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Floods Swamp North Dakota; Tornadoes Slam Mississippi; New Rules of the Game; Drugs, Guns & Graves; Post Office: Big Losses Due to Big Houses?; Abducted Near the Border

Aired March 26, 2009 - 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: Tornadoes dropped from the sky as a powerful storm system moves across Mississippi. At least two twisters have caused heavy damage in the state in McGee, just south of Jackson. The damage is devastating.

Then in North Dakota, there is nowhere for the water to go but up. In Fargo, the state's biggest city, flood waters from the Red River are expected to break a record that stood for more than a century.

Well, CNN Radio's Steve Kastenbaum and also our Chris Welch are in Fargo.

Chris, what's going on right there behind you right now?

CHRIS WELCH, CNN ALL PLATFORM JOURNALIST: Hey, Kyra, it is actually just me, Chris Welch right now.

What's going on behind me is, the levee system built here - well, it's been being built here over the last week -- is actually now having to be raised. They will - the city of Fargo was told yesterday by the National Weather Service that on Saturday the Red River here is likely to crest at 41 feet. Now that's a record no one's really - no one alive today has ever seen. And the record set back in 1897 may very well be broken.

So what they're doing now is raising the levees that have already been built over the last week another foot to two feet to make sure that nothing breaks.

Now, there's the "what if" question. What if something breaks? Well, now the city is also setting up contingency plans. This has got a few people a little worried. Well, contingency? What does that mean? Is the whole wall going to break down and my home - which, I'm actually standing on someone's deck right now - that home will just be completely flooded and washed out?

Well, the city says, no. Don't worry that much, we're only building contingency walls, you know, because we think that we should be is safe. But we feel that, on the whole, we will be safe, but they want to make sure. They want to make certain.

So, essentially there are a few - particularly more worried people that are between these primary walls and the secondary walls. PHILLIPS: All right, so Chris, you are actually on a family's deck right now. And over your right shoulder, is that the family that is packing the snow to sort of kind of build a levee?

WELCH: Yes. It is a combination of family, neighbors, you know, volunteers. They're all putting -- they're building sandbags and they're moving sandbags. They're now using sleds, because it's - essentially, it hasn't stopped snowing since yesterday morning - to transport these sandbags to the river, which now comes up just about 20 feet, maybe not even that, 20 feet behind me here. And it used to go a lot further back.

PHILLIPS: All right, we'll keep following it.

Chris Welch, appreciate it so much.

And you know, Mississippi Governor Haley Barbour has declared a state of emergency in Simpson County. That's south of Jackson. He did that after this morning's tornado. At least 25 people were hurt there, dozens of homes, businesses and a church were heavily damaged or flattened.

And then hours earlier, another twister damaged nine homes near Meridian, Mississippi, but no injuries reported there.

Chad, you just - doesn't stop for you.

CHAD MYERS, AMS METEOROLOGIST: And now Mt. Redoubt just re- erupted at 65,000 feet. I haven't seen a day like today.

PHILLIPS: All right, you put 25 feet in perspective for me. That was halfway up the White House. Now you said 65...

MYERS: Thirteen miles.

PHILLIPS: Oh, my goodness.

MYERS: Yes. It's the ash cloud now that's has gone up.

Now we've been talking about Mt. Redoubt out in Alaska for some time. It has been erupting. Well, today it has erupted again, a number of times. But the biggest one 65,000 feet. And that is a big eruption to get ash that high. You need a pretty big explosion to push it in there.

Let's focus in a little bit on the flood. What is going on? It's the Red River, it's the Missouri River and all the tributaries in between. We focused in on one town like Fargo, but if you live in a different town and you're suffering, send us an iReport. Love to get it on. Love to show everybody else what you're dealing with as well.

There's Fargo. Fargo is going to be at a flood stage of 41 feet. That doesn't mean anything to anyone. What it means to me is that the old record was 40. It's above the old record set 110 years ago. It is going to be above that record for seven days. So all of this stuff we are trying to build there to hold this water back doesn't just have to last for an hour. It has to last 24 hours a day for the next seven days before the water level begins to go back down again. And that's going to be a real feat. The Army Corps of engineers really on their toes out there. They'll do what they can, but I'm telling you what, this is a biggie.

Also a biggie for Denver, you are in for a blizzard. It's already happening right now. It's going to be10, maybe more inches. Especially to your west, more than 10 inches. We'll get to that in the next half hour. Big-time snows across Colorado -- Kyra.

PHILLIPS: Thanks, Chad.

You mentioned our iReporters, they've been fantastic. They're sending us great pictures and videos the flooding that's got much of North Dakota under water right now. Check out these scenes from Fargo where volunteers are actually working around the clock filling sandbags. Thousands of people giving their time and energy to try and save their city. And they placed hundreds of thousands of sandbags already along the swollen Red River there.

