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President Bush Ready to Send Diplomats to Iran; TSA Snoops into Personal E-Mail Accounts; An Emotional Day in the Mideast After Yesterday's Prisoner Exchange; Mug Shot T-Shirts Become a Popular Trend

Aired July 17, 2008 - 10:00   ET

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


BARBARA STARR, CNN PENTAGON CORRESPONDENT: But yesterday, Defense Secretary Robert Gates made clear that he is hearing the commanders on the ground in Afghanistan and that they need more troops as soon as possible and he's going to start looking around to see who he can send. There's a marine unit right now off Kuwait. They're sort of a reserve force, if you will, for emergencies. That might be one possibility. More planes, more aircraft, more security forces.
But it's going to be tough going to put large numbers of boots on the ground anytime soon. And of course, this has taken on extra urgency since that very tragic attack on Sunday in which nine young troops were killed from the 173rd airborne regimen in Italy came under attack from a large group of insurgents in eastern Afghanistan.

Now a formal investigation is under way into that attack. Commanders want to know how it happened, you know, the chairman of the Joint Chiefs of Staff Admiral Mike Mullen talked a little bit yesterday about how tough that attack really was.

(BEGIN VIDEO CLIP)

ADM. MICHAEL MULLEN, JOINT CHIEFS CHAIRMAN: It was a very large group, several hundred insurgents. It was very well planned, a very sophisticated attack. And, in fact, eight of the nine individuals who died all died basically in the same spot.

(END VIDEO CLIP)

STARR: And the key question, Tony, is there were about 25 U.S. soldiers put into this one area where nine died in this terrible firefight. How could those young troops not have the information in hand that they were going into an area where there were about 200 insurgents? Basically lying in wait for them in this village waiting to attack. It was a counterinsurgency operation. That's what they do, they go into hostile areas. But clearly there wasn't enough immediate firepower on hand when this happened and the investigation is going to look at how this all took place. Tony.

TONY HARRIS, CNN ANCHOR: Solid intelligence. Barbara Starr at the Pentagon for us. Thank you.

U.S. strategy in Iraq, can it work in Afghanistan. CNN's Anderson Cooper takes up that issue with our military analyst retired Brig. General David Grange. (BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: General, we talked with Peter Bergen last night on the program. He pointed out that the surge in Iraq worked militarily in part because of the massive change in attitudes toward Al Qaeda by Sunnis and their willingness to work with Americans. Can the same thing work in Afghanistan? I mean, people are calling it a surge in Afghanistan. Is it apples and oranges?

BRIG. GEN. DAVID GRANGE (RET.), MILITARY ANALYST: Well, they are different. They're both counter insurgencies, but none of these fights are exactly the same. I think, one, you have to look at both Afghanistan and Iraq as a regional fight. It's a campaign for the entire region. And sometimes you have to reinforce or improve your resources in one area and then pull back to another because it's not going to be a steady state. But the difference in Anbar province and let's say where the Taliban are in safe havens in Pakistan, it's a little different situation.

Pakistan truly has to cooperate unless we invade Pakistan. It's sort of like going to Laos from Vietnam. And so, you have a safe haven for recuperation training for the Taliban that you can't get to except for maybe covert action, special operations or surgical strikes, and so you really have your hand tied somewhat in order to counter this. But we are short-resourced along that border. There's no doubt about that.

(END VIDEO CLIP)

HARRIS: More analysis and interviews on "Anderson Cooper 360," weeknights at 10:00 Eastern, right here on CNN.

HEIDI COLLINS, CNN ANCHOR: President Bush ready to station diplomats in Iran for the first time in almost 30 years. Britain's "Guardian" newspaper says a formal announcement is in the works. We want to go live to CNN White House correspondent Elaine Quijano. Good morning once again to you, Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Heidi. Well, officials here at the White House says they don't have anything to announce right now. They're not commenting on that article in the British newspaper, the "Guardian." But CNN reported weeks ago this is an idea that officials are taking a serious look at, called an intrasection. The idea being not the quite a full embassy in Tehran but as a kind of de facto embassy that would handle things like visas and help facilitate travel for Iranians that would like to travel to the United States.

Now, the benefit for the U.S. would be to have a better since, a better ability to reach out to the Iranian people directly while keeping contact with the Iranian regime to a minimum but also to get a better handle on the state of Iranian political affairs. Of course, this coming at a time when the U.S. has been trying to ratchet up the diplomatic pressure on Iran, to try to curb that country's nuclear ambitions. Heidi.

