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Fueling Debate: US Airway's Cost-Cutting Plan; Diplomacy With Iran; Pentagon Probes Afghan Attack; Raid on Wachovia Securities Headquarters
Aired July 17, 2008 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: So how much jet fuel is enough? And who makes the call? Some airline pilots claim they're being pressured to skimp in the name of cutting costs.
DON LEMON, CNN ANCHOR: Boots on the ground are one thing. Eyes and ears are another. The Pentagon wants to know why U.S. troops were caught unaware in a deadly ambush in Afghanistan.
PHILLIPS: Carbon-free electricity in 10 years? Al Gore sets a lofty goal for a nation whose very survival he says is at risk.
Hello, everyone. I'm Kyra Phillips, live in New York.
LEMON: And I'm Don Lemon, live here at the CNN World Headquarters in Atlanta.
You're in the CNN NEWSROOM.
PHILLIPS: We're going to start off the 2:00 Eastern hour with breaking news. We're just learning about a raid on the Wachovia Securities headquarters in St. Louis.
Security regulators, we are told, from several states went after documents and records on the company's sales practices. Apparently, authorities in Missouri say that the move is part of a broad investigation that's taking place into auction rate securities.
Missouri's secretary of state says that hundreds of investors have complained about the inability to access their money. So Wachovia Securities is part of the Charlotte, North Carolina-based Wachovia Corporation, by the way. We'll try to find out more about exactly those auction rate securities, what they are, and how many people could be affected.
(STOCK MARKET REPORT)
PHILLIPS: Now, oil is a hot topic on Capitol Hill today. Democrats in both the House and Senate say they're trying to find ways to relieve America's pain at the pump. In the House, Democrats want to force energy companies to use existing oil leases before acquiring new ones. In the Senate, Majority Leader Harry Reid is pushing a crackdown on oil speculation. Neither measure has the support of Republicans.
The economy is issue #1. And we're going to bring you all the latest financial news weekdays, noon Eastern. It's info you need on the mortgage meltdown, the credit crunch, a lot more. "ISSUE #1" at noon Eastern.
LEMON: All right. Let's talk safety in the skies as it relates to issue #1. More now on the money versus safety debate sparked by some US Airways pilots who say the carrier is second-guessing their judgment when it comes to fuel needs on flights. US Airways says that is not the case at all.
Our CNN chief technology correspondent, Miles O'Brien, joins us now. He's a licensed pilot. He joins us now to talk about this and to put it into perspective for us.
Miles, you said that this -- you know, it may seem like a little bit of money. I think it was like 80 bucks or something. But it will save them millions.
MILES O'BRIEN, CNN CHIEF TECHNOLOGY CORRESPONDENT: Yes. You know, what we're talking about here -- you know, there is an old expression in flying, that the only airplane that has too much fuel is one that's on fire. OK? That's -- you know, that's a flip thing, but there is something to this.
What we're talking about is pilots at the top of the food chain at US Airways. Eight of the most senior guys, the seasoned veterans, who, according to the airline, over the course of time have been routinely asking for more fuel than is required by the FAA, on the order of 15 minutes.
Now, what does 15 minutes equate to? It comes out to about 370 gallons worth of fuel. The penalty for carrying 370 gallons extra fuel is 37 gallons, a 10 percent rule. OK?
So, it costs you an extra 37 gallons to carry that extra fuel. That amounts to about 100 bucks each flight.
LEMON: OK. OK.
O'BRIEN: Now, you would think, why would they be so upset about that? But start extrapolating and multiplying out over the course of a huge airline, thousands of flights, and you're talking about some real money.
LEMON: OK. And -- but we're also talking about a back-story here, because, you know, fill us in. There's -- we have this fight, sort of, if you want to call it that, between the pilots and the union and the airline as well. So there is a back-story to this.
O'BRIEN: Right. Well, here -- I mean, there's a big money issue here. And the fact that eight senior pilots have been singled out, and on the surface would look like a symbolic move, kind of a shot across the bow for the 5,000 pilots in this entire system.
LEMON: Right.
O'BRIEN: But you've got to remember, this is an airline that was brought together in a shotgun marriage that didn't work out so well.
LEMON: Right.
O'BRIEN: US Airways, America West, seniority systems didn't jive well. Bad history of labor versus management acrimony. And at the root of this is management trying to tell those darn prima donna pilots that they're in charge, not the pilots.
LEMON: And especially...
O'BRIEN: And captains have always had the rule of god for years.
LEMON: Especially this sort of to add fuel to the fire, no pun intended, really...
O'BRIEN: Yes.