Well, you can share your pictures and videos with us, just log on to iReport.com. Thanks so much.

And if you've been watching CNN or browsing CNN.com or even whitehouse.gov, you probably saw the town hall hit the 21st century. For more than an hour, President Obama answered questions that were e- mailed, webcamed or asked in person. And he did it in real time, or as we like to say, live.

Suzanne Malveaux so it all too.

And Suzanne, you know, you've covered a number of different administrations, this was definitely a first. What stood out to you?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: This was definitely an experiment, Kyra. And White House aides were a little bit nervous to see how it was going to work out. But the president, he did address a number of things that we saw through YouTube videos and texts. He was talking about education, he was talking about health care reform.

But one thing happened, Kyra, that they didn't expect. And that was one question that was quite popular. They had promised that they would go ahead and ask the popular questions, most popular, to the president. One that was gaining a lot of steam over the last 24 or 48 hours was whether or not legalizing marijuana would help improve the economy.

Now, White House aides tell us they promise they wouldn't tell the president to give him a heads up on any of the questions. But then we were told that, yes, they actually did tell the president that was something that was online that was creating quite a buzz.

And so, the president in kind of a joking way said that, look, he understood that this was something that everybody was talking. And then he said, no, I don't think this is actually going to help the economy.

It was one way that they dealt with a sensitive issue. They're talking about transparency and accountability, Kyra, but they did make an exception when they found out that that was something that a lot of folks were talking about.

I want you to take a listen to how he handled this.

(BEGIN VIDEO CLIP)

REP. DONALD MANZULLO (R), FINANCIAL SERVICE COMMITTEE: Do you realize how radical your proposal is?

TIMOTHY GEITHNER, U.S. SECRETARY OF TREASURY: It is not a radical proposal...

MANZULLO: Oh, it's absolutely -- you're talking about seizing private businesses and you don't consider that to be radical?

(END VIDEO CLIP)

MALVEAUX: OK, Kyra, that was the wrong sound there, obviously.

But he was in the town hall setting and he had basically made a joke about it. Making an exception, the White House, to its own rules of how they were going to handle this. Obviously, it's a balancing act here. Whether or not they're getting their message out, get it out in a way that is favorable to the president. But they also, too, want to say, look, we're open to any kinds of questions you that you'd like to pose to the president.

PHILLIPS: OK, we may have had an issue there technology wise, but at least we didn't have to answer any questions about legalizing marijuana like the president did. I mean, it's kind of funny, but it's not really funny. But, well, the president has to be completely transparent. One of the most popular questions sent in was about legalizing marijuana. And so, if he's going to have this type of format, Suzanne, you're right, he's going to have to take all types of different questions.

And you kind of wonder, OK, how do you gauge the success of something like this and do you think you'll see it again? Because there can be a lot of surprises when you deal with things like going online and e-mail.

MALVEAUX: Sure. Sure. I mean, they certainly run that risk. That they might get a question that he's not comfortable answering. And there were some serious questions about legalizing marijuana.

One thing the White House is looking at, they told us there were about 67,000 people who actually saw it live through the internet. We don't know how many people saw it on television. But they also say that there were submissions for those questions, 3.6 million or so.

Now, if you take, I guess, a survey and you think about "American Idol," there are about 30 million that vote for a particular episode on any kind of given week. So, you know, it is about a tenth of the "American Idol" participation. That's pretty good for, you know, something that's been advertised 24 to 48 hours in advance, not primetime. So, I think they thought it went pretty well.

PHILLIPS: Are you telling me you are watching "American Idol"?

(LAUGHTER)

MALVEAUX: I got that figure from somebody else.

PHILLIPS: That's what I thought. I know you better than that. You are always plugged in to the politics.

All right, Suzanne, thanks.

Well, if the president didn't answer your question, we just might. White House Economic Advisor Austan Goolsbee is going to join me in just a few minutes. We're going to put some of the town hall postings to him.

If a company is too big to fail, it shouldn't be too big to regulate or too complicated or well too connected or too sneaky. So says Treasury Secretary Tim Geithner asking Congress to rewrite the rules of the U.S. financial system.

(BEGIN VIDEO CLIP)

GEITHNER: To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game. And the new rules must be simpler and more effectively enforced. They must produce a more stable system. One that protects consumers and investors, rewards innovation, and is able to adapt and evolve with changes in the structure of our financial system.

Our system, the institutions and the major centralized markets must be strong enough and resilient enough to withstand very severe shocks and withstand the effects of a failure of one or more of the largest institutions.

(END VIDEO CLIP)

PHILLIPS: CNN's Brianna Keilar on the Hill.

