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FBI Investigates Mortgage Misdeeds; President Bush Visits Midwest Flood Zones; FEMA Flap over Relief Supplies

Aired June 19, 2008 - 15:00   ET


KYRA PHILLIPS, CNN ANCHOR: Foreclosures, repossessions, disastrous losses throughout the economy. The feds say they're the product of malicious mortgages, and somebody has to pay.
DON LEMON, CNN ANCHOR: And the water is still rising in Quincy, Illinois, and men other Midwestern river towns hit by the second 500- year flood in 15 years. But get this. Levee breaches upstream can help -- can help communities downstream.

We're live, and we have got it all covered for you.

Hello, everyone. I'm Don Lemon, live here at the CNN World Headquarters in Atlanta.

PHILLIPS: And I'm Kyra Phillips live in New York. And you're live in the CNN NEWSROOM.

The FBI calls it Operation Malicious Mortgage. So far, about 300 people have been rounded up, real estate agents and mortgage brokers included. Two former hedge fund managers have been indicted separately. All are charged with various forms of fraud.

Our personal finance editor, Gerri Willis, here to put it all together for us.

Why don't you go ahead and debrief us first on the mortgage fraud.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: All right, well, this is complicated stuff, lots of people doing things they shouldn't.

First off, you mentioned 400 people arrested. What they were doing was small-time criminal activity. It was one of the fastest- growing frauds in this country, white-collar frauds, that is. They were simply duping people out of their money. They were putting incorrect information on mortgage forms, signing things they shouldn't, encouraging people to do activity they shouldn't, defrauding seniors out of their homes with reverse mortgages that weren't worth the money.

So, 400 people, I have to tell you, they arrest people every single day on this. But this was a huge roundup. And, again, so much money in real estate, Kyra. These small-time fraudsters, they found a way of making money on this.

And I have got to tell you, I have heard of one fellow who did this for years, finally got arrested, and put in jail. He continued to do the fraud from jail.

PHILLIPS: Unbelievable. And it was the elderly that really got the screws put to them, you know?.

WILLIS: Well, elderly and lots of other folks.

If it was a reverse mortgage, for sure, it was elderly folks, but so many other kinds of fraud, you can't imagine.

PHILLIPS: Well, head of the FBI Robert Mueller held a news conference today. Let's take a listen.


ROBERT MUELLER, FBI DIRECTOR: Operation Malicious Mortgage focused on those types of mortgage fraud, lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes. And 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.


PHILLIPS: And you have seen those foreclosure schemes up close and personal.

WILLIS: That's right. Yes, we did this story on a couple in Florida who -- a fraudster out there lied to them about foreclosure.

No, when you were under foreclosure, your house is going to be taken away, you will look anywhere for help. These folks relied on somebody who was an absolute scam artist, fear of having their house taken away. They're still fighting it out, but really, really scary stuff.

Now, I also want to talk about the flip side of this, because we have about small-time crooks and the idea that a lot of this fraud was perpetrated at a very low grassroots level. But guess what? At the end of the day, there were also problems Wall Street.

PHILLIPS: The hedge funds manager.

WILLIS: The hedge funds managers, today, these Bear Stearns fellows being rounded up. We have seen the video on our air all day long.

What they were doing is that they would take these subprime mortgages, bundle them together, and then sell them to investors. But the big question the feds have today, and what they think they did wrong was that they mispriced those. They were expressing confidence in the investments at a time that the mortgages were...


PHILLIPS: They knew that they were tanking.

WILLIS: Exactly.

PHILLIPS: So, that money is gone. Those investors won't get that money back.

WILLIS: The investors don't get their money back. My heart really goes out to, though, those people who had those mortgages who got taken by small-time crooks.

But, as you can see, there was enough money to be made by just about anybody who wanted to in this business.

PHILLIPS: A lot of lessons to be learned. Gerri Willis, thanks so much.

WILLIS: My pleasure.

PHILLIPS: All right.

And Wolf Blitzer is going to have much more at the mortgage fraud arrests at the top of the hour in "THE SITUATION ROOM." So, stay tuned.