LEMON: ... is that they are having -- they're in dire straits, at least economically.
O'BRIEN: But let's -- one takeaway here is we're not talking about real safety issues here, this is comfort level for the pilots.
LEMON: OK.
O'BRIEN: OK?
LEMON: All right.
Miles O'Brien, our chief technology correspondent.
Always a pleasure to have you right here in Atlanta. Thank you, sir.
O'BRIEN: All right. You're welcome.
LEMON: Kyra.
PHILLIPS: The United States and Iran, it's a stretch to say relations are improving, but diplomatic wheels are turning.
CNN White House Correspondent Elaine Quijano can tell us what it all means.
Hey, Elaine.
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Hello to you, Kyra.
Well, you know, the White House isn't confirming or denying a report out of the British newspaper "The Guardian" that the United States plans within the next month or so to announce it's going to be opening an intrasection in Tehran. But if this does move forward, it would not be a surprise.
CNN reported weeks ago U.S. officials had acknowledged that this discussion about this possibility was very much in the works. Now, an intrasection is essentially an office. It would be an office in Tehran.
U.S. diplomats would be stationed there to help with things like visas and to help facilitate travel for Iranians who want to come to America. Now, U.S. officials, without confirming anything, say the idea would be to essentially reach out in a more direct way to the Iranian people. Not necessarily cozy up to the Iranian government. But they dismiss the notion that there is some kind of increased urgency to the situation because President Bush has less than seven months left in office.
(BEGIN VIDEO CLIP)
SEAN MCCORMACK, STATE DEPT. SPOKESMAN: Where we see opportunities to advance the national interests via foreign policy, we are going to take them. We're not going to take them though just for the sake of the clock.
(END VIDEO CLIP)
QUIJANO: Now, this idea is not unprecedented. The U.S. actually has an intrasection in Havana, Cuba. It's housed within the embassy of Switzerland. Also, Iran itself actually has its own intrasection here in Washington. That's located in the embassy of Pakistan -- Kyra.
PHILLIPS: All right. Elaine Quijano live from the White House.
Thanks, Elaine.
LEMON: All right. Let's talk now about the war in Afghanistan, a lack of military intelligence. That's just one angle the Pentagon is looking at after the deadliest single attack against U.S. troops in Afghanistan in more than three years. They're wanting some answers there.
Let's go straight to the Pentagon for the latest from our senior Pentagon correspondent, Jamie McIntyre.
Jamie, they're looking for answers. Have they gotten any yet? Or too early to figure that out?
JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, you know, Don, any time the U.S. suffers this kind of loss of life on the battlefield, there is an after-action review to try to figure out what went wrong. But this is now rising to the level of a formal investigation, what in military parlance is called a 15-6 (ph) investigation.
What that simply means is that there is an officer assigned to investigate it, and he will produce a report after reviewing all the available information, even talking to witnesses. And one of the things they want to figure out is, how is it that this group of American soldiers was sent to build a combat outpost in this remote area without any knowledge that nearby were hundreds of Taliban fighters who wanted to attack them?
Now, it may be that those fighters just crept in under the cover of darkness. This attack happened in the early morning hours. And there was no way to detect them. Or, it could be that the U.S. could or should have had intelligence about where they were, perhaps from overhead assets.
It's one of the things the investigation is going to look at, was there intelligence about this concentration of enemy fighters? If there was, was it passed on to the soldiers? If there wasn't, why not? How was it missed?
That's one of the things the U.S. is going to want to look at as this investigation goes forward.
LEMON: Senior Pentagon Correspondent Jamie McIntyre.
We appreciate that.
Jamie on top of it. We'll get back to him when he gets new information.
Meantime, a new Project Apollo. Al Gore says that the nation that went to the moon can generate clean electricity, and they can do it fast.
PHILLIPS: You'll never know when you need an emergency transfusion. We're going to look into new questions about the safety of the blood supply.
(COMMERCIAL BREAK)
PHILLIPS: The politics of race. A new poll suggests a Barack Obama presidency might not do much to change race relations in America.
CNN Senior Political Correspondent Candy Crowley takes a look.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): John McCain went before the NAACP and recognized the obvious: Barack Obama is making history.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Of course I would prefer his success not to continue quite as long as he hopes.
(LAUGHTER)
MCCAIN: But it does make you and me proud to know the country I have loved and served all my life, still a work in progress, and always improving.
(APPLAUSE)
CROWLEY: But a "New York Times"/CBS poll shows, despite Obama's already historic run, Americans still see things in black and white -- 59 percent of blacks describe race relations as generally bad in this country. Only 34 percent of whites say that. What's more, only half of black respondents think an Obama presidency would change race relations.