Brianna, how did the new proposals go over?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, key democrats, Kyra, are onboard. But some republicans saying they're afraid this proposal and the multiple proposals by the Obama administration to reform these financial markets, they're afraid that it's a remedy that might ultimately kill the patient.

And that includes a proposal that we first heard of on Tuesday. That unprecedented ask by the Treasury secretary to give -- for Congress to give the federal government the power to seize and perhaps wind down these companies like AIG. That was at the heart of the most contentious exchange of this hearing that we saw as this hearing wrapped up a short time ago.

Let's listen.

(BEGIN VIDEO CLIP)

MANZULLO: Do you realize how radical your proposal is?

GEITHNER: It is not a radical proposal...

MANZULLO: Oh, it's absolutely -- you're talking about seizing private businesses and you don't consider that to be radical?

GEITHNER: No. This is a prudent, carefully designed proposal to protect our financial system from the...

MANZULLO: If it's prudent and carefully designed, Mr. Secretary, then you would have the answers to some of my questions, such as what size business is subject to this.

(END VIDEO CLIP)

KEILAR: You can see there some republicans discomfort, Kyra, with just how involved the federal government could be getting here. Why are they concerned? Well, because they fear that with so much involvement, it could be overreaching. That ultimately, instead of just regulating it could ultimately stifle the U.S. economy.

We expect this to play out as this issue moves forward and they start talking about writing a bill, moving forward with votes on the, Kyra.

PHILLIPS: And we'll follow it. Brianna Keilar, thanks so much.

A raging war and a growing death toll. It's not happening in a faraway land, it's playing out right next door along the U.S./Mexican border. We'll tell you what every American needs to know straight ahead.

(COMMERCIAL BREAK)

PHILLIPS: Tens of thousands e-mailed their questions to the president. We also want to know what is on your mind. E-mail your questions to mailtothechief@CNN.com. In about 10 minutes, I'll put some of those questions to Austan Goolsbee, one of Mr. Obama's top economic advisers.

(COMMERCIAL BREAK)

PHILLIPS: The raging drug war along the U.S./Mexico border, of course, it's a cause for concern for the Obama administration, but also for anyone thinking of traveling to the border or beyond. Last year alone, more than 6,000 people were killed in drug-related violence, more than double the previous year. The State Department's latest travel alert notes a rise in robberies, homicides, petty thefts and carjackings in Tijuana and northern Baja, California. Juarez, where more than 1,600 people were killed last year, is of special concern.

And this week, the Obama administration unveiled a $700 million plan to help Mexico fight drug cartels. It includes a crack down on weapons and money flowing into Mexico.

Now a look at the faces behind the statistics. An American couple and their kids ambushed and terrorized on a Mexican highway. This hour, they're going to tell you their story in their story in their own words. It's definitely something you need to hear.

So just how threatened are you and me and every other American as Mexico's drug war rages on both sides of the border? CNN posed that question to Secretary of State Hillary Clinton continuing her two-day trip to Mexico. She's visiting police in Mexico City today to show us - or show U.S. support, rather, for their battle against drug cartels.

We asked the secretary if the growing drug violence directly threatens America's national security.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, U.S. SECRETARY OF STATE: It's not an immediate problem. It is a terrible law enforcement problem. We have some of our cities along the border where the violence has washed over and people are being killed and kidnapped. So, we do have a law enforcement problem.

But this is more about trying to act proactively. You know, why would we want this to go on? Especially when President Calderon and the Mexican government are doing everything they know to do to try to defeat this violence.

(END VIDEO CLIP)

PHILLIPS: Well, Secretary Clinton is also meeting with college students in the border city of Monterrey. That's where authorities recently nabbed an alleged drug trafficker suspected in a gun and grenade attack last year on a U.S. consulate building.

Our Anderson Cooper is seeing grim evidence of the growing violence first hand. He's just south of the border right now riding along with the Mexican military. He's actually on the phone with us.

Anderson, I know that you've been heading over toward those mass graves. Have you reached that point yet? If not, maybe you can tell us about the fighting, who it's between and why the brutality is so bad?

ANDERSON COOPER, CNN CORRESPONDENT (via telephone): Well, Kyra, that's really what is so particularly striking about the violence here. You know, there's always been a level of violence associated with the drug trade, but the way people here are getting killed has really shocked even people who have become kind of immune to high levels of violence. We're seeing beheadings, very public executions in some of these border areas along Mexico. And it's really sent a shock wave through society at all levels. It's really been a warning. The beheadings, in particular, are used by one of the cartels as a kind of a signature way that they kill and also a warning to others about going against that cartel or betraying that cartel.

So that's one of the things that's particularly shocking. And you know, essentially what we've seen in Juarez and elsewhere, it's a battle over turf. It's a battle over the control over lucrative drug smuggling routes into the United States. And it's a battle between a handful of very powerful drug cartels.

