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3.6 Quake Shakes DC Area; BP Has Stopped Oil Flow; British Says Freeing Sick Bomber a Mistake; 18th Century Ship Found Under World Trade Center Site; List of Alleged Illegal Immigrants Under Investigation in Utah; ESPN Reporter Sues Hotel Chain Where Stalker Videotaped Her; George Clooney Sues for Using His Name in Clothing Line; Goldman Sachs Pays Record Fine to Settle Fraud Claim; Market Looking at Lower Open After Week of Gains; Deadly Hotel Fire in Iraq; Iranian Scientist's Mysterious Link to U.S.; Apple's Big Announcement

Aired July 16, 2010 - 09:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: Good morning, everyone. I'm Fredricka Whitfield in for Kyra Phillips.

Friday gets off to a shaky start near Washington, D.C. Several million people wake up to an earthquake in an area that doesn't usually feel tremors.

And so far so good at the Gulf oil well. Nothing gushing. We'll take a look at where things go from here.

And the British government now admits it. Letting the Lockerbie bomber go was a mistake.

We begin with some seismic shaking in the D.C. area before dawn today. And it wasn't political. It was a 3.6 magnitude earthquake centered in Gaithersburg, Maryland. That's about 20 miles northwest of the nation's capital.

According to the USGS the quake was felt by as many as three million people in the mid-Atlantic region. There were no reports of injuries or damage, but residents flooded 911 lines to report the rumbling.

Let's get more now from someone who actually felt it. CNN producer Trish Chicca. She was at home in Kensington, Maryland when the quake hit and she's joining us right now on the phone.

So, Trish, give me an idea. What did you feel? What did you hear?

TRISH CHICCA, CNN PRODUCER (via phone): Hi, Fredricka. Of all things I had just gotten out -- I was in the shower at the time. And all of a sudden I felt, you know, my -- the bottom of the tub was vibrating. The -- you know, the low, deep rumble.

The window, there was this -- the window right in my shower, it was rattling. It felt like a train or a huge truck was going by but of course I would have had to been right outside my window if that were the case. It didn't make any sense and, you know, I felt this, you know, momentary -- maybe low level feeling of panic.

I'm in the shower. I'm thinking that's kind of a vulnerable place to be. Should I --

WHITFIELD: And were you thinking this is a tremor? An earthquake? Or were you thinking something else was going on?

CHICCA: Well, no. At first I -- I just wasn't quite sure, you know, as it lingered just long enough -- you know it didn't last that long, but it was long enough to get your attention, I'll tell you that. And I -- as I was dismissing the other possibilities -- because you try to, you know, think of the rational possibilities -- it did dawn on me that wow.

This might be an earthquake, but you know, I know, Fred, you live in this -- you grew up in this area yourself.

WHITFIELD: Right.

(CROSSTALK)

CHICCA: You know this is not --

WHITFIELD: And never experienced anything like this.

CHICCA: No, never. And so you don't really think that that's a valid possibility when you live in this area but --

WHITFIELD: You're right.

CHICCA: You know, nothing is impossible. And sure enough, when I -- I got -- I thought about getting out of the shower, finish doing what I needed to do, and got out, and I checked on my -- I have a teenage son who was sleeping, and I went and peeked in at him and of course he slept straight through it. Going to take more than a 3.6 earthquake to wake a teenager.

WHITFIELD: Right. Well, he's not alone. I spoke with my sister this morning who lives in Germantown, Maryland. And her daughter slept through it, too. The teenager that she is.

But my sister described it as sounding like a giant piece of furniture that was being dragged across the floor. I know you described it kind of like a train. So it's kind of freaked out a whole lot of people. Trish --

CHICCA: Yes. It's a little disconcerting, like I said.

WHITFIELD: Yes.

CHICCA: And I -- then I turned on the local news and of course, sure enough, my suspicions were --

WHITFIELD: A little affirmation there.

CHICCA: Yes. It was indeed an earthquake. How about that? WHITFIELD: I know. All right, CNN producer Trish Chicca. Thanks so much.

