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Nearly Twenty-Year Kidnapee Found; Farewells for Senator Kennedy

Aired August 28, 2009 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: A family's prayers are answered. A long-lost child returns home as an adult. Jaycee Lee Dugard is also now a mother. Police say the convicted sex offender who abducted her in 1991 has fathered her two children, all three reportedly kept locked away in a secret backyard compound. It's a story that is both remarkable and horrific.

CNN's Dan Simon is joining us now live from Antioch, California with more on this.

So, Dan, if you could, just describe how authorities found out about all of this.

SIMON: Yes, Heidi, this all really came to light on Tuesday, August 25th, just a few days ago. So Garrido shows up at the UCAL Berkeley. He is there with two kids. And apparently he wants to pass out some kind of literature to students on campus. And to do that, you need to have a permit, and you need to have a background check.

And so, a security officer on campus confronts Garrido as he wants to pass out this literature, asked him, apparently, for his drivers license. Then that officer, that security officer runs a background check on Garrido. And there it is determined that this man is a registered sex offender and that he has a criminal record.

The security officer was suspicious about everything that he saw, the fact that Garrido was there with two small children. That leads to a meeting with Garrido's parole officer the following day. That is in San Francisco.

So Garrido shows up at that meeting with his parole officer with the victim in this case, Jaycee Dugard. He is also there with his wife, Nancy Garrido, along with two children that he fathered with Jaycee Dugard. I know it's a bit confusing.

But at the end of the day, the parole officer discovers what's going on. He alerts the local police department. And there you have Mr. Garrido arrested, Heidi.

COLLINS: Yes, and it's just an unbelievable story as we continue to look at those pictures there. This is a mug shot, if you will.

How were they able to keep this a secret for so many years? I mean, if my understanding is right, there were reports of sheriff deputies or police going to the home during this time and not really noticing anything. Is that right? SIMON: You know, it's such a good question. And we're hoping to get to that backyard later in the day to have a look for ourselves. But the way it has been described, there was a backyard within a backyard. There were a series of tents and sheds that were apparently covered with some kind of blue tarp. That is where Jaycee Dugard apparently spent the last 18 years, living in the backyard of the house with her two children, children fathered by the suspect in this case, Mr. Garrido.

I want you to listen now to authorities as they describe what that backyard looked like. Take a look.

(BEGIN TAPE)

KOLLAR: The search of the residence revealed a hidden backyard within a backyard. The hidden backyard had sheds, tents and outbuildings where Jaycee and the girls spent most of their lives. There was a vehicle hidden in the backyard that matched the vehicle originally described at the time of the abduction. The tents and outbuildings in the backyard were placed in a strategic arrangement to inhibit outside viewing and to isolate the victims from outside contact.

(END TAPE)

SIMON: Heidi, I have to tell you we spoke to one neighbor who says he saw a couple of children living in the backyard of this house. He claims that he called the local sheriff's department two and-a-half years ago. He says authorities came out, talked to the Garridos. There was sort of a brief conversation. But the home was never searched, and really nothing ever came of it.

But, you know, according to this neighbor and some others here who live in this working class area in Antioch, California, there were some suspicions. But, of course, everybody's surprised in terms of the extent of what happened.

COLLINS: Yes. It's just an unbelievable story of Phil Garrido and his wife, Nancy now in custody as we continue to try and learn more here.

Dan Simon, sure do appreciate that. In fact, as you mentioned, neighbors say there were some clues that strange things were taking place next door. In fact, here's what some of them had to say.

(BEGIN TAPE)

(UNKNOWN): The gate bothered (ph) me. Ching, cling, cling, cling -- he in and out through the back.

(UNKNOWN): Weirdos, definitely they weren't the -- they weren't average people. You could just tell by looking at them and at the way that they walked around and stuff. They were just like -- you kind of got the creeps from them. You know?

(UNKNOWN): (inaudible) saw it on the Internet. (UNKNOWN): He let me know he had a past. He said that, you know, he was in prison a while back. He was in prison for 11 years for a crime against a woman.

COLLINS: Most neighbors say they had no idea that anyone other than the suspect and his wife lived on that property.

The public is getting another chance to pay their respects to Senator Ted Kennedy today. People are lining up at the JFK Library in Boston for a public viewing. His body will lie in repose until 3 o'clock this afternoon.

CNN's Deborah Feyerick is outside the library for us now this morning.

Hi there once again, Deb. It certainly seems like that crowd has really not let up.