What the Mexican government says that what gives them some hope, some glimmers of hope, they say, is that even though the death toll has doubled in this past year and that was doubled from the year before that, they say they've been able to have some high-level arrests and increasing numbers of drug traffickers are being extradited to the United States. And, that they're actually breaking up some of these larger more powerful entrenched groups.

And they're hoping one day to be able to break down these larger drug cartels, make it smaller, less organized drug groups which are trying to run drugs into the United States. And then it becomes a law enforcement issue here in Mexico and not so much a national security issue, which it is right now.

PHILLIPS: Anderson, what about drug use? I mean, we know how bad it is in the United States, what about in Mexico? I mean, are these cartels making money specifically because of such a high demand for drugs in the U.S. or is there a lot of use within Mexico as well?

COOPER: Yes, without a doubt the primary market is the United States. But there is a growing drug problem in Mexico itself, particularly in some of these border states and that's a concern. I talked to the attorney general a couple of months ago, that's certainly on his radar here in Mexico and it's become a concern to a lot of local officials.

But clearly, without a doubt, the vast majority of these drugs are going into the United States. And we're talking about - I mean, it's not just, you know, marijuana, it's not just cocaine. It's also methamphetamine, it's also heroin. So, basically, any drug sold in the United States, more than likely it has come through Mexico.

PHILLIPS: Well, you're with the Mexican military, a huge target for the cartels. Do you feel safe?

COOPER: You know, yes. I mean, I think I have a relatively high threshold for these sorts of things.

But, I mean, look, these guys are certainly - these are on the front lines of a very violent war. And we have seen large numbers of police, local, federal police who have been killed, military who have been killed here over the last two years. It is a very violent war. There's a very serious situation and these people are on the front lines every single day. PHILLIPS: Great work, Anderson. Appreciate your time.

COOPER: Sure thing, Kyra.

PHILLIPS: And be sure to tune in tonight for an "AC 360" report "THE WAR NEXT DOOR" Anderson reports live from the U.S./Mexican border. That comes your way 10:00 p.m. Eastern only on CNN.

(COMMERCIAL BREAK)

PHILLIPS: Noted historian and civil rights scholar John Hope Franklin has died. He was 94. Franklin is best known for his chronicle of black history in America, "From Slavery to Freedom." He was also instrumental in ending school segregation with his work on the famed Supreme Court case, Brown versus the Board of Education. He was the first African-American department chair at Duke University.

President Barack Obama had this to say, "Because of the life that John Hope Franklin lived... we all have a richer understanding of who we are as Americans and our journey as a people. Dr. Franklin will be deeply missed, but his legacy is one that will surely endure."

(COMMERCIAL BREAK)

PHILLIPS: Well, we've seen a few glimmers of economic hope this week, but not in today's news. From the labor front, first time claims for unemployment benefits rose last week to 652,000. Continuing claims now top 5.5 million, the most ever.

Well, we call it, "Mail to the Chief." Your chance to send us your questions for top White House officials. And President Obama actually answered e-mails from the White House website today. We've been collecting some of the questions that Mr. Obama didn't get a chance to get to and as well some questions that you e-mailed us here into the NEWSROOM. We're going to pose them to Austan Goolsbee, one of President Obama's top economic advisors.

I thought it went pretty well last time, Austan. You've come back for a little more abuse.

AUSTAN GOOLSBEE, ECONOMIC ADVISER TO THE PRESIDENT: Yes. Hopefully, I can answer them. Some of those are pretty tough questions.

PHILLIPS: I know - hey, we've got some pretty smart viewers, my friend.

All right, let's just get right to it. OK, do the best that we can here. This comes from J.R. in Florida, Austan. He said, "Are there any plans to put Americans to work in a service corps situation maybe similar to what was done with the Civilian Conservation Corps in the Roosevelt years?"

Interesting question, because it did make a difference in hard economic times for people. GOOLSBEE: Yes. Look, the centerpiece of J.R.'s question is around a key decision that was made in the recovery package, and that is what share of the jobs created do we want to be government jobs as opposed to private-sector jobs?

So, the decision that the president made when they went through with the recovery package is that it's going to going to create up to 3.5 to four million jobs, but we wanted 90 percent to be in the private sector. And the thought is they would probably last longer if they were in the private sector.

So there is - there are construction projects, there are a variety of things similar to what they did back in the day, but most of the effort is through the private sector.

PHILLIPS: Got it.

All right, this one comes from one of our viewers, he lists it "Jobless in Texas" and his question is, "Are you going to require companies, especially those getting federal bailout money, to hire Americans first before foreign workers here on visas or ones that are here illegally?"