LEMON: All right, let's talk now about the flooding. The flood- driven waters of the Mississippi River burst through another levee, this one in Winfield, Missouri, just 50 miles north of Saint Louis. Water has surged over 35,000 acres, the latest to be claimed by a raging river that still threatens many other places, including Mark Twain's home town of Hannibal, Missouri.

Our extreme weather specialists are watching every development for you.

Our Chad Myers is standing by. He's in the CNN Severe Weather Center. And Josh Levs is looking over the videos and photos coming in from our I-Reporters. We will have more from Josh a little bit later on this hour.

Watching the floodwaters in Missouri for us is Reynolds Wolf. He's in Hannibal. And Paul Vercammen, he is in Winfield.

We want to get now to the president. Let's talk about President Bush. He is getting an up-close look at the staggering damage in Iowa. A short time ago, Mr. Bush received a briefing in flood-ravaged Cedar Rapids. He's taken a helicopter tour of the region. And he's visiting Iowa City as well.

Before today's trip, Mr. Bush met with members of his domestic team in there to access the region's need. That's what he's doing.

Let's go now to Paul Vercammen. He is joining us now by telephone.

Paul, we have been talking about Winfield and the levee being breached there. We want to know if things are getting better or worse for the folks there. PAUL VERCAMMEN, CNN SENIOR PRODUCER: Well, since that initial levee breach that we talked about, Don, the first levee in Winfield, we have had a slow creeping in of the water, but nothing severe.

And that's because Winfield has the second levee. And this is the critical levee. And out there on a farmer's field, away from all the hustle and bustle of the command center and all this, National Guard troops are putting sandbags on top of this second levee.

And this is sort of their mission right now, is to make sure that that's fortified up to 40 feet, so it can hold. One fire department official was joking, and he said, listen, this is what we need to do. We need to get to 40 feet and this river crests to 39, we will beat this thing by a foot.

I also heard you point out earlier that, when you have these levee breaches or spillovers in other areas, it can take the heat off a community. What that means is, someone else's misery upriver can actually help somebody downriver.

And, hopefully for the people here in Winfield, these multiple levee breaches in other places will keep the pressure off, this second levee in Winfield will hold, and they will come out of this with shining colors.

Now let's go upriver to Hannibal, Missouri, and Reynolds Wolf, who is there with fight that goes on in Hannibal to save the city.

REYNOLDS WOLF, CNN CORRESPONDENT: Well, I would like to tell you and also show America what's happening here in Hannibal.

The town of Hannibal is just fine. But just south, about a quarter-mile south of Hannibal proper, this is the situation, water everywhere. Right now, I'm coming to you from Sycamore Street. You can see the stop signs right behind me. The farther down the street you go, well, the deeper the signs go into the water.

Way off in the distance, you can see (AUDIO GAP) stop signs via (AUDIO GAP) was brushing up against the water. And then if you pull back a little bit, you can even see the Highway (AUDIO GAP) and people (AUDIO GAP) going over the bridge, the cars driving (AUDIO GAP) where people are fine.

I'll tell you what, though. It really is amazing just to see the exact difference that you have from one side of Hannibal and then to the other. Here on this side, we have had a lot of people that evacuated. People (AUDIO GAP) still hanging out here. But many (AUDIO GAP) homes, the people heeded the warnings. They took their most prized possessions, got out, got out quickly, got wedding albums, their china, things that mattered most, and they went to higher ground.

That's really a good idea, because we do anticipate the floodwaters to continue to rise. In fact, they expect it to crest some time tomorrow right around 31 feet. So, the sun is shining bright. Birds are singing, plenty of clouds. It look beautiful. But, still, there is a lot of trouble going on up and down this immense river.

Don, let's send it back to you in Atlanta.

LEMON: And you know what? It's weird, Reynolds. Life goes on, because I saw the interstate which is behind to your left. And trucks are just going right over it, cars, as if nothing is happening there. What are you walking on? Is this the sidewalk -- is the sidewalk in front of people's homes?

WOLF: This, Don, is Sycamore Street.


WOLF: Sycamore Street, where kids could be playing kickball any day of the week. But today you're not kicking anything but parts of the Mississippi and parts of Bear Creek that are feeding in, all coming together to make one big watery mess. And a mess, it is certainly a rough way to put it, no question.