RON WALTERS, AFRICAN-AMERICAN LEADER CENTER: It lends some credence to the fact that, even if Barack Obama is now the nominee of the party or even if he wins the presidency, it's not going to have a profound effect upon race releases in the United States.
CROWLEY: And while Obama battles McCain to become leader of the Western world, the poll also found 64 percent of blacks think whites have a better chance of getting ahead. Just 35 percent of whites thought that.
It goes on, with blacks more likely than whites to see Obama as caring about the problems of people like them and more likely to describe him as patriotic. Whites are more likely to see Obama as a politician who says what he thinks people want to hear.
The truth is, blacks have voted Democratic for decades. No Democratic presidential nominee has won the white vote since the early '70s. These things take time.
WALTERS: You have to look at American culture and the fact that it's been 400 years for these kind of racial attitudes to develop, racial behaviors to materialize. And you're certainly not going to wipe that out with just someone being elected to any office in the United States.
CROWLEY: Making history does not change history.
Candy Crowley, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: An African-American is running for president, campaigning in cities where he couldn't stay in a hotel 40 years ago. And in the view of NAACP chairman Julian Bond, that says something good about America. Bond says whoever wins the presidency should work to ensure equality for all Americans.
(BEGIN VIDEO CLIP)
JULIAN BOND, CHAIRMAN, NAACP: We expect any president of the United States to be a champion of civil rights. And I hope that if Obama gets the nod, that he'll do that. I hope John McCain would do it as well.
But we don't elect presidents to be civil rights leaders. We elect them to be presidents. We have civil rights leaders abundant in America. Some people think we have too many of them.
But we don't want to put that burden on his shoulders or Senator McCain's shoulders. We want whoever wins to be a president who cares about justice, fairness and equality, who enforces the civil rights laws, who ensures that racial discrimination goes away. And any president who does that will be fine with us.
(END VIDEO CLIP)
PHILLIPS: Bond adds that the NAACP is nonpartisan and doesn't endorse any candidate.
LEMON: And leading our Political Ticker today, John McCain in the battleground state of Missouri. The Republican nominee-in-waiting spoke to voters in Kansas City just a short time ago about soaring energy prices and their impact on the American way of life.
(BEGIN VIDEO CLIP)
MCCAIN: Now let me also point out in national security, we are transferring somewhere around $700 billion of American money to countries that don't like us very much. Some of that money ends up in the hands of terrorist organizations.
We cannot afford that from a national security standpoint. We have to reduce and eliminate our dependency on foreign oil.
(END VIDEO CLIP)
LEMON: All right. So here is what Barack Obama is doing today. He's taking the day off from campaigning, and maybe he can afford to.
His campaign raised -- get this -- $52 million in June, more than twice what John McCain raised. It was the second best fund-raising month of the year for Obama and more than double his May total of $22 million. Boy.
Well, the presumptive Democratic nominee blames the conservative media for attacks on his wife Michelle. Obama tells "Glamour" magazine his wife and John McCain's wife Cindy are not fair game because essentially they're civilians. He says his wife is the quintessential American woman who is honest, smart and funny. Senator McCain agrees with Obama, recently telling CNN both spouses should be treated with respect.
Make sure you check out our Political Ticker for all the latest campaign news. Just log on to CNNPolitics.com. It is your source for all things political.
PHILLIPS: Friends of Tony Snow arriving today at the funeral of the late White House spokesperson. President Bush gave the eulogy, remembering Snow for his professionalism, wit and love of family.
The well-known conservative commentator joined the White House staff two years ago last May. He served until last September. Tony Snow died of colon cancer last Saturday at the age of 53.
(COMMERCIAL BREAK)
PHILLIPS: Well, we're learning more about the raid that's taken place on Wachovia Securities, the headquarters in St. Louis. Apparently, security regulators from several states went in after documents and records on the company's sales practices.
Our Poppy Harlow has been following this out of New York for us.
Poppy, what else do you know? And is there a lot of reason to be concerned here when it comes to banking at Wachovia?
POPPY HARLOW, CNNMONEY.COM: The first thing I want to do is calm all Wachovia investors out there. If you look at the stock, it's up more than 15 percent right now.
This is not something new, Kyra. The raid is new, but the concerns over the safety of auction rate securities, that is not a new thing. We've been dealing that really since February. So I want to calm people's fears out there first.
This is all sparked by a "Wall Street Journal" article. We've confirmed that raid in St. Louis.