GOOLSBEE: Well, I don't know the exact details on the immigration status. It's totally clear that the centerpiece effort of the president's recovery package and in the budget he is outlining is to restore jobs to Americans and get the American unemployment rate down.

Now, we've got to do that, obviously, in international context. But I think the key focus is to try to get Americans back into their jobs. And, as you said from the unemployment claims this week, I mean, it's an uphill climb. We've lost more than four million jobs since the recession began.

PHILLIPS: Indeed.

OK, this one coming from Debbie in California - Oh, no, I'm sorry, this is Jeff in Pittsburgh, Austan. I'm sorry. "I've heard repeatedly that we cannot allow the big banks to fail. If we are going to be on the hook to bail out such banks in these circumstances, shouldn't we break up the banks so they won't be so big next time?"

GOOLSBEE: Well, look, what Jeff is pointing at there is the centerpiece of what our new financial regulatory regime needs to be. And you saw Secretary Geithner start outlining that today and you'll hear more about that in the weeks to come.

And that is we cannot sustain a financial system and we threaten our own economy when you can have insurance companies strapping hedge funds on their back, when you can have different bank or different financial institutions evading rules under one regime to get it into some other one so that they can get away with shenanigans that the taxpayers have to foot the bill for. We have to bring a stop to that. And it may not be the form of banning anything bigger than size "X" but it is going to be of the form let's protect the taxpayer and let's have some prudence when the American people's money is at risk.

PHILLIPS: Got it.

This one coming from Debbie in California, "I pay my mortgage and have excellent credit. I am not in danger of losing my home, but I do struggle. I want to refinance at today's lower rates. I can't, because my home value has decreased. What will any of your programs do to help people like me?"

GOOLSBEE: Well, in the president's Mortgage Assistance Program, depending on what her circumstances are there in California, she might be exactly the kind of person that one of those pieces was designed to help. And that is, if you have a regular mortgage, a prime conforming mortgage, you either have to have 80 percent down -- 20 percent down and 80 percent loan-to-value rate or you have to get private mortgage insurance.

What has happened to a bunch of people is the house value has gone down so they can't refinance. And the president's program enabled anybody with a conforming mortgage to refinance at today's low rates. That what his program would do. It's helped to get interest rates down.

And you've seen a big rise in refinancings lately compared to where they were last year. And it sounds like exactly the program she might qualify for.

PHILLIPS: Austan Goolsbee, appreciate your time today.

What did you think of the town hall meeting?

GOOLSBEE: It was pretty interesting. An electronic one.

PHILLIPS: Yes, it was. All right. Well, we're going to continue to request you. You know, there's all these questions and if the president can't get to all of them, we're counting on you and the rest of the staff.

GOOLSBEE: OK

PHILLIPS: Thanks, Austan.

GOOLSBEE: Take care.

PHILLIPS: Well, we recently reported on the Postal Service buying expensive houses. Now, the postmaster general is pleading for government help.

First, Robert Gibbs stepping up to the podium at the White House. We are going to go ahead and listen in to the news conference - or press conference, rather, at the White House.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: How is everyone? Good afternoon. No announcements, so we'll just start.

QUESTION: Thanks, Robert. On Afghanistan, two topics, please. General Eikenberry said that allies need to do more towards the war effort. And, of course, you've been hearing this for some time. But I'm wondering what specifically the president wants from NATO allies. Is he going to have a specific ask for more troops? Can you talk about that?

GIBBS: Well, let me give you a little bit broader answer on Afghanistan and -- and our Afghanistan-Pakistan review. The president is making calls and briefing members of Congress based on the conclusion of that review, which the president will announce tomorrow at the White House. So I'm not going to, predictably, get in front of that.

I think you've heard both the president -- both President Obama and candidate Obama discuss the need for a greater -- greater influx of -- of help and resources in a very dangerous part of the world.

We'll have more to say on the comprehensive policy tomorrow. I will say just broadly that the -- the calls and the consultation that are happening today are the end of a long process of consulting with members of Congress and coordinating with the -- with international leaders about this.

And the president, like I said, will have more to say about this tomorrow.

QUESTION: Is it fair to say -- just a quick follow-up -- is it fair to say on a broad level that there will be requests for more troops from the international community?

GIBBS: I -- I anticipate this will be a continuing thing that -- that the president will discuss in the coming weeks.

QUESTION: And also, quickly, on autos, in the town hall today, the president said that he's expecting automakers -- that they must be willing to restructure. Does the president think that U.S. automakers make cars that Americans want to buy?

GIBBS: Well, he owns one of them, so I think the answer to that is safely yes.

QUESTION: What does he own?

GIBBS: A Ford Escape Hybrid, like his press secretary. It's a nice car. It really is.