FEYERICK: It hasn't let up. As a matter of fact, we want to show you something very, very interesting. As we push in to this gentleman in the dark suit shaking hands online, that is Tim Schriver. OK? That is one -- a member of the Kennedy family. If you can see him there -- farther down is Cara Kennedy, Senator Ted Kennedy's daughter, and her two children, Kennedy's grandchildren.

They are greeting people. They are really making this very personal, thanking people for coming out, for paying respects to the senator. And so, you really get a sense that there's a sense of family here, that they're not taking for granted that so many people have come individually.

Now, inside people are filing past the casket, as they have all morning. There were so many people online that actually they opened up the doors about 15 minutes early. And you talk to people, and they'll tell you the issue is civil rights or gay rights or reproductive rights. Everybody's come here for their own personal reason.

And among those people we've got Nicholas and Jeanne and Tish Kasongo.

You met the senator. You're part of the immigrant community here. Tell me what his -- what he means to you.

N. KASONGO: Senator Kennedy mean a lot to us. There is no way to find words to describe that. First of all, when you meet him, you found that human face, a great and important politician who still has a heart and will listen to you, making you feel human. You don't feel that gap (ph) between an authority and you, a simple assistant (ph).

FEYERICK: And clearly, that's got to matter. And because of the fact that he made you feel that you mattered, coming here first generation. Describe that.

T. KASONGO: I think we feel like we are in our country, too, that we are adopted and we are not strange. And I feel that... FEYERICK: So he had the ability to make you feel welcome as you started your life here?

J. KASONGO: Yes. And also I wanted to mention that, you know, it's because of him and the work he did for us, for the immigrants that we are here today. I can proudly stand here and say that I am, you know, citizen of this country. I went to school in this country. I got my education. I am productive member of this society and as well as productive in the society of the Congo, these people.

FEYERICK: Good for you. And what makes this feel so special, Heidi -- and that is is that everybody who is here today really has an individual, personal connection, both to Senator Kennedy and also to the Kennedy family. And that's what's so incredible.

Oftentimes you'll see people turn out for some sort of celebrity. But here it's really as if they're paying respect to the family and that the family is here greeting them and thanking them for coming.

Heidi?

COLLINS: Yes. It's obvious that they feel like they really knew the senator, or at least some of the members of the Kennedy family. All right, Deb Feyerick live for us there. Sure do appreciate it.

I want to remind everybody also that you can stay with CNN for special coverage of the life and death of Senator Kennedy. His body is scheduled to lie in repose at the JFK Library until 3 o'clock eastern this afternoon. Then a private memorial takes place at the library beginning at 7 o'clock tonight.

Tomorrow morning, a private funeral mass gets underway in Boston at 10:30. And then there's a burial service at Arlington National Cemetery. That's where the senator will be laid to rest, near his slain brothers, John and Robert.

Dangerous times in Southern and Central California. Wild fires are burning out of control around Los Angeles County and Monterey County fueled by all of the dry brush there. In fact, take a look at what's happened to some of the homes near Rancho Palos Verdes (ph). Thousands of acres have actually burned there. Thousands of families have had to evacuate as well. We'll get the very latest on that in just a few moments.

Meanwhile, it was a place where there were no whites only signs. And this week the nation's first African-American president is visiting. We'll take you there coming up.

(COMMERCIAL BREAK)

COLLINS: You may think of the first family's vacation spot as a playground for the rich and famous. But Martha's Vineyard actually has a history of welcoming rich and poor, black and white. CNN's Dan Lothian explains.

LOTHIAN: When President Obama played his first round of golf on Martha's Vineyard and when they all went out to eat at a local restaurant, the first family chose the town of Oak Bluffs, a picturesque seaside community that's long been a haven for African- Americans where decades ago the color of your skin didn't close the door.

(UNKNOWN): The colored only, white only signs were up throughout much of the 20th century. And so, this was a place that didn't have the signs, didn't have the barriers to integration.

LOTHIAN: Word spread quickly. And African-Americans who visited the island came to especially enjoy this beach, a tiny sliver of land that's often referred to as the ink well.

Charles Ogletree, who is a Harvard professor, Obama friend and a 15-year summer resident says the ink well became a kind of community meeting place for African-Americans and remains that way today.

OGLETREE: They're exercising every morning. They're swimming every morning. There's not a house that's not a temple (ph). It really is just out in the water, folks chilling and having a great time there.

(UNKNOWN): This shot, I think, is really quite telling.

LOTHIAN: At the Martha's Vineyard museum, the history of African-Americans on the island is traced back to the 18th century. Some were slaves who when freed made a home here. Later other blacks came in search of good jobs.

(UNKNOWN): You could get on a ship, a whaling ship. And in the 19th century you had these multi-ethnic and multi-racial whaling vessels.