LEMON: Reynolds, that puts it right into perspective. Almost every town has a Sycamore Street, like a Main Street, right?

All right, Reynolds Wolf reporting to us from Hannibal -- thank you very much for that, Reynolds.

We are going to go now to our other meteorologist. He is in house watching all of this from the Severe Weather Center, Mr. Chad Myers right behind me.

Chad, talk to us about when we can expect to see a little bit further down.

CHAD MYERS, CNN METEOROLOGIST: Well, I got off the phone with the Weather Service in Memphis, Tennessee.

And Memphis is actually going to be in pretty bad shape, only about 26 feet, 26.9. That's not even up to flood stage, to action stage. So, there is some good news. The graphic behind me is actually Hannibal, Missouri.

And I remember this vividly, talking to the emergency manager around Hannibal, Missouri, a couple of days ago, thinking that this river is going up to 31.8, maybe 31.9. But with the breaks that have happened in the levee north of there, now this river only crests at 29.4.

And you heard Reynolds Wolf say, man, if we could just get one foot, if we can keep it one foot above, our levee, keep it one foot above the water, we win.

Well, Hannibal, Missouri, look at that, you win, two feet of water lower than you would have been had you not had those breaches up to the north of you.

Don, I just want to go kind of through some of these things real quick, and Kyra.

June 3 and 4, the heavy rain began in Indiana and Illinois. June 5, the rain began in Iowa, over eight inches of rain in parts of central Iowa, more heavy rainfall in Indiana, Iowa, and Wisconsin on June 7. June 10, remember Lake Delton? Lake Delton failed. That was June 10. That was just, what, nine days ago.

June 11, 50 tornadoes. One tornado killed four Boy Scouts in Iowa. Then it rained more on the 12th. It rained more on the 13th. It stopped raining on the 14th and 15th. But now all of this water is heading to almost Saint Louis now from Iowa.

Kyra, it is a long travel all the way down to basically New Orleans. But those river cities downriver of Memphis all look good, where the river is so much wider.

PHILLIPS: All right, Chad, thanks so much.

Well, we're just getting in pictures now from the president of the United States, two helicopters that are airborne, an aerial tour that he's getting right now in Iowa. This is the new video coming in to us -- the president right here going between Cedar Rapids and Iowa City. He is getting a chance to see firsthand how those rising waters have affected the civilians, the residents, the farmland.

He will of course be offering help and aid as he finishes up his assessment of the water-ravaged areas there. The president of the United States airborne, checking out Iowa, as folks there are just struggling to get through each day right now.

Also, John McCain's wife, Cindy, is in Vietnam this week. She's talking one on one with our John King. We're going to have her comments about Michelle Obama -- straight ahead.


LEMON: All right, let's talk politics now.

Leading the Political Ticker today, Barack Obama says no thanks to federal financing. Obama set records with his fund-raising prowess in primaries, raising $265 million through April. Now he says he won't accept public money for the general election. Taking that money could limit how much he could spend. John McCain's campaign is accusing Obama of backtracking from his earlier support of public financing.

PHILLIPS: Well, McCain is showing his support for Midwestern flood victims. He's expected to tour Columbus Junction, Iowa, in the next hour so. We will met -- or he will meet with residents and business owners there.

LEMON: And Obama is in Washington today meeting with leaders of several voting blocs no Democratic hopeful can do without.

Now, he had a morning meeting with union leaders, followed by a sit-down with the Congressional Black Caucus. He also has a meeting scheduled with female members of Congress.

PHILLIPS: Barack Obama says he won't accept public financing for his presidential campaign, which means he can raise and spend as much as he wants now.

Let's get the details and the bigger picture from our deputy political director Paul Steinhauser. He joins me live from Washington.

Paul, what do you make of all this?

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Well, first of all, Kyra, this is historic. It's never happened before. We have had this public finance system for 32 years. This is the first time a presidential candidate has dropped out of the financing for the general election.

What it could do right off the bat is, it could give Barack Obama a big advantage when it comes to campaign cash and spending that cash in October, September, October, and right up to November 4.

Barack Obama, his campaign, it relies on a lot of small donors, little $25 here, $30 there, mostly online. Obama says it's a new kind of finance system. He says the current finance system is broken, overrun by Washington lobbyists and insiders. He made this announcement online on his Web site this morning.