The fact is that Wachovia purchased A.G. Edwards, a broker based in St. Louis. And I want to explain to people quickly what these auction rate securities are.
They're essentially bonds whose interest rate comes up periodically. They're brokered off every 14 days, every 28 days, et cetera. They're considered very safe investments. Traditionally, safe investments, these bonds.
But what's been going on is the fact that the credit market froze up. A lot of concern starting in February, so a while ago, as to not being able to auction off these bonds.
And what happens is, when they have can't auction off these bonds, and the whole auction does not go successfully, then the banks step in and they buy the rest of these auction rate securities so that people have the cash backing up their investments. But then what happened is that the bank's position in terms of their liquid position dried up, Kyra. So what that basically means is that people were left with investments that they thought were safe, which turned out to at least on paper not be safe, Kyra.
But this is interesting. I did talk to a broker who told me -- who wanted to remain anonymous. But I did say to him, "Would you advise your clients to purchase these auction rate securities right now?" And what he said to me is, "No, they are an unliquid (ph) investment at this point in time."
What Missouri bank regulators are trying to figure out is whether these were marketed to Wachovia consumers, in a sense, to make them think they were safe investments, when in fact they may not have been -- Kyra.
PHILLIPS: But apparently the report is saying that the secretary of state there in Missouri, Poppy, is reporting that investors have complained about not being able to access their money.
HARLOW: Yes. Let me read you this, because this is coming from the Missouri secretary of state, Robin Carnahan. And this is what he said. This is one example in this press release which we have right here from them.
He said, "Sixty-year-old business owner Tom Nagel (ph) purchased some auction rate securities through Wachovia back in 2005." And this is a quote from what Tom Nagel (ph) said. He said, "My broker of 20 years assured me that this was the same as a money market, that I could get my retirement funds back at any time."
That's the concern here, is that the people that are going after Wachovia right now, what these regulators are trying to find out is whether or not that is the case, whether these were marketed to people in an untruthful way or not. But again, nothing firm against Wachovia at this point, so I don't want to raise concerns unnecessarily here -- Kyra.
PHILLIPS: All right. We'll follow it.
Poppy Harlow, thanks so much.
HARLOW: You're welcome.
LEMON: Al Gore to America: Clean up your act. The former vice president offers a far-reaching challenge on the nation's energy future.
(COMMERCIAL BREAK)
PHILLIPS: Hello, everyone. I'm Kyra Phillips, live in New York.
LEMON: And I'm Don Lemon, live here at the CNN World Headquarters in Atlanta.
You are in the CNN NEWSROOM.
Issue #1, of course, for so many Americans, the high price of gas and oil. Oil prices have been on a three-day sliding, now hovering around $131 a barrel. At the pump though, AAA says the price of gas is flat, at $4.11 a gallon.
Our Susan Lisovicz joins us now from the floor of the New York Stock Exchange to tell us how the markets are doing and all the other financial news on top of that.
Go ahead, Susan.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Hey, Don.
Well, let's talk about oil. That's the perfect segue. Another factor today in the rally that we're seeing this afternoon.
Oil right now is down more than $5. So the decline we've seen in three days is about $16 below -- $16 decline, and it's below $130 a barrel.
Having said that, still really high. Gas prices will probably still go higher because there is a lag. But it is a catalyst for the rally, as is for a second day, a better-than-expected result from a big financial firm, JPMorgan.
It's recording a more than 50 percent decline in its quarterly earnings. But believe it or not, that was better than expected. And JPMorgan shares are up 12 percent, leading the Dow 30.
Another big winner today is Wachovia Bank. I know Poppy was talking about it a few minutes ago. Its shares are up 15 percent. I know there is a lot of concern about the health of our banking system, but remember, this particular -- these auction rate securities are a very small part of Wachovia's assets of more than $1 trillion.
What Wachovia said to me in the last few minutes is that -- let me just read it to you -- "Many security firms, including Wachovia, are responding to inquiries from regulators about auction rate securities. The discussions occurring today are a part of this ongoing process." So there you go, Don.
LEMON: Yes, unbelievable.
And you know, we have been seeing just over the last week or so, the financial sector has been absolutely hammered. They've been hammered for a long time now, but the last week has been bad. Fannie Mae and Freddie Mac were on the verge of collapse, what about -- any signs of life there?
LISOVICZ: Yes, they have a pulse. (INAUDIBLE) coming back to life.
Fannie Mae and Freddie Mac are each up more than 18 percent and -- on a couple factors. Let me go with what happened today. The Fixed Ratings Agency affirmed AAA ratings for both of them. And Ben Bernanke, of course the chairman of the Federal Reserve, said they are in no danger of failing because they are adequately capitalized.