Rattled a lot of folks in their homes there, rattled them awake. Meteorologist Rob Marciano in the weather center.

This is some freaky, weird stuff to happen in the D.C. area.

ROB MARCIANO, AMS METEOROLOGIST: Yes. It certainly is. I don't care who you are. If you live or at least grew up in the northeast to feel the ground shake underneath you is certainly unusual, if not a little bit frightening for sure.

As far as what the USGS says people felt, well, they actually -- what it felt like map basically. Anybody who felt it will report in and this -- the darker highlighted areas here, right around the epicenter is where people felt it the most.

But you see it's very close to the D.C. area. Only about 20 miles away. So this sort of magnitude quake, anything around 4.0, you're going to feel it at least 20, 30 miles away. And that's exactly what we felt. But you don't typically see much in the way of damage with this kind of thing.

Now you're maybe thinking, well, this is completely unusual. Why is this happening? Well, 90 percent of earthquakes that happen across the globe, happen at the boundaries of tectonic plates like out there in California where you have the San Andreas fault.

Here we're pretty much in the middle of a plate. We just have -- you know, you're thinking -- there are faults underneath the crust. Certainly down around the I-64 corridor, there's a little -- there's a fault. Many minor faults here but generally speaking they're not large enough or active enough, Fredricka, to produce these huge earthquakes.

The last time we saw one this big this close to D.C. has been at least 20 if not 30 years, so --

WHITFIELD: Wow.

MARCIANO: It has been a while for sure. We don't expect any sort of major aftershocks. But if that happens, we'll certainly be here to report it to you.

WHITFIELD: And we'll hear about it from plenty of people that we know.

MARCIANO: Yes.

(LAUGHTER)

WHITFIELD: All right, Rob Marciano, thanks so much.

MARCIANO: You bet. WHITFIELD: All right. It is day 88 in the Gulf oil disaster, and for the first time in nearly three months, no oil is gushing from BP's ruptured well.

Take a look at the image right there. The shutoff is part of an integrity test to determine how the well is holding up. It could continue through tomorrow afternoon.

After the tests are finished, BP is expected to reopen the valves and resume siphoning oil to awaiting ships on the ocean's surface. The ultimate solution remains to be the relief wells which are expected to permanently seal off the flow sometime next month.

But first what happens now? CNN Ed Lavandera is in New Orleans watching this new game plan unfold. He is joining us actually by phone.

So, Ed, what is the plan?

ED LAVANDERA, CNN CORRESPONDENT (via phone): Hey, Fredricka. We just wrapped up a short technical briefing call with officials from BP and the latest update we have is that they're reporting no negative effects from the integrity tests that have been going on for more than 15 hours now. Started at 2:00 Central Time yesterday afternoon.

And so that is a good sign, they say. You know we've talked a lot about over in the last 24 hours about the pressure readings and how crucial that is, this test. And right now they have been telling us that anything below 6,000 pounds per square inch of pressure would not be good, and they want to try to get it up about 8,000.

And right now they say that they're at 6,700 pounds per square inch and they're happy with that. They're saying that that pressure continues to rise at a steady rate. So that is good news.

And that is -- they didn't offer much of the details except to say that -- they described some of the work that the robotic cameras below the surface of the water and what kind of work they were doing. And they were looking around on the ocean floor around that blowout preventer and they say that they haven't seen any damage to the ocean floor as well.

So all good signs but to how we exactly proceed from here and what kind of decisions will be made still haven't been made. So the good news is, though, that the integrity test continues and that they're happy with the way it's moving along so far.

WHITFIELD: Ed Lavandera, joining us by phone from New Orleans. Thanks for that update. We'll check back with you later on in the morning.

All right, all across the Gulf, any sense of relief is tempered by a grim reality. While the flow has stopped temporarily massive amounts of oil still loom offshore.

