
Our Atika Shubert is on the Israeli-Gaza border. But does anyone believe this will hold, Atika?
ATIKA SHUBERT, CNN JERUSALEM CORRESPONDENT: Well, here in the town of Sderot, people are skeptical, but having said that, it's the close of the first day of the truce. And so far, the ceasefire is holding. People were able to go about their business. No rocket attacks, no sirens blaring, no 15 seconds to get to a bomb shelter and people are enjoying the normalcy of this.
Having said that, even though people here are hopeful, they're not optimistic.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: ...I'm not sure the children know what is normal life. They're not able to (INAUDIBLE) and then, we want a people, children to think, laugh and have a good time and quiet time. And they're not sure that this time it will be OK, because they know what was. But I am optimistic. UNIDENTIFIED MALE: We are not optimistic because the Israeli side always violates any calm. As Palestinian people and factions, we all support this calm, we just want to live in peace.
(END VIDEO CLIP)
SHUBERT: Now, there you heard from two differing views, one from here in the Israeli town of Sderot, another from a Gaza resident. And just yesterday, Israel's president warned that this ceasefire may be short-lived and fragile. It's only intended to last for six months. There's a number of outstanding issues, including negotiating the release of Corporal Gilad Shalit, the Israeli soldier kidnapped by Hamas two years ago. That is a critical part of this truce agreement.
Nonetheless, even though hopes -- there are hopes, but many people still skeptical. People at the moment are enjoying the quiet, Don.
LEMON: CNN's Atika Shubert at the Israeli-Gaza border, we appreciate your reporting, thank you -- Kyra?
PHILLIPS: Straight ahead, high gas prices affect everyone. But what about a company whose whole business is transport? We're going to tell you how the Post Office is trying to adapt.
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PHILLIPS: With the high price of gas, you probably made changes in your driving habits, so has the Post Office, believe it or not.
CNN's Ted Rowlands reports.
(BEGIN VIDEOTAPE)
TED ROWLANDS, CNN CORRESPONDENT (voice-over): It isn't his money, but Carlos Martinez (ph) still finds it shocking that he pays almost $70 to fill up his mail truck. He says a few months ago, it cost about half that.
CARLOS MARTINEZ, POST OFFICE WORKER: It's bad, you know, for the Post Office, for everybody.
ROWLANDS: Rising gas prices are costing the U.S. Postal Service millions. The Postal Service says with more than 200,000 trucks in its fleet, just a one-cent increase in gas translates into an incredible $8 million annual expense.
PAT DONAHOE, USPS DEP. POSTMASTER GENERAL: Last year, we spent $1.7 billion for gasoline and diesel. It's going to go up by about $600 million this year. So, this fuel increase has really put some pressure on us.
ROWLANDS: Unlike other businesses, like FedEx who recently raised prices, the Postal Service can't easily do the same thing.
(on camera): The only source of revenue for the Post Office is postage. So, the easiest way out of this mess would be simply to raise prices, which they could technically do if regulators agree it's needed. However, postal officials say at this point, that isn't something they want to explore.
DONAHOE: Truthfully, we want to stay away from that. Every penny you raise the stamp has a dampening effect on the volume of the mail, so we'd rather focus on efficiency.
ROWLANDS: And so, the Postal Service is adding more walking and bicycle routes and using GPS to make existing routes more efficient. One move that hasn't worked out is using flex fuel vehicles. They bought 30,000 of them like this one in San Francisco. Many are basically useless when it comes to saving gas because there's no ethanol available nearby.
The long-term plan is to eventually replace the entire fleet with some sort of alternative fuel vehicles. But because there's no clear choice yet, that's years away. For now, they're hoping to cut costs using the most basic transportation: a carrier's own two legs.
Ted Rowlands, CNN, San Francisco.
(END VIDEOTAPE)
LEMON: Hannibal, Missouri, boyhood home of Mark Twain. Reports of its distress are not exaggerated and the Mississippi River hasn't even crested. We're live in the Midwestern flood zone.
PHILLIPS: A natural disaster it's not, but the mortgage meltdown is a national disaster that's still causing hardship for millions of people. The Feds say it's time to hold lawmakers accountable.
LEMON: And for the Taliban, a sudden reversal of fortune in Southern Afghanistan. Afghan and NATO forces launch a counter-attack. And our Nic Robertson checks in live from Kabul with the very latest for us.
Hello, everyone. I'm Don Lemon live at the CNN World Headquarters in Atlanta. Get it right this time, Kyra.
PHILLIPS: And I'm Kyra Phillips in the Big Apple. You're live in the CNN NEWSROOM.
Mortgage brokers, real estate agents, and investors, they're among more than 400 people now charged in a nationwide crackdown on mortgage fraud. The Feds say at least 300 people have been rounded up and most were allegedly involved in mom-and-pop schemes.
(BEGIN VIDEO CLIP)
MULLER: Fraud, Operation Malicious Mortgage focused on three types of mortgage fraud: lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes. Through this operation, more than 400 defendants have been charged and we have obtained 173 convictions in crimes that accounted for more than $1 billion in estimated losses. (END VIDEO CLIP)
PHILLIPS: Federal authorities say that Operation Malicious Mortgage focused on a number of cities, including Baltimore, Chicago, Houston and Miami.
And a few more details about the arrest of two former Bear Stearns executives. The Justice Department says that indictments were unsealed this morning against the former hedge fund managers. Both men are suspected of misleading investors about the risky subprime mortgage market. And the attorney for one of them says that his client is innocent and is quote, "being made a scape goat."
LEMON: Now to the floodwaters that have -- engulf the Midwest. It happened again, the flood-driven waters of the Mississippi River burst through another levee. This one in Winfield, Missouri.