The whole financial sector is showing signs of life today on news, on real news. There was a lot of fear that would be -- that the news out of the banking sector would be terrible. So far, not so bad. We have a ways to go, we have a lot more earnings to report over the next week or so, Don.
LEMON: All right. Thank you very much for that, Susan. We appreciate it, we'll check back with you, of course. Always busy on Wall Street there.
Susan Lisovicz joining us from the New York Stock Exchange.
Time now to tell you about some other stories we're working on for you today, right here in the CNN NEWSROOM.
The Pentagon is trying to determine whether an intelligence failure contributed to the deaths of nine U.S. soldiers in Afghanistan on Sunday. Here's what sources are telling CNN. They say that troops did not -- did not -- know about a build-up of insurgents. A top U.S. diplomat is getting ready to attend nuclear talks with an Iranian envoy on Saturday. The State Department says the presence of Under Secretary William Burns will show Iran the world is united in its concerns about Iran's nuclear program.
The Pilots Union is accusing U.S. Airways of jeopardizing safety by pressuring pilots to fly with less fuel to save money. It says pilots who object are being punished. U.S. Airways denies that charge.
PHILLIPS: Al Gore says it's the hard-headed truth. With the energy crisis spiralling, the former vice president says that renewable energy now makes sense economically. Speaking today in Washington, Gore challenged the nation to produce every kilowatt of electricity through wind, sun and other earth-friendly energy sources within 10 years.
(BEGIN VIDEO CLIP)
AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: To those who say that costs are still too high, I ask them to consider whether the cost of oil and coal will ever stop increasing if we keep relying on quickly depleting energy sources to feed a rapidly growing demand all around the world. When demand for oil and coal increases, their price goes up. When demand for solar cells increases, the price often comes down. That's the difference.
(END VIDEO CLIP)
PHILLIPS: As if on cue today, Texas officials gave an initial OK to the nation's biggest wind power project. The plan would deliver power to urban areas from wind farms in west and north Texas.
LEMON: Former President Bill Clinton is taking on another killer disease that stalks a big part of the world. He announced today that his foundation has signed an agreement with six drug companies to make malaria drugs cheaper and more affordable. Malaria is spread by mosquitoes and affects 500 million people around the world every year. The agreement is an extension of Clinton's HIV/AIDS initiative, which the former president established six years ago.
Money is on the way for former users of the now withdrawn painkiller, Vioxx. The drug maker Merck will start cutting checks in August. Part of a nearly $5 billion settlement designed to settle about 50,000 lawsuits alleging harmful Vioxx side effects. Merck pulled Vioxx from the shelves in 2004.
A new lawsuit filed just yesterday says that one Arizona county sheriff's office racially profiles Hispanic people. The sheriff denies it. But it is by no means a new accusation.
CNN's David Mattingly investigates.
(BEGIN VIDEOTAPE)
DAVID MATTINGLY, CNN CORRESPONDENT: Virginia Hernandez once had the courage to cross the Mexican border and walk 70 miles across the Arizona desert alone. But after 11 years in the U.S., she's never been more afraid.
UNIDENTIFIED FEMALE (through translator): I'm afraid of being arrested by police. You watch TV and see that police are doing the job of immigration.
MATTINGLY: What Hernandez and potentially thousands more illegal immigrants fear most...
UNIDENTIFIED MALE: ... man out of vehicle.
MATTINGLY: ... happens just like this in and around Phoenix every day. Deputies in Arizona's Maricopa County round up illegal immigrants at traffic stops, houses and businesses, doing what's normally left to federal agents.
SHERIFF JOE ARPAIO, MARICOPA COUNTY, ARIZONA: Last time I heard, it's illegal to come into this country, to be in this country. It's a federal law. You can get six months in jail. Nobody enforces that law. We do.
MATTINGLY: Maricopa's controversial sheriff, Joe Arpaio, instructed his deputies to create a new line of border defense, hours away from the Mexican border. For months, they've been checking documentation on the street and in the jails. The sheriff says these inmates are just a fraction of the more than 10,000 illegal immigrants put behind bars in Maricopa County and facing deportation.
(on camera): Living in Phoenix is harder than crossing the border.
UNIDENTIFIED MALE: Yes.
MATTINGLY: Most illegal immigrants incarcerated in Maricopa County are accused of felonies. But, a simple traffic stop for speeding or a tag violation could also result in deportation. Critics of the crackdown say that's led to the ruin of livelihoods and families.