COLLINS: Elaine Quijano for us, right outside the White House. Thanks, Elaine.

HARRIS: The nation's sputtering economy this morning. New snap shots and to the bigger picture. Wall Street off to a good start here. 30 minutes after the opening bell, a live picture of the big board right now. The Dow up 61 points. One reason? The price of oil holding steady. Part of the fuel for the bull run yesterday, that after a drop of $10 a barrel over the last couple of days, other new numbers coming in this morning. We learn that jobless claims jumped last week. The new figure, 366,000. More evidence that residential construction remains gloomy, construction of single family homes dropped by 5.3 percent last month. It's now at the slowest pace in 17 years.

COLLINS: The soaring cost of fuel, is it putting you in danger? The pilots union for U.S. Airways says airline management is trying to cut costs possibly at the expense of your safety. The union says the airline is pressuring pilots to fly with less fuel than they feel is safe. It says pilots who carry an extra 10 to 15 minutes worth of fuel were sent to intimidating training sessions. U.S. Airways disputes the claims and says safety is always the airline's number one priority.

IndyMac Bank failure fallout. Did risky business amount to fraud? CNN Justice correspondent Kelli Arena on a federal investigation.

(BEGIN VIDEOTAPE)

ARENA (voice-over): IndyMac was taken over by regulators last week. And now we learn it's being investigated for possible fraud. Sources with knowledge of the investigation tell CNN the FBI is looking into whether any crimes were committed when IndyMac made home loans to risky borrowers. The FBI would not comment. But one source says the investigation is focused on the company and not individuals at this time.

JOSH HOCHBERG, FMR. JUSTICE DEPT. PROSECUTOR: I would suspect that looking at bad appraisals, bad underwriting, which would mean false statements on loan applications.

ARENA: And now that the bank has been taken over by regulators experts say it'll be easier for the Feds to get their hands on what they need to conduct their probe.

HOCHBERG: There's been so many issues associated with the mortgage failures and the subsequent losses that the question is whether the FBI has enough resources working these cases.

ARENA: The bureau says it's made investigating mortgage fraud a priority and assigned nearly 200 agents. In all it's investigating 21 companies. Officials won't offer any details, but CNN has previously confirmed that the nation's largest mortgage lender, Countrywide Financial, is part of that probe.

ROBERT MUELLER, FBI DIRECTOR: Our mortgage fraud case load has doubled in the past three years to more than 1,400 pending investigations. We have engaged each of our 56 field officers to focus on this criminal priority.

ARENA: It's really not clear how long the Feds have had their eye on IndyMac. But these investigations do take a lot of time. Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

HARRIS: In North Carolina, police taking another look at the home of a missing jogger who turned up dead, the body of Nancy Cooper was found at a construction site on Monday. She was reported missing two days earlier. Police won't say how she died. Cooper's twin sister talked to reporters today.

(BEGIN VIDEO CLIP)

KHRISTA LISTER, SISTER: It's really hard to look in the mirror. When I walk in and I see myself, I'll do a double take, go, Nancy! So I'm not really coping yet, I don't think. It's adrenaline.

(END VIDEO CLIP)

HARRIS: Police also have warrants to get DNA evidence from Nancy Cooper's husband. They say he is cooperating. They haven't named a suspect or person of interest.

COLLINS: Assessing wildfire damage in California. This afternoon, President Bush takes a closer look. He'll fly over an area in northern California with Governor Schwarzenegger and FEMA director Paulson. And he will meet with first responders. Dozens of fires are still burning across the state. Almost 1,400 square miles charred since last month.

HARRIS: Boy, we've talked to much about the fires when they were really raging. Rob Marciano in the severe weather center, it's hot out that way again, isn't it?

ROB MARCIANO, CNN, METEOROLOGIST: It is, but it's more of the southwest I think than the folks in the northwest and California aren't seeing the extreme heat that they saw during the height of the fires. That's good news. Not a lot of rain out there this time of year so they'll take lack of heat when they can get it.

All right, you got some thunderstorms rolling down I-90 here in southern Minnesota. These have been deemed severe with moving about easterly about 33 miles an hour. Certainly it's going to have some heavy rains, frequent lightning and maybe a little bit of rotation in this. So we'll keep an eye on that for potential of some damaging winds. Northern parts of the lower hand of Michigan, just south of Traverse City, also some thunderstorms, these are not severe. Pretty intense thunderstorm rolling just past Rochester heading toward Ipteca in the finger lakes region here. This one might have a little bit of hail. Certainly looked potent on the radar. Heavy rain and certainly some gusty winds especially ahead of the thunderstorm complex.