QUESTION: Where is it?

GIBBS: It's on West Exec. It's gray.

QUESTION: No, not yours.

(LAUGHTER)

GIBBS: Oh. QUESTION: Is it in the motorcade or...

GIBBS: No, it's...

QUESTION: Is this a new (OFF-MIKE)

QUESTION: Is this brought to you by Ford?

GIBBS: Oh, no.

(CROSSTALK)

QUESTION: ... endorsement?

GIBBS: No, I'm -- I'm a proud Ford owner, and I'm happy to say that. No, the president's Ford is back in Chicago, probably for good reason. The Secret Service doesn't let him drive anymore, which I know he misses.

But, no, obviously, the -- the president believes that American automakers are building cars that -- that Americans want to buy and that are also being sold overseas.

But I think it's important to understand, even what people would consider to be the most successful auto companies right now are in a global economic slowdown. All have been severely hurt. I think I mentioned a few weeks ago that, you know, Toyota had sought help from the Japanese government.

It is hard -- I think the president used some statistics today... PHILLIPS: Continue to monitor the White House press conference there with Robert Gibbs. You can also go to CNN.com/live.

We're going to take a quick break. We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Well, in North Dakota, a disaster that could break records. Flood waters driven people from their homes across the state including Fargo, the biggest city, and Bismarck, the capital. And it's only going to get worst. By Saturday, the Red River, in Fargo, is expected to reach its highest recorded level breaking the record set in 1897.

IReporters are letting us know how serious the situation is.

(BEGIN VIDEO CLIP)

RICK KURTZ, CNN IREPORTER: Just today we have - it looks like blizzard conditions. They closed all of Grand Forks down. So nobody is going to work or going anywhere, actually.

I see a lot of the river coming up. I can see a lot of ice moving. I think this storm had slowed the water down, but it's still -- it's going to come regardless.

(END VIDEO CLIP)

PHILLIPS: Chad Myers keeping track of everything that's happening right now.

You know, we keep talking about it could break records. When will it break the record? What is it going to take to break the record?

CHAD MYERS, AMS METEOROLOGIST: Probably tomorrow. Oh, it's going to go up that high.

PHILLIPS: OK.

MYERS: They already know how much is in all the - you know, all the other he creeks and streams that are going to get down into that river, into that Red River.

The problem is is that, you know, think about how many people lived there in 1897. About 5,000 maybe.

PHILLIPS: Yes, not many. How high did the water get?

MYERS: It was 41 feet high.

PHILLIPS: OK. OK.

MYERS: Almost 41 feet, and that's where we are now and that's where we're going, to about 41 feet.

But you know, we also have these levees in place. These levees actually make the river higher because the river can't spread out into the flood plain like it's supposed to. That's why they call it the flood plain, it's supposed to flood. It can't flood because now we are trying to keep this river in this bank and keep it away from the cities. So we have all of this getting into a funnel and this funnel is going to be the problem.

Also the funnel, Kyra, the problem is going to be we're going to try to funnel and keep that water in these sandbagged little area for seven days. We are going to keep this river at the flood stage or above - record flood stage - for seven solid days.

And the Red River actually flows north, which is an odd river for the U.S. But it flows up into Lake Winnipeg into Canada.

But Fargo, all of these areas, every one that you see pink, those are all significant flooding. Record flooding going on all the way up and down the Red River. And that bubble of water still has more places to go.

One more thing I want to talk about very quickly is Denver, Colorado. There is a live shot from the DOT and I-70 in Colfax. I wouldn't want to be in any one of those cars doing zero miles per hour. Expecting major blizzard in Colorado, Kansas, Oklahoma, Texas. Amarillo, Texas, talking about drifts now ten to 20 feet. Could you imagine? Can you imagine a drift 20 feet? Talking about water 20 feet, how about a snow drift 20 feet high? Big problems everywhere.

PHILLIPS: You know, I've never I have never lived in that type of situation. But we've covered it, and I just can't imagine knowing it is coming yearly. Or at least it may come on an annual basis. And sometimes you can't even prepare for these things.

MYERS: And then the people in the high plains, all their cattle are out there too.

PHILLIPS: Oh! We are going to see the agricultural impact.

MYERS: Absolutely.

PHILLIPS: We were talking about that this morning.

All right. We'll follow that. Definitely on the news front. Thanks, Chad.

MYERS: Sure.

PHILLIPS: Well, we recently reported on the Postal Service buying expensive houses when it transfers some employees. Now the postmaster general is pleading for government help. What's going on here? Our Special Investigations Unit is on the case.

(COMMERCIAL BREAK)

PHILLIPS: Well, the Postal Service is cutting jobs, closing offices and offering early retirement to workers. It is expected to lose $6 billion this year. So, why is it buying million-dollar homes so employees can move?