(voice-over): Immigrant rights activist, Aldo Castinadad (ph), takes to the radio, helping fearful listeners spot and avoid patrols.
UNIDENTIFIED MALE: They are in the house for weeks. They don't go out because they feel like any time, in any place, the sheriff (INAUDIBLE) arrest.
MATTINGLY (on camera): You like the idea that you're running people out of the county?
ARPAIO: I love the idea of running criminals out of the county. And the last I heard, these are criminals. Nobody wants to say it. It's all this undocumented immigrants. Why don't say they are criminals? They are criminals.
MATTINGLY: Do you believe you're a criminal? (SPEAKING SPANISH)
UNIDENTIFIED FEMALE: No.
UNIDENTIFIED FEMALE (through translator): Criminals are the ones who rob and kill. I haven't done anything like this.
MATTINGLY (voice-over): Virginia Hernandez says she came to the U.S. to support her family in Mexico. She now has a husband and two U.S. born children of her own. And she worries that each drive down the street, each visit to the supermarket, could cost her her freedom and her family. She says they will soon join other illegal immigrants trying to start a new life in another state.
David Mattingly, CNN, Phoenix.
(END VIDEOTAPE)
LEMON: President Bush is due in California for a look at what wildfires have done to the Shasta Trinity National Forest. He'll join Governor Arnold Schwarzenegger on a fly-over there. More than 2,000 fires have burned, nearly 1,400 square miles of California, since mid- June and dozens of fires are still burning. The president will end the day with a private fundraising dinner at Napa.
Following last month's floods, officials say a half dozen Iowa communities are considering applying for government buy-outs. Under the program, residents of flood prone (AUDIO GAP) ... city or the county. The Federal Emergency Management Agency picks up 75 percent of the tab. Under the program, structures on the property are torn down and the land remains underdeveloped or undeveloped, except for parks or recreational areas.
We turn now to our Chad Myers. Since we were talking about weather. We've been talking about fires and flooding as well. Chad Myers joins us to tell us will tell us what else is going on in the country or to add to what I just said.
CHAD MYERS, AMS METEOROLOGIST: Well, in '93 the same thing happened. Homes were bought out, towns were moved. The towns don't even exist now where they were before. Rainshowers still across the area. Heavy rains across Wisconsin last night. Worried that that might move into those flooding areas -- flooded areas. But that looks like -- pretty good, has not done so so far.
There are some showers across parts of New York, Pennsylvania and New Jersey. Kind of slowing down the JFK Airport right now, just a little bit. We'll have to watch that as it goes on.
We have a couple more things that I want to kind of spread around here. I have a lot of things to talk about today. One more thing that I want to show you is an area that has been spinning here off the coast of Jacksonville. Not really worried that this is going to be a big, significant storm here. But when we get a storm, we get any type of circulation over the Gulf stream, you can add that -- that's warm water that is up here across parts of the mid-Atlantic -- that's the area that can get the juice going, that's the energy. These are the areas that we expect to see significant storms follow-up now for -- in parts of this time of year.
We're now still watching that storm that was in the Caribbean. It's not doing very much but it could develop into something more. And we're still obviously following the president today. He will be back out here in California.
And Don, you said dozens of fires, where last week we were saying hundreds of fires. And for a while, it was up to 1,400 fires all at one time. So these firefighters are really getting a handle on what's going on out there in California.
LEMON: You're absolutely right. And I'm looking at the copy and you said more than 2,000 fires have burned, nearly 1,400 square miles of California. That is amazing.
MYERS: That is bigger Rhode Island. More land has burned than the entire state, the land area, the land mass, of Rhode Island.
LEMON: All right. Chad Myers, thank you very much, sir.
MYERS: You got it.
LEMON: Kyra?
PHILLIPS: Not in my backyard. Too late. It's already there. You won't believe what lurks beneath one Orlando neighborhood.
(COMMERCIAL BREAK)
PHILLIPS: The American Red Cross says it is taking new steps to ensure the safety of the blood that it processes. That follows a "New York Times" report accusing the organization of repeated safety lapses. The newspaper says that the Red Cross has been cited by the Food & Drug Administration for lapses in screening donors for exposure to disease, including failure to test for syphilis. The organization has been fined $21 million since 2003. The Red Cross is responsible for 45 percent of the blood supply in the United States.
LEMON: If you've got crab grass or gophers or rodents or knee- high weeds in your backyard, you better count your blessings. A neighborhood on the outskirts of Orlando, Florida, only wishes its landscapes were so innocent.
CNN's John Zarrella reports.