All right. Look at this swirl in the atmosphere. We got some action just to the northeast of Jacksonville. This is an upper low as opposed to a surface low. Low to the surface this time of year over those warm gulf stream waters would have more tendency to develop into say a tropical storm or hurricane. But until that low goes to the top, the bottom of the atmosphere we're not too terribly concerned about it.

Savannah down to Jacksonville, though you will see these rain band roll in off the ocean. And once we get the heat of the day, which is happening quite quickly, then you'll see those thunderstorms fire up even more. There's disturbance rolling into the eastern Caribbean. We saw it yesterday. National Hurricane Center ordered a recon plane to dive into it. They checked it out. It didn't look like that impressive. It doesn't look that impressive today. So, we'll continue to monitor as it heads into the Caribbean which has toasty waters. Right now, it's not too of much of a concern.

Bertha just doesn't want to go away. I'm kind of tired just talking about her but she's out there and still a tropical storm. Elida and this is tropical storm Fausto, there's Elida. This is tropical storm Fausto and they're both kind of training each other. I think Fausto will pretty much take the same track, probably become a category 1 hurricane before too long as it heads westerly into the Pacific.

All right. The other big heat is going to be out west and also out east. 92 degrees today in D.C. today and 92 as well in New York City. Philadelphia is going to feel some hot weather also. Live shot for you, WPVI. Not a whole lot of humidity in the air but certainly some haze. We have a number of air quality alerts posted for today and likely tomorrow as well for some of the major metropolitan areas, including Philadelphia, including Atlanta and up through parts of New York as well. Not so humid today, but tomorrow increasing humidity and then Saturday as well. And it will really feel more like July.

COLLINS: Perfect for the weekend, right?

MARCIANO: Yes. At the beach, at the pool. Hang out in the shade.

COLLINS: Yes. Forced air conditioning in the house is good, too. All right. Rob, thank you.

MARCIANO: See you guys.

HARRIS: Keeping the country safe. Barack Obama tries to convince voters he can. John McCain challenging Obama on national security.

(COMMERCIAL BREAK)

HARRIS: Presidential politics now. John McCain in Missouri today. McCain holds a town hall meeting in Kansas City following his speech at the NAACP convention yesterday. That's at 12:30 Eastern. And you will see it live here on CNN.

Barack Obama is off the trail today but, man, in the money. The campaign says Obama raised $52 million in June. That's more than double the $22 million the McCain campaign took in last month.

COLLINS: Barack Obama trying to convince voters he can keep the country safe, but John McCain is hoping to highlight Obama's perceived weakness on national security. The story from senior political correspondent, Bill Schneider.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): On Tuesday, Barack Obama gave his big speech about Iraq and Afghanistan. John McCain's response? Obama doesn't know anything.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Why not take your first trip ever to Afghanistan before you come out with a speech on what we need to do? I mean it's remarkable. I've never seen anything like it.

SCHNEIDER: McCain has extensive military experience, 11 flag- level officers signed a letter endorsing him.

GENERAL KELLEY: He's experienced. He's well-like and he knows what he's talking about.

SCHNEIDER: Nearly three-quarters of Americans believe McCain would be a good commander in chief. Obama has no military experience. Voters are not sure whether he would be a good commander in chief. As a result, McCain has the advantage on national security issues like terrorism and handling a national crisis. Obama opposed the troop surge in Iraq, but now acknowledges that violence has declined.

MCCAIN: Senator Obama refuses to acknowledge that he was wrong.

SCHNEIDER: Obama claims he was right, not because the surge didn't work but because it was a dangerous distraction.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This war distracts us from every threat that we face and so many opportunities we could cease.

SCHNEIDER: On Wednesday, he held a summit with national security experts aimed at drawing attention to those threats.

OBAMA: Instead of adjusting to the stateless threats of the 21st century, we invaded and occupied a state that had no collaborative relationship with Al Qaeda.

SCHNEIDER: Right now Obama and McCain are rated about the same on Iraq, Iran, and international affairs, which means he has neutralize McCain's advantage on foreign policy and he's trying to do the same thing on national security. Obama will shortly be headed for the Middle East.