(BEGIN VIDEO CLIP) BILLY NUNGESSER, PLAQUEMINES PARISH PRESIDENT: We need to ramp up, we need to keep on the front line. Keep the people out there. Keep building the berms. They're working. And we're going to see this all come ashore, I believe, for a year or two.

We might get long breaks in between, but we know there's a lot of oil out there on the surface, below the surface, and depending on the current, and when that storm hits it right and pushes it into the marshlands, it's going to come. And we better be ready for it.

(END OF VIDEO CLIP)

WHITFIELD: Billy Nungesser says today will mark a pivotal turning point for the first time since the April 20th explosion. Crews may be able to capture more oil than what's actually escaping.

And just minutes ago we learned that President Barack Obama will address these latest developments on the oil disaster. His comments are expected later on this hour at roughly 9:30 Eastern Time. Of course, we'll carry that live.

Goldman Sachs has agreed to shell out $550 million in its fraud case linked to the mortgage meltdown. The payment settles charges that the Wall Street giant defrauded buyers in investment tied to subprime mortgages.

The penalty sets a record. It's the biggest ever levied against a Wall Street firm in the history of the Securities and Exchange Commission. But it is still under 5 percent of Goldman's net income last year.

So the settlement may not have Goldman digging too deep into its massive piggy bank but it could affect fraud cases in the future. We're talking about what this means for Wall Street coming up at the bottom of the hour.

All right, Wall Street reform is now just one signature away from being law. The Senate passed a massive 2300-page bill by a vote of 60-39. And President Obama is expected to approve it next week.

New financial regulations may seem removed from your everyday life, but this could mean some big changes in the way you spend money. Take a look.

First off, cash will be key when you go shopping. Stores will be allowed to require minimum purchases when you use plastic. And that means putting that $2 cup of coffee on your credit card may be a thing of the past.

You can also expect to see some stores actually offering discounts for paying up front instead of using credit.

The rules also clamped down on so-called swipe fees. The fee banks charge stores when customers use debit cards. Fewer fees mean less revenue for banks and that could translate to fewer perks.

And free checking, cash-back rewards, a lot of those offers, they just might disappear.

Next step, your loans. Banks will really be making sure that you can afford it especially when it comes to mortgages. You'll also have annual access to your credit score -- that all-important number -- not just your credit report.

And how about those taxpayer bailouts? President Obama said the overhaul will make them a thing of the past. He says the bill gives Uncle Sam tools to crack down on companies that put the economy in danger, but Republicans dispute that and say this is big government at work.

The seat of the late Senator Robert Byrd is a big one to fill, but today West Virginia's government will announce its pick to temporarily take the job. Governor Joe Manchin says he will push the state legislature to approve a special election this November to fill the remaining two-years of the term.

Senator Byrd died last month at the age of 92. And Governor Manchin has said he would consider running for the seat himself.

The British government now says releasing the Lockerbie bomber was a mistake. Scottish justice officials led Abdelbaset al Megrahi go home to Libya on compassionate grounds last year.

They thought he only had about three months to live because he's got prostate cancer. But nearly a year later, he is still alive and could live another 10 years or more.

The release has outraged people on both the U.S. and the UK. 189 of the 270 people in the bombing were Americans.

The Senate Foreign Relations Committee holds a hearing later this month taking a closer look at why he was released.

CNN's international security correspondent Paula Newton joins us now from London.

What's the latest?

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: Fred, you know, at the time when al Megrahi was released it really outraged the American government saying they did not feel that the release was warranted.

Now what just happened is that the UK ambassador to the United States pointed out that look, this is a new government here, headed up by David Cameron. David Cameron did not agree with the release at the time and he believes now that it was a mistake.

Not so surprising in that statement, but categorically, again, Fred, in this statement they are saying look, there was no deal. And this is a huge controversy brewing on this. No deal between BP and the British government to allow this prisoner release so that BP could get a favorable oil deal going -- drilling deal going in Libya. This government very keen right now, Fred, to really put some type of a finality to underscore this point. David Cameron, the prime minister here, is meeting with President Barack Obama next week. They want this controversy to somehow go away.