LOTHIAN: And while other sitting presidents like Ulysses S. Grant and Bill Clinton have visited here, historians say Mr. Obama's vacation at this 28 and-a-half acre farm in Chilmark carries more weight and draws attention to the rich history that Carrie Tankard (ph) is promoting with the heritage trail -- 22 sites honoring people of color on the island.

TANKARD (ph): We uncovered headstones and things. You know, you can put your hands on it. You can see it. It's just a feeling you can't describe. We just want them to know that we were here.

LOTHIAN: Martha's Vineyard, a vacation destination for the first family that some see as another chapter in the island's deep African- American history.

Now, later today a group of prominent African-Americans will be holding an event here. It's a ground-breaking for a housing project, but also kicking off the restoration of the oldest African-American church on Martha's Vineyard, 115 years old. It just gives you a sense of the ongoing effort here to shine the spotlight on what African- Americans have done on the island.

Heidi? COLLINS: Yes, and the president is going to be making some comments, Dan. What is he expected to say?

LOTHIAN: That's right. The president -- and this is at the mass, the funeral mass for Senator Kennedy. They will be leaving the island later today headed to Boston to try to get into the city ahead of what's expected to be some bad weather. But he and the first lady will be attending that funeral or mass. And the president expected to make some very personal comments, we're told, about the impact that Senator Kennedy had on his life from a new senator to a campaign to president.

COLLINS: All right, Dan Lothian for us this morning. Thanks so much, Dan, appreciate that.

The son of a CIA double agent has pleaded guilty to spying for Russia just like his father. Federal authorities say Nathaniel Nicholson (ph) was, in fact, enlisted by his father. He faces more than 20 years in prison when he is sentenced in January. His father, Jim Nicholson, is serving 23 years. He's the highest ranking CIA officer to ever be convicted of espionage.

Americans with life-threatening illnesses traveling to Mexico in search of treatment and maybe even a cure.

(COMMERCIAL BREAK)

COLLINS: A look at our top stories now. A new set of killings rocks the college campus of Virginia Tech. Authorities say they are now treating the deaths of two students as a double homicide. The bodies of 18-year-old Heidi Lyn Childs (ph) and 19-year-old David Lee Mesler (ph) were found in the nearby Jefferson National Forest. Both appear to have been shot.

Two years ago, as you remember, at Virginia Tech a student gunman killed 32 others and himself. In January a doctoral student beheaded a fellow student in a campus cafe.

Police say a man shot and killed four people at a home near Lawrenceville, Georgia just outside of Atlanta. Investigators say the man accused of the killings lived at the home and was arrested early this morning when he drove back to the scene. A four-year-old girl who was also shot is recovering at the hospital.

Many Americans fighting life-threatening diseases like cancer are traveling to Mexico for treatment, a place where medical care can be cheaper and alternative methods are more accepted. In today's health care in focus, CNN journalist, John Tiorgi (ph) profiled cancer patient who traveled across the Mexican border in search of a cure.

(UNKNOWN): How have you been?

FISHER (ph): Pretty good.

(UNKNOWN): Yes? FISHER (ph): Hanging in there. My name's Denise Fisher (ph). And I am from Alamo, California, which is in the San Francisco Bay area. I've just arrived in the San Diego airport. And I'm going to be going to Oasis of Hope Hospital in Tijuana, Mexico.

I think we've crossed. People sent me an article about Americans being killed in Tijuana. Other people called and said, you know, the swine flu is way too dangerous and you shouldn't go there. We really felt safety was not going to be an issue.

Here we are. (inaudible)

FISHER (ph): Home sweet home. I am a nurse anesthetist. My husband, David Fisher (ph), is a general surgeon. In 2005 they found a big chest mass, a tumor. Thomas just is starting an I.V. Then he'll hook up the first thing that I'm getting, which is genoxil (ph), a low-dose chemotherapy. My husband said to me one night, I feel like you've given up. I feel like you're just going to accept it and die. And if that's what you want to do, I will support you in that. But I really want you to fight.

When I first was diagnosed and my oncologist gave me this long line of chemos that would eventually kill me, you know, I was not happy. When I came to Mexico, he basically said I hate Mexican clinics.

(UNKNOWN): Hi, Denise. How are you doing?

FISHER (ph): Very Good. Thank you.

(UNKNOWN): So good to see you again.

We have been working very diligently in changing the image of quackery in Mexico, especially in Tijuana. And I'm sure there are some. But there are some quacks all over the world. What we're doing here and we've done for the last 46 years is scientifically-based therapies.