SCHNEIDER (on-camera): And he intends to show how much he knows about the threats the U.S. faces. McCain is hoping the trip will demonstrate how little he knows. Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

HARRIS: Al Gore's power play, not political but electrical. Today Gore will challenge the United States to produce all its electricity from so-called clean sources within ten years. He admits it's an ambitious and expensive goal but he says it will pay itself back many times over. You can see Gore's energy speech live during "Issue #1," at noon Eastern. And he will be a guest on "Larry King Live" tonight at 9:00 Eastern and at 6:00 Pacific.

COLLINS: President Bush is among those gathering today to remembering Tony Snow. The funeral service for the former White House spokesman taking place in Washington this morning. Snow died of colon cancer on Saturday at the age of 53. He was the White House Press Secretary from May 2006 until last September. Prior to that, he was a columnist, commentator and talk show host. Snow joined CNN as a contributor in April. He is survived by his wife and three children.

(COMMERCIAL BREAK)

COLLINS: Stagflation, a poisonous brew of slow economy and high inflation. Is it the next thing hitting your wallet? Gerri Willis and what you need to know.

(COMMERCIAL BREAK)

HARRIS: Let's get you to the New York Stock Exchange now and check out the big board. I think we were anticipating kind of a bigger rally than this. Susan Lisovicz indicated that we might get a triple digit start to the day. OK, we didn't get that, but we are at least in positive territory after the big bull run yesterday of 276 points. We're at 55 points in positive territory. We're going to check in with Susan in just a couple of minutes right here in the CNN NEWSROOM.

Oil and politics, a volatile mix on Capitol Hill. At issue today, new drilling and old leases already held by oil companies. CNN's Kate Bolduan is in Washington. Kate, good to see you. Does anyone know where this debate is headed?

KATE BOLDUAN, CNN CORRESPONDENT: Well, it's headed - it's right on Capitol Hill, as it normally is, Tony. As you mentioned, you summed it up pretty well, democrats on Capitol Hill are making a big push today on energy, specifically what they think needs to be done to reduce gas prices. In the house, it's a combination of measures which include forcing companies to act on existing oil leases or Congress will take the lease away.

Democrats are also pushing to speed up oil lease sales in an area called the National Petroleum Reserve in Alaska. It's near Anwr but already open to oil exploration. Now, Senate democrats are taking on another area, Wall Street. A new proposal introduced to us by the majority leader Harry Reid, calls for strengthening the commodity futures, trading commission. That's the group, of course, that regulates energy futures trading. In part, this bill would crackdown on so-called speculators, people who buy and sell futures but don't actually physically produce or acquire the commodity. He talked about it a little bit on the Senate floor yesterday.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: Right now Wall Street traders are raising gas prices with nothing more than a click of a mouse. For nearly eight years, this Bush-Cheney administration, the most oil-friendly administration in the history of the country, both have made their fortunes in oil, have turned the blind eye to the excessive speculation.

(END VIDEO CLIP)

BOLDUAN: Now, the big question of course is, Tony, where is all this going? Well, it's going to be difficult for democrats to succeed here because in general, republicans are not on board. They want to be able to add provisions that among other things would allow for opening up new areas for domestic drilling and democrats may not give them that chance.

HARRIS: OK. Kate Bolduan for us this morning on Capitol Hill. Kate, good to see you. Thank you.

BOLDUAN: Thanks, Tony.

COLLINS: Sure, inflation is scary, but the real bogeyman in the economy is stagflation. Personal finance editor, Gerry Willis is here to give us the low down on that. Probably you should start saying, OK, what is it? Stagflation.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, yes, you need to know what it means right. Well it's a combo of a slowdown in the economy and high inflation. For consumers, this can be worse than a short recession. The reason - well a short recession may kill your job prospects, but at least you're not facing higher prices. During a period of stagflation, you're unlikely to get any major wage gains, you'll be squeezed by high prices and may still lose your job. Worst, the last period of stagflation lasted from the late 1960s to the early 1980s. A long time.

Back then inflation was in the double digits, the jobless rate was above 10.8 percent. It took a big recession to squeeze the inflation our of that economy. The stagflation we're seeing today though will get worse before it gets better but economists don't think it will be as bad as it was in the '70s. They're calling it stagflation lite. Right now, inflation is five percent. The jobless rate of 5.5 percent GDP. That's economic growth that 1 percent, pretty sluggish," are far lower though GDP, economic growth, at one percent, pretty sluggish, all far lower though than the highs of the 1970s.