The postmaster general was on Capitol Hill for a hearing yesterday. Our Special Investigations Unit correspondent Abbie Boudreau tried to ask him that very question.

(BEGIN VIDEOTAPE)

ABBIE BOUDREAU, CNN CORRESPONDENT: Excuse me, Mr. Potter. Hi. My name is Abbie Boudreau and I'm with CNN and I was just wondering...

(voice-over): Postmaster General John Potter was in no mood to talk. We've been asking to interview him for weeks, but were turned down. We caught up with him in the hallway after the hearing.

(on camera): You've been talking about cutting back...

(voice-over): But then, on a dime, he stopped debt in his tracks, pushed me aside and slipped into a side door.

(on camera): Someone's, like, slamming the door on me.

(voice-over): Just moments before that, Potter was before the House Oversight Committee talking about the Postal Service's financial crisis and his idea to cut back delivery from six days to five.

JOHN POTTER, POSTMASTER GENERAL: Based on current volume projections, we'll come approximately $6 billion short of breaking even this year.

BOUDREAU: Committee members and the Postal Service inspector general also responded to CNN's recent investigation into the Postal Service's relocation policy.

DAVID WILLIAMS, USPS INSPECTOR GENERAL: When CNN first broke the story, we began -- Senator Grassley called us and we worked out a request for an audit.

REP. JASON CHAFFETZ (R), UTAH: It seems like it's too lucrative and too expensive. The questions about giving out bonuses to an organization that is operating in the red, it's doesn't pass the basic sniff test.

BOUDREAU: Earlier this month, CNN reported the Postal Service through Cartus Relocation, a government contractor, purchased more than 1,000 employee homes in just two years. The average cost of those homes, $257,000. The Postal Service also bought 14 homes that were $1 million or more.

A Postal Service spokesman said all but one of those houses, this six-bedroom lake front mansion with an indoor swimming pool and spa, were sold.

On average, the Postal Service says it lost $58,000 for each home purchased and later resold. But when we asked the Postal Service about how much it lost on those million-dollar homes, we learned the average loss was a whopping $582,000 per house.

A spokesman blames that high number on a house purchase at the height of the Florida real estate bubble which skewed the average.

A few hours after our brief hallway encounter, Potter changed his mind and wanted to talk.

(on camera): Postmaster General Jack Potter, nice to see you again. Why did you avoid my questions today in the hallway?

POTTER: I wasn't avoiding your questions. I was being ushered out of the Congress by my staff.

BOUDREAU (voice-over): Surprisingly, Potter said he had no idea about the million-dollar houses.

POTTER: When you brought it to our attention, I was really amazed and we spent time to look into that policy. We found out we did have an uncapped value on a price of a house that could participate. We have since gone back and reviewed that entire policy.

(END VIDEOTAPE)

BOUDREAU: When we first reported this story a few weeks ago, there was no limit on how much the Postal Service would pay to buy a home. Then, at the time our story aired, it put a $1 million cap in place. And now, the postmaster general tells us, they're planning that amount even further.

PHILLIPS: OK, he wasn't avoiding you, he was practicing his basketball - the head fake, right? Or whatever it's called.

(LAUGHTER)

BOUDREAU: I mean, you have to be quick on your feet to catch up with that man, I will tell you that.

PHILLIPS: Yes you do. All right, when can we expect to see the changes?

BOUDREAU: Sixty to 90 days, that's what they're saying. At that point, after 60 to 90 days, the new policy will be in place. And at that point, the postmaster general says, he promises, no more $1 million-plus houses.

PHILLIPS: Remind me not to do anything wrong. I don't want Abbie Boudreau chasing me down the hallway.

Good job. Great job.

BOUDREAU: OK, thanks.

PHILLIPS: Well, they look like a contented couple, but they can't sleep at night, believe it or not. An American family haunted by a lifetime of nightmares after a trip to Mexico goes horribly wrong. We're going to hear their story in their own words. Believe me, you won't want to miss it.

(COMMERCIAL BREAK)

PHILLIPS: Well, as always, "Team Sanchez" back there working on the next hour of CNN NEWSROOM.

What do you have, Rick?

RICK SANCHEZ, CNN ANCHOR: You know, it's funny. Just as you were coming to me, the microphone wire snapped. But still I can hear you, so I will respond to your question.

We just saw a video a little while ago, you are not going to believe this, Kyra. It's an NFL football player, he's going to the hospital - he's rushing to the hospital, admittedly so. He even took a red light at the very end. But the reason is his mother-in-law is in the hospital dying. She's about to die.