(UNKNOWN): Alternative cancer treatment encompasses really many different approaches that different define differently. But basically, these are, to some extent, unproven therapies. There's a little Denise in all of us. We sometimes challenge the status quo, especially when our backs are against the wall and we don't like the options we have.

(UNKNOWN): She's really strong. She's been a real great leg of support to me.

FISHER (ph): There were people here then from South Africa, Australia, all over the United States.

(UNKNOWN): I live in North Carolina.

(UNKNOWN): I'm from New Zealand.

(UNKNOWN): I started having non-Hodgkin's lymphoma in 1996. (UNKNOWN): (inaudible) cancer.

(UNKNOWN): Can't say enough about this place. It's the only hospital you cry when you leave.

(UNKNOWN): Now after this being my third trip, I associate this whole area just with healing, with getting well.

FISHER (ph): I think that my kids give me the will to live. They've got a lot of growing up to do. And they need a lot of mothering between now and when they're adults. And I believe I'll be there to do it. I have a strong faith. I believe that God gave me my kids and that He will allow me to raise them. And I look forward to that.

COLLINS: CNN's photo journalist John Tiorgi (ph) there. If you'd like to know more about the health care debate and how the reforms could affect you and your family, check out the special health care in America section of the Web site. You can get the latest from town hall debates, fact checks, i-reports and other health care news. There's a lot of information there. Just go to cnn.com/health care.

Demonstrators opposed to what they call out of control government spending begin a series of rallies this afternoon. The so-called tea party express gets underway in Sacramento, California on the steps of the state capital. Rallies are also planned later today in Reno and Sparks, Nevada. We, of course, will be following what's going on with these rallies all day. And we will hear from one of the rally organizers in the noon hour of CNN Newsroom.

America's housing crisis: good news coming out this week. Sales are on the rise, but so are prices. What does this all mean to buyers, sellers and the banks? It's our snapshot across America.

(COMMERCIAL BREAK)

COLLINS: Good news this week for home buyers and sellers. A new report yesterday showed new home sales are gaining more than anybody expected and earlier. We saw a rise in the prices for existing homes. CNN personal finance editor, Gerri Willis, joining us now from New York with a little bit more on this.

So, Gerri, tell us what glimmers of hope there are in the housing market and maybe more importantly, how long they could last.

WILLIS: Well, that's a great question. You know, we are seeing glimmers of hope. You mentioned the new home sales number. That just blew away expectations. It's a critically important part of the home market because new home sales generate jobs. They generate sales in other areas. The big box stores that sell everything from furniture to, you know, lighting, you name it -- that really spurs the economy more broadly. And then another glimmer of hope as well: existing home sales up for four consecutive months.

Now, this is the big kahuna in the housing market.

COLLINS: Yes.

WILLIS: Existing home sales far bigger than new home sales. It's really critical that that market get up and firing. And then the big question always for people who already own homes: What are prices doing? Where are prices going? Well, we saw just a couple of weeks ago quarterly home prices for the quarter ended in June up 2.9 percent. And I can't tell you how critical this is to consumer confidence, the way people feel about their homes.

It's improvement in prices. And people are more willing to spend, it means that people are more optimistic about the future. This adds to, sort of, already the positive sentiment when it comes to sales, either existing or new home sales.

You're starting to see, Heidi, even in markets where sales have been abominable, where prices have fallen 20, 30 and 40 percent.

COLLINS: Yes.

WILLIS: Signs of hope, signs of improvement. Now, granted, a lot of the buyers out there -- they're actually people who are investors. They're people who may flip the home down the road.

COLLINS: Yes.

WILLIS: But this turnaround is giving a lot of optimism to people who want to get into that market, frankly, for the first time. So we're seeing it in parts of California, Vegas, which has been a horrible market for the last couple of years.

COLLINS: Yes, no kidding.

WILLIS: Starting to see some improvements. Even Florida here, also starting to see some improvements. And places like Detroit, you know, are really starting to see momentum in the opposite way instead of down -- up. And that's what we've all been waiting for.

Heidi?

COLLINS: Yes, absolutely. All right. Our personal finance editor, Gerri Willis. Thanks for that information, Gerri. In fact, we'd like to dig a little bit deeper into what these housing numbers really mean as part of our snapshot across America today.

From Irvine, California, Matt Blashaw, host of DIY Network's Deconstruction and in New York, we have Doug Yearly, regional president of Toll Brothers, a leader in new home construction and Julie Cripe, who is the CEO with Omni Bank of Houston -- well, actually, in New York out of Houston.

We'd like to begin with you, Doug, this morning. In fact, we have seen these encouraging numbers that we've just been talking about. Does this mean that the housing market is really on the rebound, or is it a little too early to say that? What do you think?