COLLINS: Yes. What's the advice to investors?

WILLIS: Well, you may be tempted to pull your money out of the stock market. You know, during times of stagflation but that would be a mistake. We've already seen the market start to turn around and the first sign that the economy is getting healthier is that the stock market makes gains. It's a forward looking indicator. Timing that turn though, as you know, Heidi, is impossible. You're better off buying stocks at a discount and riding the upturn.

COLLINS: Yes. But what about your retirement? I mean, how do you protect that we're in this stagflation?

WILLIS: Well, there are other choices that I think people meant. You may putting part of your portfolio into Treasury Investment Protected Securities. What a mouthful. They're also called TIPS. These investments rise during periods of inflation. Look, if somebody buys $100,000 worth of TIPS, and inflation goes up three percent, they end up having $103,000 by the end of the year. TIPS also pay additional interest twice a year at a fixed rate. Now, you can buy TIPS through a brokerage or directly through the government at treasury direct.gov.

COLLINS: Any good places to put your money right now?

WILLIS: Well, you know, I know people are worried out there about putting money in the stock market. They're looking hard for the right kind of place to put their money. Certainly doing that make sure you have enough cash on hand. You want to have some savings. Look at the highest yielding money market accounts. Savings accounts are giving you decent returns. You aren't keeping up with inflation. To get the high returns, go to bankrate.com. If you're looking for a safer area You might want to consider the group consumer staples. We talked to some experts yesterday, those are businesses that sell products no matter what the environment is, consumers are buying. So companies like Proctor & Gamble, Wal-Mart, Costco. That being said, you don't want to invest blindly. You definitely want to do your homework. And if you have any questions, send them to us at toptips@cnn.com. We love hearing from you.

COLLINS: And what about "Open House" this weekend?

WILLIS: "Open House," 9:30 a.m. Eastern on CNN Saturday morning. We'll look at how safe your money is. And we're going to talk about towns across the country where your dollar goes the distance.

COLLINS: Oh, I'd like to move to one of those towns right now. Gerri, thanks so much. Appreciate it.

WILLIS: Thank you.

HARRIS: Falling oil prices lead to rising stocks. Will Wall Street continue climbing today? So far so good. We're watching.

(COMMERCIAL BREAK)

HARRIS: Well, we're at the half hour. Welcome back, everyone to the CNN NEWSROOM. I'm Tony Harris.

COLLINS: Hi, everybody. I'm Heidi Collins.

(BUSINESS REPORT) HARRIS: Boy oh, boy, I tell you what, if you missed Larry King last night, you missed our own Energy Fix correspondent Kathryn Harlow, taking the airline industry to task. Have a listen.

(BEGIN VIDEO CLIP)

KATHRYN HARLOW, CNN ENERGY FIX CORRESPONDENT: 12 CEOs of the major U.S. carriers sent an open letter last week to customers asking to help them stop speculation. But, all the major airlines all speculate in their own way. They all hedge oil. So what is the difference here? Now the airlines do take physical possession of the oil, hedge funds, pension funds, they do the same thing. They don't, but still you're calling on the public to help you stop something you practice yourself.

(END VIDEO CLIP)

HARRIS: Wow! Boy. CNN money.com's Poppy Harlow, that's what her mom calls her. We're going to caller Poppy. She join us with our energy fix from New York.

Poppy, what had you so fire up last night?

HARLOW: It just seems odd to me Tony, that the airline industry which buys oil, speculates on its future price, is against speculation all the sudden. The airline industry says, though, all speculation is not the same. Take a listen to the response.

(BEGIN VIDEO CLIP)

JIM MAY, PRES. AND CEO, AIR TRANSPORT ASSOC.: The people who take possession of the physical commodity of oil are hedging, as they should. And there is absolutely nothing wrong with that. And there is no change in any of the proposed legislation to change that fact.

What we're going after are the index speculators because oil has become sort of the new gold. It's become a financial instrument and it is those folks that are helping drive up the overall cost.

(END VIDEO CLIP)

HARLOW: Tony, here's what everyone agrees on. Oil prices are killing the airlines. You have to be sympathetic to them as well as the travelers. But ironically, many believe airline critics -- many airline critics rather, believe they should have speculated more when oil prices were lower. Southwest Airlines, for example, locked in 70 percent of their fuel cost when oil was just $51 a barrel. As a result, it's in much better shape, much better position than a lot of its larger competitors -- Tony.