Here's what he had to say.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Join me and declare your independence from this broken system and let's build the first general election campaign that is truly funded by the American people. Now, this decision, the campaign is in your hands in a way no campaign has ever been before. Now is the time to act.


STEINHAUSER: A very different tune from the John McCain campaign. They're saying Barack Obama reneged on a pledge, a pledge he made last year to actually entering the public financing with John McCain.

The campaign put out a statement today. They said: "The true test of a candidate for president is whether he will stand on principle and keep his word to the American people. Barack Obama has failed the test, that test today. And his reversal of his promise to participate in the public finance system undermines his call for a new type of politics."

So, Kyra, the McCain campaign saying basically it's just words from Barack Obama. He says he's a new kind of candidate and he says he wants to get away from the old Washington types, but they're basically saying he's reneging on his promises. PHILLIPS: So, Paul, how much of an advantage does this give Obama? And, as Obama says, hey, let's have an election funded by the American people. In a hard time right now in this economy, the American people could be saying, we don't want to fund anymore.


STEINHAUSER: Well, that's true.

But I have got to say right now, Barack Obama, to date, since he jumped into the presidential campaign a year-and-a-half ago, he's raised over $272 million. John McCain raised -- has raised about $99 million.

Barack Obama and his campaign are a campaign fund-raising machine. Here's how it works. The public financing, it kicks in right after the conventions are over. So, we're talking September, October, and that first week in November. John McCain will give $85 million to spend. Barack Obama, if he raises much more than that -- and he probably could -- he can spend it on campaign commercials and much more -- Kyra.

PHILLIPS: All right, Paul Steinhauser live from Washington -- thanks, Paul.


LEMON: Well, John McCain's wife, Cindy, is in Vietnam this week, working with a charity that helps children born with facial deformities.

And our John King is traveling with her. And they took a few minutes to talk about the presidential campaign, including a specific comment that made headlines back during the primary season.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: You did step forward at one point in the campaign when Mrs. Obama had said for the first time that she's proud of her country, you did step forward and said I've always been proud of my country. You saw a reason to say that, didn't you, some political opening?

CINDY MCCAIN, WIFE OF SENATOR JOHN MCCAIN: No, it wasn't a political opening. No, there was nothing planned. I'm an emotional woman when it comes to service to our country. I watched many people's children leave and go serve. This is something that is the fiber of the McCain family. It was nothing more than me just saying, look, I believe in this country so strongly.

I think she's a fine woman. She's a good mother. And, you know, we both are in an interesting line of work right now.


LEMON: Well, you can see more of John King's interview with Cindy McCain next hour on "THE SITUATION ROOM WITH WOLF BLITZER."

PHILLIPS: Bills from the Midwest flooding still coming due. You are going to notice it before you know it in the grocery -- actually, you're going to see in the grocery checkout line how it's going to affect you. We will get a feel for what is ahead.



LEMON: All right, think the keys on your cell phone are so small now, you can barely dial the phone number? Well, listen to this. It is billed as the world's lightest cell phone, a device a little bigger than a credit card, that, with various add-ons, can also be an alarm clock, a camera, a digital picture frame, even a music player.

Geez. Well, CNN's Rob Marciano introduces to Modu.


ROB MARCIANO, CNN METEOROLOGIST (voice-over): The world of cell phones is a crowded field. So, how can a startup break in against the likes of BlackBerry, Treo, iPhone and countless other popular brands? How about the phone with many jackets.

Modu, developed by an Israeli company, sports any number of looks and functions. Plug the Modu into this jacket, and it's a camera phone. Another jacket, it's a music player. How about an alarm clock as it recharges is batteries?

There's a picture frame to display photos that you took and stored in Modu. And with 16 gigabytes of storage, it may be tiny, but it's the brains of the operation.

ZACK WEISFELD, MODU: All the processing power, all the operating system, all the applications and everything is here. And, in the jacket, there's basically only a lifestyle kind of experience.

MARCIANO: Modu was one of the top winners in a recent mobile innovation competition. Makers say cell phone companies are attracted to Modu's concept of turning the cell phone into a fashion accessory.