DOUG YEARLY, REGIONAL PRESIDENT, TOLL BROTHERS: Well, we feel great. We certainly feel better than we did six months ago. Our numbers are up significantly. We've been reporting improvement in sales over the last five-and-a-half months. If you look at our communities on a same-store community, we're up 32 percent.

The buyers are much more motivated. We're beginning to reduce incentives and beginning to raise prices, and while it's a buyer's market, that may not last too long. We have lot of buyers out there who understand that and are starting to come back out.

COLLINS: Yes. Matt, what do you think? Same question for you. Do you think it's too early to say that , yes, we're on the rebound? We're good?

MATT BLASHAW, REALTOR/ CONTRACTOR: I think a lot of these buyers are taking advantage of the tax credit. That's what I always hear when I'm looking for my buyers. They're saying, hey, I want to take advantage of that because it has to close -- the deal has to close by December 1st or they lose it.

So, they're looking after these deals. So, I want to see, is this just kind of a status of whether they're taking advantage of the credit? I think a couple more months of these home sales going up, and I think we're going to really see a lot of movement.

And a lot of these, too, are short sales that -- that's all I see out here is a lot of short sales. Not a lot of equity sales, and the banks, they're finally starting to have these departments and streamline these short sales. So, we're seeing these things go through, and that's contributing to the home sales, as well.

COLLINS: Let's talk to the bank lady, Julie. What do you think about all this? Is it time to say we're on the rebound here?

JULIE CRIPE, CEO, OMNIBANK N.A.: Well, I think it's definitely time for some cautious optimism. I'd like to think of it on this road to recovery across the United States where actually have some different speed limits. So, regionally we're going to be a little faster to recovery. Texas is doing great and is actually doing some home building and having good sales. I think it's great nationwide to see the sales up.

COLLINS: All right, very good. We saw prices, as we have said, Doug, for existing homes go up last month. What are you expecting, though, for the new home market? We should also talk about prices here. We get these numbers, but then we don't talk too much about how much money was knocked off that asking price and what sort of deals are out there.

YEARLY: Well, as I mentioned, our incentives are coming down, and two great stats came out this week. The Case-Shiller Index of new homes showed an increase in the price of homes in 18 of the 20 markets they study. That's very encouraging.

And Commerce came out this week and disclosed that sale of new homes are up 10 percent, and we haven't had that number since February of '05. And we all remember February of '05 and the fabulous times we had then.

Very quickly to match point. The first time tax credit is helping, but we sell $600,000 homes. We don't sell to the first-time buyers, and we reported some of the best numbers in the industry. So, I think it's a lot more than that first-time tax credit.

COLLINS: Yes. Very interesting. Matt, in fact, we'd be curious to know, what type of homes are most attractive to buyers out there in southern California? A lot of times we hear about that $400,000 mark, if you will. Those are the homes that seem to be moving all the time.

BLASHAW: $400,000 is the mark. Anything under that is really, really moving and that's -- we're talking -- I put in offers that had about -- these houses have 50, 60 offers on them. We're talking, they're going quick.

COLLINS: All right. Interesting. Julie, for you, I guess people are probably wondering what about the credit? Is it fair to say that credit is flowing better now, too? Because, obviously, in the beginning of all this, this is a real issue because even if you wanted to buy a house you had to have this remarkable credit history, of course. And then you also had to be prepared to put down a substantial down payment on a home.

CRIPE: Yes. Credit is flowing. Banks are loaning still and using prudent credit standards, which helps us all. But there will be a requirement for people to have a solid down payment of 15 percent probably -- maybe 10, but most likely 15 percent or 20 percent...

COLLINS: I was going to say, because it's been 20 for a while.

CRIPE: Yes.

COLLINS: All right, well, to the three of you, we sure do appreciate it. Everyone very interested in this. At home, a lot of people have homes and if they don't, they'd like to have one. Thanks so much for your input. Doug Yearly, Matt Blashaw and Julie Cripe. Thanks, guys.

YEARLY: No problem.

BLASHAW: Thank you.

COLLINS: A school bus hijacked by a nearly naked guy. Terrified students jump into action to save each other as their bus goes out of control and crashes.

(COMMERCIAL BREAK)

COLLINS: Now speaking out today, the stepfather of an 11-year- old girl abducted 18 years ago and found this week. Police say Jaycee Dugard was kidnapped in southern California by a registered sex offender. They say the suspect, Phillip Garrido, forced her to live in a shed in his secret backyard compound in the town of Antioch. Police say Garrido fathered two children with Dugard. He is in custody along with his wife. Dugard has reunited with her mother. Her stepfather says the ordeal has been traumatic.