They say look, the decision was made by the Scottish judiciary. It was their business to make it at the time. They thought they were making a good move on compassionate grounds -- Fred.

WHITFIELD: Paula Newton in London, thanks so much.

A ghost from New York City's past has come to the surface and it brings a little history lesson with it. We'll talk about the old ship found buried under the World Trade Center site.

(COMMERCIAL BREAK)

WHITFIELD: Some of New York City's distant past has been found and has history buffs and archaeologists all excited. An old ship was found under the World Trade Center site. Experts think it was built in the 1700s, and that it was buried in the 1800s. And get this, it's believed the ship was buried because New Yorkers need more land.

Let's go to CNN's Mary Snow in New York, who got a firsthand look at this.

MARY SNOW, CNN CORRESPONDENT: Hi, Fredricka.

This was really an extraordinary find. And where this was found is a part where construction is underway for the new World Trade Center site. It wasn't part the original site. Archaeologists say this area hadn't been excavated so deeply before until now.

(BEGIN VIDEOTAPE)

SNOW (voice-over): At the construction site at Ground Zero, a rare find. Remnants of a ship dating back to the 18th century. We were allowed to climb down 25 feet to the site and see firsthand what archaeologists stumbled upon Tuesday.

MOLLY MCDONALD, ARCHAEOLOGIST, AKRF: Two curved timbers pulled up by a backhoe, and immediately thought that looked like a ship timber. So we stopped the backhoe and started excavating with shovels and uncovered a portion of this hull. And since then, have uncovered the rest that you see.

SNOW (voice-over): And what we can see is believed to be half of a ship. Marine historian Norman Brouwer was brought in to take a look.

NORMAN BROUWER, MARINE HISTORIAN: It appears to be an ocean- going vessel. Probably at some time in the 1700s. It's heavily built. Very solid frames close together.

SNOW (voice-over): One mystery, the circular structure that Brouwer says have been used as a fireplace. An anchor also recovered. SNOW (on camera): How significant is this find?

MCDONALD: I think it remains to be seen what this ship really is, but it's pretty significant, I think. It's pretty exciting. There haven't been that many ships found in Manhattan. It was something that occasionally ships are occasionally used as parts of landfilling. So it probably was part of filling in this land. So it's not unheard of.

SNOW (voice-over): Because of the history here, archaeologists have been monitoring the construction site. The Wildlife Conservation Society shows just how much of lower Manhattan was under water hundreds of years ago in its Manhattan Project. Compare that to now.

ELIZABETH MEADE, ARCHAEOLOGIST, AKRF: Mostly it just tells us about the landfill structure of this particular area. And how they were re-using things like old boats to build out the land. Because the shoreline was originally at Greenwich Street about a block that way.

SNOW (on camera): Because where we're standing now at one point was just the Hudson River?

MEADE: It was the Hudson River, yes.

SNOW (voice-over): The site is just south of where the World Trade Center towers once stood. This rare relic hidden for more than 200 years.

MEADE: This is the kind of thing that archaeologists are always hoping to find and very rarely actually do.

(END VIDEOTAPE)

SNOW: As can you imagine, the remnants of this wooden hull are very fragile. They're very brittle. The big challenge now is recovering the pieces of this ship. The hope is that some of it will wind up in a museum. Archaeologists are studying the samples, trying to find out exactly where this ship came from and what it was used for. Fredricka?

WHITFIELD: Wow. Fascinating stuff. Mary Snow, thanks so much, in New York.

SNOW: Yes, it really is. Sure.

WHITFIELD: Checking news across the country now. A list of alleged illegal immigrants is under investigation in Utah. More than 1,300 people are on the list, along with private information about them, like social security numbers and pregnancy due dates. A letter signed by, quote, "concerned citizens" came with it and said people on the list should be deported ASAP. It was sent to media and government offices across the state. Leaders in Salt Lake City's Latino community say the list has stirred up fear.