HARRIS: And Poppy, what about the last couple of days when we have watched oil prices drop?

HARLOW: Yes, that's right. As Susan just explained, we've seen oil down more than $10 in the past few days. But oil prices are back up just above $1 right now. So, it's worth remembering that speculation Tony, can drive the oil price down as well as driving it up.

Testifying actually on Capitol Hill this week, Fed chair man Ben Bernanke said, quote, "speculation under most circumstances is a positive thing." We're really using this word with a lot of negative connotations lately. And the reason is, that it allows companies like airlines to hedge against higher oil prices.

It can also help them predict future trends. For example, a lot of people think the oil market is warning us that increased demand from China, from India, will have a dramatic effect on the price we pay. And some argue it's better to know that now. What is not good for the market is illegal manipulation. There's a big difference there. No one's arguing for that. Commission is investigating whether that's happening.

We explain it all on our web site, CNNmoney.com, Tony. But yes, I had to take him to task a little bit for that.

HARRIS: Yes. As the kids say, for real!

Great to see you, Poppy. Last night, good job on "LARRY KING LIVE" and here as well as always. Good to see you. Thank you.

HARLOW: Thanks, Tony.

(WEATHER REPORT)

COLLINS: Checking a few international stories now.

Heartbreak in Mideast. One day after a prisoner exchange, two Israeli soldiers laid to rest today. Thousands turned out. The two were captured in a 2006 cross-the-border raid. Their remains returned by Hezbollah, yesterday. Israel returned the bodies of almost 200 Lebanese and Palestinian fighters. Mourners met their coffins on the route of south Lebanon to Beirut. Samir Kuntar, one of five prisoners freed by Israel, was welcomed back to his hometown.

HARRIS: Warnings from the Pope, speaking to hundreds of thousands of cheering pilgrims in Sydney, Australia. Pope Benedict XVI focused on environmental concerns. He says the world's natural resources are being squandered by people's insatiable consumption. The pope adds that caring for the environment is as important to humanity as peace and justice. He also takes aim at pop culture, blaming the internet and television for violence and sexual degradation.

COLLINS: Here's a twist. The Brangelina twins sparked outrage in Nice, France. Protesters complain all the hoopla is overshadowing a high-profile murder case. The twins, a boy and girl, were born July 12th. The entertainment site, TMZ.com says, instead of focusing on the murder, the gushing mayor declared Angelina Jolie and Brad Pitt honorary citizens and the babies, a pride to the city.

HARRIS: Before you send an e-mail you probably should think about who's watching. It might surprise you.

(COMMERCIAL BREAK)

COLLINS: He wasn't the original whistle-blower that contacted CNN. But a former Federal Air Marshal is now speaking out after the government spied on his personal e-mails.

CNN's senior investigative correspondent Drew griffin, explains.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SR. INVESTIGATIONS CORRESPONDENT (voice-over): The story stunned the Air Marshal program and the Transportation Security Administration. Federal air marshals telling CNN, the Air Marshal Service is so thin, only 1 percent of domestic flights have agents on board.

Kip Hallie, the head of the Transportation Security Administration, quickly went to Congress and said CNN was wrong.

UNIDENTIFIED MALE: That number is absolutely wrong.

GRIFFIN: And behind the scenes, the TSA launched an investigation to find out where our information was coming from. The TSA went so far as to track down a soldier in Iraq, peer into his personal e-mail, then call him just days after he returned from duty.

(on camera): Who was it that was calling and asking this?

JEFF DENNING, FORMER AIR MARSHAL: It was a special agent Greg Needer (ph) his name. With the TSA Office of Investigations or something.

GRIFFIN (voice-over): Jeff Denning is hardly a terrorist. He's a father of four, soon to be five children. He's a former decorated Dallas cop, a member of the Dallas S.W.A.T. team. And from 2004 through 2007, a Federal Air Marshal.

DENNING: And I joined the Air Marshals because I wanted to help in the global war on terror.

GRIFFIN: He spent three years in the service, leaving the agency on good terms but disgusted with how it was run. And last year, just as he was getting his own security business started, his country called him again.

DENNING: I got involuntarily mobilized with the Army Reserves.