WEISFELD: We want to make phones playful, something that is more an impulse buy. Today, you buy a phone and then you're stuck with it for a long time, because it's expensive and there's a long contract.

MARCIANO: The idea with Modu is to sign people to a contract, but include a couple of jackets in the deal and offer others as possible gifts.

Weisfeld says Modu is close to a deal with a cell phone provider in North America, and it's expected to hit store shelves some time next year.

Rob Marciano, CNN.


PHILLIPS: And straight ahead: another levee breached and even more threatened. We're going to have the very latest on the Midwest flooding.

Stay with us.


PHILLIPS: Hello, everyone. I'm Kyra Phillips live in New York.

LEMON: And I'm Don Lemon live at the CNN World Headquarters in Atlanta.

You are in the CNN NEWSROOM.

Time to update you on some of the stories we're working on for you today right here in the CNN NEWSROOM.

People up and down the Mississippi River are filling sandbags, shoring up levees and hoping the floodwaters will stop rising soon. Broken levees are the big problem in parts of Iowa, Illinois and Missouri. President Bush has arrived in Iowa to see the damage for himself.

The FBI 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 said Robert Mugabe is sponsoring efforts to intimidate and even kill supporters -- his political opponents -- so he can win an upcoming election.

PHILLIPS: And these pictures just in. John McCain, the presumptive Republican nominee, touring Columbus Junction, Iowa to assess the flood damage. He's meeting with the residents there and officials. As you know, the president made his way to Iowa today, as well. He took an aerial tour of Cedar Rapids. He also met with residents.

John McCain right now learning about how folks are shoring up those levees, continuing to sandbag, trying to clean up and preparing for even more, as the mighty Mississippi has taken a toll on areas like Columbus Junction, Iowa right there. We're following it. John McCain right now in Iowa.

CNN's Allan Chernoff now joining us now from Oakville, Iowa.

We were talking yesterday about how the president was going to make his way into the state, now John McCain.

Allan now giving us inside look to what's happening there in Oakville specifically.

(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, Allan provides us a very good segue for the next person we're going to talk to. With crop losses caused by the Midwest flooding, the price of corn is almost $7.50 a bushel -- $7.50 a bushel, up a buck-and-a-half this year. Almost half the nation's corn goes to livestock feed. So look for meat and dairy prices to go up, too. It's a ripple effect we're talking about. For more on what we can expect, we turn to Mike McGinnis, markets editor for the industry Web site,

Mike joins us now from Des Moines, Iowa.

Thank you very much for joining us today, because we have been hearing, sir, a lot about, you know, what if, the what if the what if this is going to affect grocery prices and food prices and what have you.

So tell us, what can we expect?

How will this impact the market, first of all?

MIKE MCGINNIS, AGRICULTURE.COM: Well, good afternoon, Don.

First off, just this past week, the corn prices did hit an all- time high of $8.07 per bushel. That was in a July 2009 futures contract. And it was in overnight trading electronically. The traders always say that let's see the price on the floor hit that before it becomes really legitimate.

But you mentioned before we came on here that the corn is well over $7, headed for 8. Traders tell me that the prices are not going to go down any time soon. So people can sit back in their chairs and get comfortable or not with these prices, because we're not really going to go down to the prices that we used to be at, which is around $2.50 or so.

LEMON: Right. OK, so then you're talking -- affecting the market.

So then what can we -- when do we expect to see this?

When do you expect to see this?

MCGINNIS: The impact on the consumer -- it's going to be a delayed impact. It's not like gas prices. Gasoline prices go up and down overnight based on crude oil prices, mainly. Food is different because food companies contract their supply well in advance. So you're going to see a delay in the prices.

Keep in mind, consumer prices of food have been going up before this flood and before this year, so...

LEMON: But, Mike, how long of a delay?

What are we expecting -- a couple of weeks, a few months?

MCGINNIS: Now, generally, you're probably looking at six months or six to 10 months. I just heard this past week that food companies that use flour to make their product are contracting their flour supply out to 2012. So they're concerned about it. That sends the message to the consumer -- it should send a message to the consumer...

LEMON: All right...

MCGINNIS: ...that it's going to be a delay.