A police officer pulls him over. Now, I watched this exchange moments ago and we're going to be able to show it to you in our show. The officer starts arguing with him and detaining him. He and his family is saying, my mother is on death's door. It's his mother-in- law, her mother - his wife. They run off. The officer keeps him there. Eventually, the woman dies in a hospital. Nurses come out, other police officers from the Plano Police Department come out and try and tell the officer, look, give this guy a break. She's dying.

Well, I'll tell you, it's become a rigmarole. The Dallas Police Department is now issuing an apology. They're taking away the ticket that had been given to him.

But, you know, nothing displays human drama like human drama if you actually watch it. So, when you watch this video today at 3:00, you'll actually see. And you'll probably be able to make decisions as to who acted in which way; who was right and who was wrong.

Also, the big story, of course, nationally today is about the uber or super-regulations that were introduced today by Secretary of Treasury Tim Geithner. This is interesting. I mean, not only is he doing away with what was already - is he bringing back what was done away with, but he's putting even more rules and regs in. And we're going to tell you exactly what they are and what people are saying about them.

PHILLIPS: Looking forward to it. Thanks, Rick.

A family's vacation in Mexico takes a horrible turn when masked gunmen surround their van. And from there, things only got worse.

(COMMERCIAL BREAK)

PHILLIPS: Well, an American family nightmare. Their annual family vacation in Mexico turned to horror when masked gunmen ambushed their car and left them scarred for life.

CNN's Randi Kaye has their story.

(BEGIN VIDEOTAPE)

DEBRA HALL, KIDNAPPED IN MEXICO: We're not anyone to them.

RANDI KAYE, CNN CORRESPONDENT (voice-over): Debra and Chris Hall don't sleep very well, though it's better now. Nightmares that used to keep them awake for days, now keep them up for hours.

D. HALL: They first got in the truck and opened the back door. Our sons said, "oh, God. Please, no, God."

And if I live to be a hundred, I will always hear that tone in his voice.

KAYE: Debra and her husband live near San Diego and for years since their teens they've been driving into Mexico to vacation but they will never go back again, not now. Not after their last trip.

(on camera): The Halls were driving along this road in Mexico just about seven miles from the U.S. border. It was a cold foggy November night shortly before midnight when they suddenly saw flashing lights in their rearview mirror. They thought it was police so they pulled over. Within seconds they were surrounded by ten masked gunmen all dressed in black pointing guns at their heads.

D. HALL: And they said, "We're getting in. Shut up. Put your heads down, we're going to kill you."

KAYE (voice-over): The halls were pulling a camper that was covered with race car stickers and the gunman demanded to know where the race car was. A prize that could have been traded for cash or drugs.

(on camera): The Halls say their abductors drove them about a mile or so into the hills. They demanded jewelry, including Debra's wedding ring, and they ripped the radio and navigation system out of their truck. Then they told them all to kneel face down in a ditch.

(voice-over): The gunman covered them with a sleeping bag.

D. HALL: I thought they were going to kill us then. They were covering us up with a sleeping bag so that they wouldn't get blood on them.

CHRIS HALL, KIDNAPPED IN MEXICO: I tried to cover my daughter with my body to protect her.

KAYE (on camera): Did you talk to her?

C. HALL: Yes.

KAYE: What did you say?

C. HALL: I just kept telling her, "Sorry."

DIVINIA HALL, KIDNAPPED IN MEXICO: I really thought we weren't coming home. And I was kind of facing my own mortality. I was OK with the fact that I was with them and that if it was my time to go, it was my time to go and at least I was with my family and I knew that they knew I loved them and I knew that they loved me, too.

KAYE (voice-over): They were face-down in a ditch waiting to be executed. Time passed slowly. Until, suddenly, the Halls realized they were alone. The gunmen had left in their truck. It took them two hours to walk to a town. Baha Police drove them back across the border.

(on camera): The Halls had no money and no I.D. when they got to this McDonald's on the U.S. side of the border. They told me someone gave them a quarter so they could use a pay phone and call a relative to pick them up.

(voice-over): They filed a report with the San Diego Police and this one with the Mexican consulate. But the men who terrorized the family were never caught. Even worse, the gunmen know where they live. They stole their drivers' licenses. Aware that cartel hit men are striking on the U.S. side of the border, they don't feel safe. It's as if fear is always stalking them. And still, they feel like they lost much more.

(on camera): You'll never go back?

D. HALL: No, no way. No way. No way. And that is sad.

KAYE (voice-over): The country they loved stolen from them in the middle of the night on a Mexican highway.

Randi Kaye, CNN, on the U.S./Mexico border.

(END VIDEOTAPE)

PHILLIPS: Tune in tonight for an "AC 360" special "THE WAR NEXT DOOR" that is tonight 10:00 p.m. Eastern.

I'm Kyra Phillips. See you tomorrow. Rick Sanchez takes it from here.