GRIFFIN: While serving in Iraq, clearing bombs from road sides, he got an e-mail from an old friend in the Air Marshal service. This e-mail, asking anyone with information about troubles in the Federal Air Marshal program to contact CNN. Jeff Denning never talked to CNN for that first report, but he did forward the e-mail. Little did he know that TSA was watching.

DENNING: In Iraq there were a lot of uncomfortable circumstances, and dangerous things. And never, Drew, have I ever been so scared of when the federal government called me on my home phone and said, I want to know about your personal e-mail accounts and what you have been sending.

GRIFFIN: Don't think it could happen? The Transportation Security Administration just confirmed to CNN that it is true. According to this statement, the TSA is investigating possible unauthorized release of sensitive and classified information to the news media.

DENNING: They're contacting me on my personal -- about my personal e-mail that I apparently forwarded an e-mail to other people's personal e-mail accounts? It's outlandish.

DENNING: The TSA denies it looked into personal e-mail accounts but did state all e-mails sent to government employees on a government system are always eligible to be read and reviewed. As is outlined on every computer in TSA, including the FAMs. And apparently including soldiers in Iraq.

(on camera): And apparently, despite all its snooping, the TSA still hasn't found the source of this original e-mail. Guess what? We did.

UNIDENTIFIED MALE: The e-mail that I sent asked colleague Air Marshals of mine to contact CNN.

GRIFFIN (voice-over): He is an Air Marshal disgruntled with the agency and hoping some media attention would change things. He says the usual channels inside government have led to retaliation and little action, which is why he wants his identity protected.

UNIDENTIFIED MALE: The only option we had left was to contact the media. And that is the reason why I sent the e-mail to my Air Marshal colleagues telling them that CNN would -- is willing to expose the corruption publicly.

GRIFFIN: Jeff Denning was not one of the Air Marshals who came forward, but he is coming forward now. Hoping the TSA will stop looking into his e-mail and start looking for real threats to the nation's security.

(END VIDEOTAPE)

HARRIS: Armed with a radar gun, he's got drivers tapping the brakes and looking twice.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: So he goes out there and people think he's a police officer.

HARRIS: An 11-year-old? Setting up a speed trap?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COLLINS: The Supreme Court says they have the right to bear arms. And today, residents of the nation's capital can start registering for handguns. Last month the Supreme Court struck down city's handgun ban. The D.C. City Council approved new firearms legislation Tuesday. It allows handguns to be kept in the home if they are used only for self-defense and have fewer than 12 rounds of ammunition.

HARRIS: So, let's talk about a neighborhood plagued by speeders so a boy armed with a radar gun does something inventive. It's a toy, but the results are very real.

Details now from reporter Bennett Haeberle, of CNN Louisville affiliate WDRB.

(BEGIN VIDEOTAPE)

BENNETT HAEBERLE, WDRB REPORTER (voice-over): It started with a yard sale and a trade. A compact disk in exchange for a toy radar gun.

UNIDENTIFIED FEMALE: From there it just kind of snowballed.

LANDON WILBURN, 11-YEAR-OLD TRAFFIC ENFORCER: Well, I just like cops. It's really cool to see how fast people are going.

HAEBERLE: 11-year-old Landon Wilburn, dreams of becoming a police officer.

UNIDENTIFIED FEMALE: (INAUDIBLE) really gets the speeders big time. I mean, it's just a big -- it's been a big problem.

HAEBERLE: So this future cop decided to start his own traffic beat. And when he's on the job, he needs all the essentials. An orange safety vest he got from his father. The helmet is his own. His mode of transportation -- a bicycle equipped with a radar gun.

WILBURN: He was going 18 miles an hour.

HAEBERLE: His work started a month ago.

WILBURN: 19.

HAEBERLE: And so far...

WILBURN: 24.

HAEBERLE: ... he's tracked 200 cars. Sometimes his work serves as a deterrent.

BRYAN WILBURN, LANDON'S FATHER: They saw this toy radar gun out there and I think that they saw that and I think people actually stopped and slowed down, and you know, jolted their car.

HAEBERLE: Some drivers are unphased and others even ask.

UNIDENTIFIED FEMALE: How fast am I going?

L. WILBURN: 12.

HAEBERLE: His goal is simple.

L. WILBURN: Just to make cars go a little bit slower because they go faster here. And that's how wrecks happen.

HAEBERLE (on camera): (INAUDIBLE) Lakes is considering adding speed humps like these, in an effort to curb speeders. But ask Landon what he thinks about it.