LEMON: All right. So food prices already high -- already high right now. So, six to eight months, we can expect to see a big jump at the grocery store. And I don't know, because it's -- really, the worst is not over yet. We don't know where this is going to go.

Do you know how much we can expect to see when it comes to products that use corn, that use soybeans, that use wheat?

How much can we expect to see in those six to eight months that you're talking about?

MCGINNIS: That's the $100,000 question. I'm not sure anybody has that answer. But the other way I want to put this is here in America, we've had it pretty good for food prices. We don't spend very much percentage of our income on food. And you look around the country and food in the United States is fairly cheap comparable to other countries.

I'm not saying that, you know, it's going to be a good news for food prices to go up for farmers. But, you know, let's face it, I mean look back. We really don't pay very much for food here in the United States.

LEMON: Yes. But we are going to be with all of this Midwestern flooding.

Mike McGinnis, markets editor for industry -- the industry Web site,

We appreciate you joining us today from Des Moines, Iowa. Thank you, sir.

MCGINNIS: Thanks, Don.

PHILLIPS: And our I-Reporters are sending in the flood zone are sending in fresh material.

With a look at what we're getting, CNN's Josh Levs once again.

You've been getting hundreds and hundreds I understand.

JOSHUA LEVS, CNN CORRESPONDENT: Yes. Oh, hundreds, yes. And they keep literally coming in every hour.

We're combing through lots and lots of photos, trying to show the ones that carry the most drama, that give you the best sense of what you can see right there. What I'm going to do this hour is show you all some photos from three different sources -- CNN, I-Reports and then A.P. These are the best we've gotten.

I want to start off with these photos right here from our own photojournalists. These are aerial shots taken by Steve Coppin today. Let's go to those. Now, he took a Blackhawk tour over the area of Quincy, Illinois. That's a neighborhood right there. And all the dark that you're seeing is water.

Let's go through a few more of his photos just so that you see the power.

When you look at it in this bird's eye view, you're able to see -- see that? Look at that -- the bridge just disappears. It just stops existing because the water in that section has gone over it.

And I think we have one more of his aerial shots that have just come to us. He just took this tour today. Let's see if we can go to the next photo. There you go -- all water, except a few buildings out there that you're supposed to, apparently, be able to drive to.

All right, now over the I-Reports, because some of these I- Reports that we're getting are pretty stunning. I saw these from Kimberly Liska. A little hard for you to see on this screen, so we're going to take it full there for you across the screen.

These are in St. Louis. And that area, President Casino, really popular, down by the river front. You might have seen some video. The water is all the way up. So no one is able to access it. Kimberly has sent some of the most popular photos we have right now on I-Report. Look at that. You've got clubs and bars in this area that's been flooded out so no one can even get to it.

The next couple of photos that she has I find particularly striking, because if you look closely, you've got -- on the far side, on the right, a stop sign. And then you've got a trash can right barely poking out over it. And I like this because it reminds us, you know, trash is just one of the many things that's in this water. We look at water. Some people have a tendency to think it's clean. Every disgusting thing you can imagine is in that water. So there you go. We got that from I-Reports, as well.

We will keep bringing photos and pictures to you throughout the day. You can see some right now behind me,, including A.P. and Getty Images. We encourage you to take a look at these. And any stories, photos, videos you have, go to -- Kyra, it's that easy. Just send them to us.

PHILLIPS: Yes. And when you see these pictures, you want to help, Josh. And this is how so many people can do it now.

LEVS: That's right. That's right.

PHILLIPS: You just -- if you don't know where to go, we're going to give you an idea right now. We'll just make it easy for you. CNN has actually set up a Web page, Impact Your World, and it's devoted to disaster relief. Just log onto and follow the links to a variety of agencies. CNN can help you impact your world. Get involved.

LEMON: All right, here's something new -- no rockets, no tanks, no gunfire. It's day one of a cease-fire between Israel and Hamas. We'll go live to the Israel/Gaza border.


PHILLIPS: Keep your fingers crossed. With an uneasy glance over both sides of the Israel/Gaza border, there's been no rocket fire into Israel, no air strikes over Gaza and the Israeli Army and Hamas began a six month cease-fire today. So far, it seems to be holding. Of course, it's not even a full day old. But Israeli-Palestinian cease- fires have failed before in less time.