(BEGIN VIDEOTAPE)
JOHN ZARRELLA, CNN CORRESPONDENT: Search teams scour backyards. Flags show where metal is detected. Perhaps just a food can. But that's not all they're finding. To the shock of people here, these teams are finding bombs.
How can there be bombs under this quiet suburb of Orlando?
FRANK KRUPPENBACKER, ORANGE COUNTY SCHOOL BOARD: I have no explanation for this. It is incomprehensible.
ZARRELLA: The school board counsel, Frank Kruppenbacher is furious. The first bomb was found last summer next to a middle school track. One hundred and twenty-six rockets and bombs with high explosives found on school property. And tons of military debris. The Army Corps of Engineers is cleaning up.
KRUPPENBACHER: Before they get to walk away and claim, we're done, we're going to have to have a real day of reckoning and assurances.
ZARRELLA: And it's not just the school. Thousands of homes are built next to a 12,000-acre World War II bombing range.
DANETTE LAMB, HOMEOWNER: What am I going to do with this? Nobody wants to touch this neighborhood. I'm stuck. So it's kind of -- this is not my little American family dream that we had.
ZARRELLA: How could this happen? Keeping them honest, we asked the school, home builders and the army.
Mike Ornella heads the Army Corps's $10 million clean-up of the Pinecastle Jeep Range.
MICHAEL ORNELLA, U.S. ARMY CORPS OF ENGINEERS: It was known that this was a demonstration area for war fighting.
ZARRELLA (on camera): People knew it and you told them?
ORNELLA: People knew it and that information was available, absolutely available.
ZARRELLA (voice-over): The army published reports, but there is no record it told anyone, even while the school was being built. A 1994 report says, "... the site is a possible danger to the public." A 1997 report sites, "...strafing, practice bombing, air-to-ground rocket firing, some high explosive bombing."
(on camera): Did the Army Corps raise enough red flags, you think, about what was going on here?
ORNELLA: I believe the Army Corps followed the process that we're required to follow.
ZARRELLA (voice-over): Ornella says the army isn't required to tell anyone, even though records show it expected development. The school board, builders, engineering firms, all say they didn't ask because they had no idea it was an old bombing range. The land developer won't comment.
Lawsuits have been filed. John Overchuck is suing one builder, Lennar.
JOHN K. OVERCHUCK, PLAINTIFF'S ATTORNEY: They're the ones who made the profit. They're the ones who are responsible because they got these people suckered into these houses. ZARRELLA: Lennar says it relied on studies that made no mention of a military range and the military did not show up on property ownership records because it has leased the land.
But it was no secret. Nearly two decades ago, local government said a planned development would have to stop if hazardous military materials turned up.
LAMB: You thought you bought in a good area.
ZARRELLA: Danette Lamb can't believe no one knew there might be bombs in the ground.
LAMB: Somebody knew something. Somebody -- a lot of somebodies turned their heads and tried to make a quick buck.
ZARRELLA: No one knew, now everyone does.
John Zarrella, CNN, Orlando.
(END VIDEOTAPE)
LEMON: Wow. Can you imagine?
Well is it that time of the year already? Talking about the Emmy nominations. They are in, and we'll tell you what shows are poised on the brink of showbiz immortality.
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PHILLIPS: One of golf's most prestigious events under way without its most prestigious player. But, there's still plenty of drama at the British Open.
CNN's Justin Armsden reports from soggy Southport, England.
(BEGIN VIDEOTAPE)
JUSTIN ARMSDEN, CNN CORRESPONDENT (on camera): With the absence of Tiger Woods, the 137th Open Championship was seen as a wide open contest before play got under way here Royal Birkdale on Thursday.
Earlier in the day, blustery wind and driving rain combined to put the world's best players firmly on their back foot and open the contest even further.
(voice-over): The potential for disaster out here was high and there were a few sorry stories to tell in the clubhouse. World #2, Phil Mickelson's poor form in the Open Championship continued during his opening round. Seven bogeys and a triple bogey combined to blow his first round total out to 9 over par 79. He has work to do if he's not to miss the cut in the event for the second year running.
PHIL MICKELSON, 9-OVER AFTER 1ST ROUND: I don't know how to describe it. I mean, you try to go play in it and you get an idea. But, it was very difficult, yes. ARMSDEN: Mickelson will be licking his wounds along side South African, Ernie Elz, who carted 10 over par 80. Conditions have improved but the wind is likely to prevent anyone from posting a breakout score.
The world's top golfers are being forced to fight for survival, even on the first day.
Justin Armsden, CNN, Southport, England.