L. WILBURN: I think we need speed humps but I think I'm still doing good.

HAEBERLE (voice-over): A traffic study conducted last year found there were enough speeders in the neighborhood to warrant the speed humps. A petition is now under way to approve the measure. If anything, Landon is drawing attention to himself and a larger issue.

UNIDENTIFIED MALE: So he goes out there, and people think he's a police officer.

HAEBERLE: Perhaps someday he will be.

(END VIDEOTAPE)

HARRIS: By the way, you might be surprised that Landon's radar gun can actually be found in toy stores for about 30 or 40 bucks.

OK. The hall of fame, or should it be shame for mug shot t- shirts?

(COMMERCIAL BREAK)

HARRIS: How about that? The piano man Billy Joel, playing Shea Stadium last night and leaving the sold-out crowd in a New York state of mind. His performance tonight will be the last rock concert there before Shea is torn down at the end of the baseball season.

COLLINS: Nabbed by the cops, now busted by the fashion police.

CNN's Jeanne Moos takes a look at mug shot t-shirts.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): People who get busted like to hide their faces with their hair, with their hoods, with their shirts.

But you can't hide from a mug shot. And when this Michigan man was photographed in a "World's Greatest Dad" T-shirt after allegedly arranging underage sex, that got us thinking about perps suited to a tee.

For instance, the mug shot of the guy wearing "Trouble Finds Me" or "Out on Bail."

UNIDENTIFIED MALE: Not anymore.

MOOS (on camera): Out on bail.

UNIDENTIFIED MALE: That's what it could say on the back. Not anymore.

MOOS (voice-over): The folks at the smoking gun Web site specialize in legal documents and mug shots. Imagine getting arrested and then "If We Get Caught, It's All Your Fault" tee or "It Wasn't Me." And who needs a written confession when you're wearing one? "I Make Stuff Up." "Trust Me, I'm a Liar."

Nobody's perfect goes perfectly with a face that shrugs. "Every Great Idea I Have Gets me in Trouble." And the mother of all mug shot understatements, "I May Not Be Mr. Right."

Andrew Goldberg is a mug shot connoisseur, sifting through --

UNIDENTIFIED MALE: Hundreds a day and thousands a week.

MOOS: Out of those thousands, one like, "I'm A Virgin But This is an Old T-Shirt," sticks out.

MADONNA: Like a Virgin, hey...

MOOS: Or the opposite -- "Support Your Local Hooker."

But some T-shirts are prophetic -- "I'm Not an Alcoholic. I'm A Drunk. Alcoholics go to Meeting."

UNIDENTIFIED MALE: She got arrested for drunk driving.

MOOS (on camera): Did she really?

UNIDENTIFIED MALE: Yes.

MOOS: "Things To Say To a Police Officer." Now, what are the chances of getting arrested with that on?

UNIDENTIFIED MALE: And the first thing is only going.

MOOS: Some of the T-shirts merit getting busted by the fashion police. "Overly Caucasian: Do Not Place on Dance Floor," "Motorcycles Helping Ugly People Have Sex Since 1903," "Warning: I Have PMS and a Handgun." Arrested people seem to like to insult others with their T- shirts.

UNIDENTIFIED MALE: He says "You're a Freakin' Idiot," but he's the one who's locked up. "98 Percent Naughty, Two Percent Angel."

MOOS: "The Party Has Arrived, All Right," "Trust Me, I Do This All The Time," "I Live in my Own Little World, But It's OK... They Know Me Here," "Stupidity is Not a Crime."

UNIDENTIFIED MALE: Right. And obviously, that's not what he got arrested for a stupidity. MOOS: Nope. It was aggravated assault with a folding knife. Who needs to dress for success when you can dress for arrest?

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

HARRIS: And good morning again, everybody. You're informed with CNN. I'm Tony Harris.

COLLINS: Hi, everybody. I'm Heidi Collins.

Developments keep coming into the CNN NEWSROOM on this Thursday, July 17th. Here's what's on the run down.

Top transition, calling for more U.S. troops in Afghanistan, but they're still pinned down in Iraq.

HARRIS: Watch on Wall Street. Earnings reports keep investors looking up, but will oil spoil the party?

COLLINS: And driver laughs at high gas prices. He's got an electric car. Why don't you? In the NEWSROOM.

Looking for answers in Afghanistan. The U.S. Military launching a formal investigation into an insurgent attack that left nine American troops dead.

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