(BEGIN VIDEO CLIP)

CARL PROBYN, JAYCEE DUGARD'S STEPFATHER: I did lose hope. But I'm coping as it's over, and the last 18 years have been pretty rough. But these last two days have been pretty good. It's got an ending to this.

(END VIDEO CLIP)

COLLINS: Police arrested Garrido when he showed up at a parole office with Dugard on Wednesday.

A memorial service is being held tonight for an Oklahoma pastor brutally killed inside her church. Police say 61-year-old Carol Daniels died of multiple sharp force injuries. It happened in the town of Anadarko. It's about 50 miles outside of Oklahoma City. Police say whoever killed Daniels moved her body into an unnatural position after the murder. Investigators are reviewing surveillance tape now for clues.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: What we know right now from witnesses and from surveillance video, she gut the church about 10:00 that morning and her body was found about noon that day.

(END VIDEO CLIP)

COLLINS: A $10,000 reward is being offered for information about the killing.

A terrifying ride home for some students in Atlanta after police say a nearly naked man hijacked their school bus. Police say the man jumped through the driver's side window of the school bus and overpowered driver while the bus was stopped near a convenience store. There were nearly a dozen students still onboard.

Police say one student tried to get control of the bus, and the man fought him as the bus careened off the road and into a ditch. Witnesses say the man jumped off the bus and tried to get away.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Once he jumped off, we grabbed him. He slipped away from us and tried to get up under the bus. He had on sweatpants but he had pulled them down and like he was driving the bus with his pants down.

(END VIDEO CLIP)

COLLINS: Witnesses say someone held the man down until police arrested him. Two students and the bus driver were hurt. Celebrating a life and paying respects. You're looking at live pictures now of the John F. Kennedy Library in Boston. That's where thousands of people are getting another chance to say good-bye to Senator Ted Kennedy. His body will lie in repose until 3:00 Eastern this afternoon.

A private funeral mass for Kennedy takes place tomorrow in Boston and then the legendary senator will be laid to rest at Arlington National Cemetery near his two slain brothers. CNN's Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): The final resting place for Senator Edward Kennedy will be by these trees on the sloping green hill close to the graves of his brothers John and Robert. Arlington superintendent, Jack Metzler (ph), showed us the site.

(on camera): The senator will be laid to rest here.

UNIDENTIFIED MALE: Yes he will be.

STARR: And his family will...

UNIDENTIFIED MALE: His family will be here and we understand approximately 200 people will attend the service. It will be a closed funeral, invited guests only. Senator Kennedy will receive military honors.

STARR (voice-over): Cemetery staff are already working at the burial site but this area will close early Saturday while the grave is prepared. It was just in the last few weeks that this site was selected. It's an area Senator Edward Kennedy knew well.

UNIDENTIFIED MALE: Senator Kennedy was here all the time. He came on the anniversaries of the deaths. He would come on the anniversaries of the births, if he was available. He would just come. Sometimes he would announce himself. Other times we would just be up here doing maintenance and we would find him up here.

If he came to funerals of one of the soldiers from his state, he'd also, before he left the cemetery always stop and have a prayer or a quiet visit here. Sometimes he would spend five minutes -- other times he would talk to the people until they quit talking to him. He would spend half hour, 45 minutes just talking to people and visiting with his brothers.

STARR: President Kennedy visited Arlington just a few days before he was assassinated in November, 1963. From the top of the hill, he looked out over this vista of the nation's capital and said it was so beautiful he could stay here forever. Now all three Kennedy brothers will be reunited on this Arlington hillside.

Barbara Starr, CNN, Arlington National Cemetery.

(END VIDEOTAPE)

COLLINS: All right, want to go back to some of those live pictures now because we continue to watch people file through as the senator lies in repose. We're looking, actually, right now, at William Kennedy Smith. You see there, greeting people as they come by the casket. And, also, to the right of him on your screen, sister Jean Kennedy.

We will continue to watch these pictures, again. You can stay with CNN for special coverage of the life and death of Senator Kennedy. His body is scheduled to lie in repose at the JFK Library until 3:00 Eastern this afternoon. And then, a private memorial takes place at the library beginning at 7:00 tonight.

Now, tomorrow morning, a private funeral mass will get under way at 10:30 in Boston, and then there's the burial service at Arlington National Cemetery. As you know by now, the senator will be laid to rest near his two slain brothers, John and Robert.

You know how the recession has put a hurt on your 401(k). Well, now another reason to be concerned about your retirement savings.