LEMON: Secretary of State Condoleezza Rice will visit earthquake-ravaged China later this month. The State Department announced her China stop is part of an Asia tour that also includes Japan and South Korea. Today, Rice spoke at the United Nations, presenting a U.S.-sponsored resolution denouncing rape and sexual violence as a tactic of war. The document cites conflicts in the former Yugoslavia, Sudan's Darfur, Congo and Myanmar and the use of rape as a way to destabilize and intimidate entire communities.


CONDOLEEZZA RICE, SECRETARY OF STATE: Sexual violence in conflict zones is, indeed, a security concern. We affirm that sexual violence profoundly affects not only the health and safety of women, but the economic and social stability of their nations.


LEMON: The U.N. Security Council is expected to adopt the resolution denouncing sexual violence in war zones.

PHILLIPS: An explosion this week in Afghanistan was doubly painful for British troops there. Not only were four soldiers killed, the U.K.'s biggest single death toll from hostile action included in the confirmation of one of the dead as the first female British soldier to die in combat in Afghanistan. Sergeant Sarah Bryant is her name, 26 years old, an intelligence specialists with two tours of duty in Iraq. She was due to go back to the U.K. next month. Bryant and three other British troops died when a roadside bomb or a mine struck their vehicle Tuesday in Afghanistan's Southern Helmand Province.

LEMON: Neither rain nor snow nor gloom of -- wait a minute, what about skyrocketing gas prices?

We'll tell you how the post office is trying to adapt.

PHILLIPS: And boys will be boys, right?

But, boy, oh boy, is this boy in trouble. Parents, you'll hide your car keys when you find out what he did.


PHILLIPS: And the Memphis Police Department has fired one officer and placed another on desk duty because of a beating inside the county jail. Memphis affiliate WMC obtained this surveillance video of the February 12th confrontation.

Duanna Johnson, a transsexual who had been arrested on a prostitution complaint, says that an officer called her names then starting hitting her. A second officer held her down while the first repeatedly struck her. She says that she eventually hit back. The officer claims he was acting in self-defense after Johnson threatened him. Well, the department is conducting an internal investigation. The charges against Johnson were dropped. She's demanding $1.3 million in damages from the city.

LEMON: So a curious boy goes looking for adventure and almost gives his mom a heart attack.

That's parenthood, right?

Well, those of you with no kids, look what your missing here. This is Hunter. He is nine years old. He and his little sister piled into their mom's van this week all by themselves and took a driving tour of the neighborhood. Their little joyride ended against a fence -- the van, of course, trashed.


UNIDENTIFIED MALE: Why were you driving the van?

You're only 9-years-old.

HUNTER: Well, I wanted to see how good I drive.

OFFICER DENNIS WALEND, LORAIN, OHIO POLICE: They could have hit another vehicle head-on when they went left of center. They could have hit that telephone pole, you know, worse than what they did. They just scraped against it.

UNIDENTIFIED MALE: You're not going to make this mistake again, are you?

HUNTER: Yes. I'm never going to do it again.


LEMON: All right. You saw their cute faces there. The good news, we're glad -- neither Hunter nor his little sister was badly hurt. But his parents say he is grounded -- both of them -- until they're 70 years old.


PHILLIPS: Come on, you didn't do that as a kid? I did.

LEMON: Oh, I...

PHILLIPS: the old Monte Carlo. But I was in the fifth grade.

LEMON: Do you remember in the old days, we had -- before they covered them up, we had, in Louisiana, ditches, you know?


LEMON: And so I drove my grandmother's car in the ditch. And so they had to get a tow truck to pull it out. And I was grounded until -- I think my ground is being lifted next week sometime.

PHILLIPS: Yes, see, you don't want to get caught, because when I did it, I never got caught and I fessed up years later and my mom just didn't want to hear about it.

LEMON: We're OK, even though we did that, though.

PHILLIPS: All right. Well, the high price of gas -- you've probably made changes in your driving habits. Hopefully you're old enough to drive. So, the post office has made changes, too.

CNN's Ted Rowlands explains.