(BEGIN VIDEO CLIP) PETER CORROON, UTAH GUBERNATORIAL CANDIDATE: If I were governor right now, I would ask for an independent investigation of the list. I would go after whoever is putting out this kind of list through the law. And I would condemn the list, which wasn't done by our current governor.

TONY YAPIAS, PROYECTO LATINO DE UTAH: Our community is very concerned, very worried about it. I would say they have been terrorized, many of them. And people are just afraid about what's happening.

DAVE LEWIS, UTAH DEPARTMENT OF WORKFORCE SERVICES: Employees acknowledge that they don't have permission, are not permitted to access case records, unless they have a business reason to be there. You just can't peruse the database and look at people's records.

(END VIDEO CLIP)

WHITFIELD: The governor's office is trying to figure out how someone got a hold of that information. Investigators are zeroing in on the Utah Department of Workforce Services.

An ESPN reporter, Erin Andrews, says the hotel where she was secretly videotaped by a stalker is negligent. Ahead, we'll tell you what she's going to do about it.

(COMMERCIAL BREAK)

WHITFIELD: ESPN reporter Erin Andrews is suing the hotel chain where a stalker secretly videotape her. The suit also names Michael David Barrett, the man who pleaded guilty to stalking Andrews. It alleges that Barrett received information from the Marriott Radisson hotel confirming Andrews was a guest there. Barrett is currently serving 2 1/2 years in prison.

And a nasty fall for pop singer Pink. It happened during a concert last night in Nuremberg, Germany. Take a look. Pink fell into a barricade as she prepared to do a stunt with a circus-like harness. Ouch. Right there. An online news service reports the singer was rushed to the hospital, but she later told followers on Twitter, quote, "Nothing's broken. Just seriously sore."

And George Clooney is playing the role of plaintiff today. He is expected to testify in Italy today against three men accused of using his name to promote their clothing line. Clooney claims he no idea the men were using his likeness for their fashions.

$550 million. That's a big check to write to settle fraud complaints unless you're Goldman Sachs The Wall Street giant pays a record fine, but it's barely putting a dent in the company's wallet. We're crunching the numbers straight ahead.

(COMMERCIAL BREAK)

WHITFIELD: The market is trying to close out a second straight week of gains. Alison Kosik is at the New York Stock Exchange where the open bell is just about to ring. Or did it just ring? They're clapping. That means, already rang?

ALISON KOSIK, CNN CORRESPONDENT: We're just a few seconds away, Fred.

WHITFIELD: Almost there.

KOSIK: So it's good news on the weekly gain that you were talking about, but we are looking at a lower open. Ah, there goes the bell. A lot of companies in the headlines lately are making some really big moves on the street today. Case in point, shares of Goldman Sachs, they were jumping in the pre-market after the Wall Street firm agreed to pay a record settlement to the SEC.

So I know what you're wondering. Why is the stock jumping after it has to pay this record fine? Well, many investors thought the company would have to pay over $1 billion.

Now, it's only in a pay (ph) measly $550 million which is actually just a drop in the bucket for the firm. The settlement also helped resolve a major PR problem for the company.

Another controversial company, BP is getting a lot of attention. BP shares right now are down a bit, but they jumped late yesterday on the news that the oil leak they have stopped, at least temporarily.

And Google shares, they're headed south. Google posted second quarter earnings that missed Wall Street estimates. Google has had some rough waters to navigate lately including a controversial fight over censorship issues with China. But the company insists it had a great quarter.

All right. So, we got lots more earnings to pore through that investors are poring through today including better than expected results from Bank of America and General Electric, two heavyweights that could help the Dow today.

All right. Let's take a look at where we stand in the early minutes of the trading day. The Dow industrials down about 60 points. The Nasdaq is off about 13, and the S&P 500 down about 5. We'll see if we can pull things up to the green before the end of the day.

Fred, back to you.

FREDRICKA WHITFIELD, CNN ANCHOR: All right. Alison Kosik, thanks so much. Appreciate that.