(COMMERCIAL BREAK)

COLLINS: The recession and financial crisis have taken a huge bite out of most 401(k)s, and now a new hurdle to rebuilding your retirement savings. Terrific. Stephanie Elam has our "Breakdown" now from New York. Hi, Stephanie.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Hi, Heidi. Yea, bearer of bad news here. For the first time ever, the IRS may reduce how much money we can stock away in our 401(k)s. Contributions are tied, actually, to a formula based on inflation, which has been negative since March. Human resources consultant Mercer (ph) says unless inflation picks up, the IRS may have no choice but to cut contribution limits.

This year, it's $16,500 for most workers. That's the number. Americans who are 50 and older are allowed to put aside an additional $5,500 a year. But next year, Mercer says the IRS could be forced to cut those limits by $500 each, Heidi. That's why we're paying attention to this one.

COLLINS: Yes. So, what is the IRS saying about it?

ELAM: The agency says it's reviewing the relevant law but warrants it's too early to speculate since all the inflation data just isn't out yet.

Still, retirement experts are concerned. The value of the average 401(k) fell 27 percent last year, basically a third of people's nest egg just being wiped out right there. That's huge.

One way to catch up is to max out your contribution, so cutting the limits makes it even harder to build up your nest egg back up to where it was. One expert tells us, quote, "This is the absolute worst thing you could be hoping for." He says with money tight, people are already tempted to contribute less money, the exact opposite of what people should be doing right now.

Sadly, this will affect very few people since most people don't max out their 401(k) contributions, anyway, and need I point out, a lot of times, the companies match that, and that's free money that they're missing out on.

COLLINS: Yes. No kidding. Not just 401(k) contributions, either. A lot of other things linked to inflation.

ELAM: That's true. Negative inflation rates also mean Social Security beneficiaries may not get a raise next year. It would be the first time seniors haven't gotten an increase since 1975. That's when cost-of-living adjustments were adopted. We'll find out for sure in October, the same month that the IRS will announce next year's 401(k) limits. We'll watch both of those, Heidi.

COLLINS: All right. Very good. Stephanie Elam with "The Breakdown." Thank you, Stephanie.

Not exactly a happy ending for all auto workers. Toyota is announcing it's closing a plant in California, putting thousands of people out of work.

Susan Lisovicz is at the New York Stock Exchange with more details on this and the market movement today. Good morning to you, once again, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. Well, Toyota is closing the only major auto plant west of the Rockies. Location is Fremont, California, south of San Francisco. It was a 25-year joint venture with GM, but GM pulled out when it went bankrupt. And it was simply too expensive for Toyota to keep up on its own and too inefficient.

The plant employees -- nearly 5,000 workers who put together Corolla compact cars and Tacoma pick-up trucks. Now, production will be moved to San Antonio, but also Ontario, Canada, and Japan. Many, many of these jobs are at risk and at a terrible time for California, which, of course, we all know has been hard hit by the housing crisis, in particular, the recession in general and it is a higher-than- average unemployment rate. It has a budget crisis.

The plant closing, of course, will have repercussions. It will hurt tax revenue and local businesses, as well as suppliers, Heidi. The UAW, Governor Schwarzenegger and many other people are really lamenting this decision by Toyota.

COLLINS: A lot of people associate Toyota wit ahead-of-the-curve cars like the Prius, everybody knows that now. But this just shows how wide-reaching all the auto problems are.

LISOVICZ: That's right, because Toyota has been stealing market share from Detroit's Big Three. But guess what? This global recession has hurt everybody, including Toyota, which has never closed a major assembly plant. But it posted its worst annual loss, more than $4.5 million. It's delaying completion of a Mississippi plant and halting a Japanese assembly line next year.

And by the way, Toyota was the biggest beneficiary of the Cash for Clunkers program.

COLLINS: Yes.

LISOVICZ: Even Toyota is feeling the pinch, and well, so are the Dow industrials, but after eight straight sessions of wins, we're seeing the blue chips in the red. The NASDAQ, however, is up about 0.5 percent. And we still have hours to go.

COLLINS: We do. We'll turn this thing around. All right, very good. Susan Lisovicz, thank you.

LISOVICZ: You're welcome.

COLLINS: Want to get you over to Bonnie Schneider with an update on Tropical Storm Danny. All right, Bonnie, where are we with this guy?

BONNIE SCHNEIDER, AMS METEOROLOGIST: Well, Heidi, we do have some new information for you. The latest track and the latest forecast has shifted slightly. Right now, the maximum winds are still where they were, about 40 -- 40 miles per hour, but gusts are up to 50. So, still a fairly strong tropical storm but not forecast to reach hurricane intensity.