(END VIDEOTAPE)
LEMON: Well, you know what? A lot of people will tell you it's been a great year for TV. We'll tell you who's up for the best of the best. Today's Emmy nominations.
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LEMON: I hate to interrupt Billy Joel because he -- man, he's amazing. Anyway, that is Billy Joel. The piano man 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 is before Shea is torn down at the end of baseball season. The piano man.
PHILLIPS: Well, let's hear it for basic cable. The Emmy nominations are out. And two non-premium shows are up for best series. That's never happened.
From Hollywood, here's CNN's Kareen Wynter.
(BEGIN VIDEOTAPE)
KAREEN WYNTER, CNN CORRESPONDENT (voice-over): The producers of "Mad Men" may feel like a million bucks after making history as the primetime Emmy nominations were announced. The AMC drama set in the 1960s advertising firm, joined the FX's channel's "Damages," in becoming the first basic cable shows ever to compete for best series. They'll compete for Best Drama, with a show from premium cable, Showtime's "Dexter." And three broadcast TV series, "House," "Lost" and "Boston Legal."
(on camera): In the comedy category, it was NBC's "30 Rock" leading the way with 317 nominations. The show starring Tina Fey, is up for best comedy again. An award it won last year.
(voice-over): The defending champion will go up against another NBC sitcom, "The Office," as well as "Curb Your Enthusiasm," "Entourage" and "Two and a Half Men." Fey scored a nomination for Actress in a Comedy, along with "Samantha Who?"'s, Christina Applegate, "Ugly Betty"'s star, America Ferrera, Julia Louis Dreyfus from "The New Adventures of Old Christine" and "Weeds," Mary -Louise Parker.
Among funny men, Steve Carell was recognized for his work in "The Office." He'll compete for Best Actor in a comedy with "30 Rock"'s Alec Baldwin. Newcomber Lee Pace, of "Pushing Daisies," three time Emmy winner Tony Shalhoub of "Monk" and "Two and a Half Men"'s Charlie Sheen.
In the Actor in a Drama category, "Mad Men"'s Jon Hamm earned the first Emmy nomination of his career as ad-exec Don Draper. He faces competition from "Boston Legal"'s James Spader who won last year. Along with Gabriel Byrne of "In Treatment," Bryan Cranston of "Breaking Bad," "Dexter"'s Michael C. Hall and Hugh Laurie of "House."
Sally Field will defend her title as Best Actress Drama. The star of "Brothers and Sisters" already has three Emmys to her name, not to mention two Oscars. She's up against "Damages" Glenn Close, 2006 Emmy winner Mariska Hargitay of "Law and Order: Special Victim's Unit" and the stars of two TNT dramas, Kyra Sedgwick of "The Closer" and Holly Hunter of "Saving Grace."
The nominations recognize achievement for a TV season that was shortened by a writers strike last winter. And, as the industry prepares to hand out the Emmys, labor unrest continues with the possibility of an afterstrike.
(END VIDEOTAPE)
PHILLIPS: All right, Kareen Wynter. I understand there was a first that happened at these Emmy nominations.
WYNTER: Oh, you know, there has to be some surprise, Kyra.
The Academy added the category of Outstanding Host for a Reality Program. But, here's the best part. Ryan Seacrest of "American Idol" will go head to head with "Project Runway"'s Heidi Klum. Interesting, interesting match up. The hosts of "Survivor," "Dancing With the Stars" and "Deal or No Deal," were also named.
And speaking of deals, Madonna's brother has got a big one. "SHOWBIZ TONIGHT" explores whether he betrayed her by writing a tell- all book. Or did he have every right to reveal what he did? A heated debate tonight on TV's most provocative entertainment news show 11:00 p.m. Eastern and Pacific -- Kyra.
PHILLIPS: Whatever involves Madonna becomes headlines, that's for sure. And it's always provocative.
WYNTER: And we always watch.
PHILLIPS: Yes, that's true. Kareen Wynter, thanks so much.
WYNTER: Bye, Kyra.
PHILLIPS: They're called securities. But secure is a relative term. Angry investors prompt a raid on Wachovia Security's headquarters in St. Louis. We'll see what it's all about and what's at stake.
LEMON: And how about this question? Conservation at any cost? Well, some long-haul pilots accuse a major airline of skimping on fuel to save a little money. The airline says the pilots are out of line.
Hello everyone, I'm Don Lemon live here at the CNN World Headquarters in Atlanta.
PHILLIPS: And I'm Kyra Phillips in New York.
You're live in the CNN NEWSROOM.