TED ROWLANDS, CNN CORRESPONDENT (voice-over): It isn't his money, but Carlos Martinez still finds it shocking when he pays almost $70 to fill up his mail truck. He says a few months ago, it cost about half that amount.

CARLOS MARTINEZ, DRIVES MAIL TRUCK: 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 to an incredible $8 million annual expense.

PAT DONAHOE, USPS DEPUTY POSTMASTER GENERAL: And 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 (voice-over): 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. Now, they're hoping to cut costs using the most basic transportation -- a carrier's own two legs.

Ted Rowlands, CNN, San Francisco.


PHILLIPS: Now, the sports page of today's "Boston Globe" reads: "Boston Goes Green." And this is why. The Boston Celtics and their green clad fans filled the streets to parade the NBA championship trophy for the whole city to see. The Celtics trounced the L.A. Lakers Tuesday night to win the title. The past few years have been good for Boston area sports fans, by the way, with the Red Sox, the Patriots and now the Celtics. They're all winning the titles. They're on a roll.

LEMON: Yes, trounced? Is there a bigger or harder word for that?

That was a whooping.

All right, Kyra, time to check in with CNN's Wolf Blitzer. He's standing by in "THE SITUATION ROOM" to tell us what's coming up at the top of the hour.

Hey, Wolf.

WOLF BLITZER, CNN ANCHOR: Hi, guys. Thanks very much.

Cindy McCain sits down for a rare interview. She talks about her husband, the campaign and if candidates' spouses are fair game.

Also, Barack Obama opting out of public financing for the general election.

Is he going back on his word? Can John McCain compete with Barack Obama's massive fundraising power?

I'll speak about it with James Carville and Bill Bennett. They're here in "THE SITUATION ROOM".

And it's a case of mortgage fraud some are comparing to the Enron collapse. Authorities arrest hundreds of people across the country, including two investment managers who lost more than $1 billion for Bear Stearns.

All that, guys, and a lot more coming up right here in "THE SITUATION ROOM".

LEMON: We're looking forward to it, Wolf. We'll be watching.

PHILLIPS: We'll have the closing bell and a wrap of the all the action on Wall Street straight ahead.


LEMON: OK. A truck load of federal relief supplies has arrived in Louisiana only two years and 10 months after the disaster they were meant to relieve.

Our Abbie Boudreau, who is with our Special Investigations Unit, joins us now with an update on that -- nothing but a boondoggle, I guess you could call it -- Abbie.


Today there was a hearing at the state capital in Baton Rouge where lawmakers wanted to know why FEMA and the Louisiana Surplus Agency could be so completely out of touch with the victims of Hurricane Katrina and what they actually still need.

Now, the Louisiana state Committee on Homeland Security requested today's hearing after watching our investigation last week. Lawmakers grilled the executive director of the Louisiana Recovery Authority, Paul Rainwater, for the complete breakdown in communication between his agency and the state surplus agency. Earlier this year, it was the surplus agency that turned down thousands of items from FEMA because it felt Katrina victims no longer needed them.


EDWIN MURRAY, LOUISIANA STATE SENATE: He had to know the need was there. I mean I -- unless he just lives completely oblivious to everything that's in the newspaper. I mean he kind of had to know. And I understand that you're here representing the agency and all that kind of stuff. But I wish we could talk to this gentleman to find out how he couldn't know, that there not just was a need, but there still is a need.


Oh, I hope this is a glaring lesson for the future,, because if it's not, this is a slap in the face to think that anybody in this state doesn't know that the need is still there.


BOUDREAU: Now we've been told that one large truckload of these supplies have been driven from Texas to Baton Rouge. And tomorrow those items will be delivered to New Orleans to those community groups who are in such desperate need of these items -- Don.

LEMON: Abbie, thank you -- Kyra.

PHILLIPS: Well, the closing bell is about to ring on Wall Street. That's going to do it for us.

LEMON: Oh. That is going to do it for us, as the closing bell is...

PHILLIPS: It's the top of the hour.

LEMON: Yes, it is, 4:00. The Dow was up 34 points.

Kyra, good to see you. We'll see you back here tomorrow at this time.

Take it over -- Wolf Blitzer in "THE SITUATION ROOM".