However, there is a change. Take a look at the track and as I open up the scope, look at where this cone of uncertainty stretches all the way a little further to the west, including a good portion of Cape Cod in the islands of Martha's Vineyard and Nantucket. This means that region could see tropical storm force winds by Saturday afternoon, early evening.

The storm is still forecast to move away by the U.S. mainland, away from the Canadian Maritimes by Sunday, but it is important to note that slight shift to the west as we track this storm. And it just goes to show you that tropical storms are always very unpredictable when it comes to that wobbling, that last-minute movement.

We're monitoring Danny very closely, Heidi, just to see where it will go. But right now, not a hurricane, a tropical storm, but be on guard up and down the East Coast for this storm.

COLLINS: All right. Very good. Bonnie Schneider, thank you.

New Orleans still in recovery four years after Hurricane Katrina. Some in the city are blaming that on Mayor Ray Nagin.

(COMMERCIAL BREAK)

COLLINS: We are been telling you this story all morning long at the Met about a nude model arrested because they've been doing a photo shoot right there in New York's Metropolitan Museum of Art. She was posing for pictures there without permission and got busted.

We wanted to know, the question was specifically on our blog today, is it art or is it porn? So, we've been getting a lot of responses today, just want to go ahead and check out what some of you had to say.

Ron says, "If it's against the law, it's against the law. That being said, you're in a museum. You're there to see beautiful things, including nudes. I can think of nothing on earth more beautiful than the female body."

Okay, then this one here from Bill. "Here's a thought. How about you take the extra step and get permission to do the shoot after hours, and then it isn't an issue."

Finally, Liz says "Art, but they should have been more careful around the children."

Okay. Back in a moment in the CNN NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Four years ago this weekend, Hurricane Katrina slammed into the Gulf Coast, killing more than 18,000 people and causing billions of dollars in damage. New Orleans was especially hard hit. Officials there vowed to rebuild, but recovery is nowhere near done. And many are blaming that on the city's mayor. CNN's Sean Callebs reports.

(BEGIN VIDEOTAPE)

SEAN CALLEBS, CNN CORRESPONDENT (voice-over): Mayor Ray Nagin has been a lightening rod for criticism in post-Katrina New Orleans. As the recovery moves forward, his popularity moves in the opposite direction. Just after groundbreaking for a new public housing project, Nagin told me he isn't surprised.

RAY NAGIN, MAYOR, NEW ORLEANS: I don't think any leader after disaster pretty much survives. If you go look at Japan, you look at other major disasters, most of the leaders are kind of kicked out. I was fortunate or unfortunate to be standing here as we continue to progress. And what I find is that citizens wanted immediate fixes when there was no immediate fix. So, I took the brunt for that.

I am so humble today.

CALLEBS: In May 2006, nine month after Katrina hit, he was re- elected mayor. But since then, critics charge, he's had a bunker mentality with the perception he's rarely seen in public at a time when New Orleans need a strong, visible mayor.

(on camera): Some people have come to me and said, why did your mayor run for re-election? Have you have that question, and what's your answer?

NAGIN: I just didn't want to leave the city in a state of total disrepair. We were on the verge of bankruptcy. So, I wanted to put some things in motion. I felt I was best qualified to do that, and we'll see if it all works out.

CALLEBS (voice-over): While many areas tourists see are flourishing, entire communities in New Orleans east, Gentilly (ph), Lakeview and the Lower Ninth Ward remain devastated. Many New Orleanians blame Nagin. A cable TV executive before being elected, for the slow pace of recovery. For his part, he says he was ready to lead, but was the city ready to follow?

NAGIN: There have been days when I questioned whether the city was really ready to move forward and ready to deal with the issues that I was bringing forward. But you know, I'm a little too old to change now. I came to office as kind of a newbie, I've never been in politics, and I have always lived my life telling people the truth. Now sometimes that works out in politics, and sometimes it doesn't.

CALLEBS: Among his most controversial comments...

NAGIN: This city will be chocolate at the end of the day.

CALLEBS: What was behind that?

NAGIN: The only thing I regret about "chocolate city" is that people misunderstood the quote and the comment so much. At that time, there was this notion that some of our business people were saying to national media groups they didn't think certain people should come back. So, I wanted to send a strong signal that everyone was welcome. It was misinterpreted.

(END VIDEOTAPE)

COLLINS: Coming up next hour.

Video like this. Plus, a claim from this man that he was shot by white people who were hunting black people. It's now the focus of an FBI investigation. After Hurricane Katrina hit, did lawlessness really rule the streets of New Orleans?

I'm Heidi Collins. CNN NEWSROOM continues with Tony Harris.