Meantime, any moment now, we also expect the president of the United States to speak from the Rose Garden. When that happens, we'll take it live. He's expected to talk about the status of the oil capping efforts taking place in the Gulf of Mexico. There you see the live shot right there. When it happens, we'll bring it to you.

Meantime, let's get back to Goldman Sachs, which has agreed to shell out $550 million in its fraud case linked to the mortgage meltdown. So, the payment settle charges at the Wall Street giant defrauded buyers in investments tied the subprime mortgages. The penalty, that's a record. It is the biggest ever levied against a Wall Street firm in the history of the Securities and Exchange Commission, but it is still under 5 percent of Goldman's net income last year. So, what does this penalty really mean for Goldman Sachs moving forward?

Ryan Mack, president of Optimum Capital Management joining us now from New York to take a closer look at this.

So, Ryan, good to see you. So this fine or this settlement is just a drop in the bucket for Goldman compared to its annual profits of $13 billion. So, is this tantamount to really a slap on the wrist or is this a significant penalty?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MGMT.: I mean, at the end of the day, it's the largest that SEC has ever given out. That at the end the day, you know, Goldman Sachs made $13.3 billion. So, they essentially were able to make $13.3 billion -- and a lot of that was through taxpayer dollars because AIG had to actually pay out through insurance. A lot of funds that taxpayer dollars had to pay to AIG to Goldman Sachs. So, they're able to get away like fat rats. So, I know why the stock is rising. It looks good.

I can see why World Bank of Scotland and other companies are thinking about filing civil suits, but you know what? On one side it's, you have a moral decisions that Goldman Sachs made, essentially, just like an insurance agent trying to hire an arsonist to sell fire insurance.

But on the other side, you have some very just playing stupid decisions at all these investments banks that went out to invest with Goldman Sachs, but they've overleveraged themselves. And they stop (ph) and mortgaged back Securities with next big thing and then they got --

WHITFIELD: Something else coming with this though -- when Goldman Sachs, you know, agrees to write this check, it also agrees to make some changes. What would those changes be and how might that impact other financial institutions?

MACK: We have to have a lot more disclosure. I mean, the changes should have been there in the first place. As me as a financial adviser, I can't sell a stock that I'm shorting to a client without revealing that I'm shorting this stock. And these changes were already put in place. I mean, so, these moral decisions were already put in place by the SEC. So, to actually say that they will sort of reveal more information is something that is actually required by the SEC by the rules and regulations to make sure that your client fully understands exactly your position that you're taking.

So, I mean, I have to do it. Every other adviser has to do it. So, why should Goldman be remiss in terms of making these things fully exposed? So, I really just think -- it can't go on again. We have to be making wiser financial decisions for the bank to make billions of dollars (INAUDIBLE) many banks because they thought that they can make 12 percent to 15 percent retires for the rest of the years and overleveraged themselves in order to put these in, it's just truly irresponsible.

WHITFIELD: Besides the, you know, $550 million being a fraction of their $15 billion in profits on an annual basis, that being a drop in the bucket, how does Goldman Sachs kind of make off by avoiding trial altogether? Do they get off easy?

MACK: They absolutely did, because they really (INAUDIBLE) they didn't really, truly, reveal exactly how much they were involved in making the deal. So, they really essentially said, you know, we're going to pay $550 million just to keep our mouths shut, and say, you know, we should have revealed a little bit more information.

So, I'm sure that they don't have to go to trial they'd have to reveal the fact that they hired somebody who is short in positions of some securities that they were selling to clients saying that these were the next best thing, but they actually had huge short positions and come out and say things like we lost millions of dollars ourselves, but you made billions of dollars off the short position as well as a client that you hired in order to construct these very high, highly complex securities.

So, this is, I mean, they're winning on all sides here. So, I don't know about you, but I'm happy to pay $500 million or $550 million if I'm going to make $13d billion off the backs of the U.S. taxpayers as well as other investors out there who thought that they were actually getting treated fairly.

WHITFIELD: Ryan Mack, president of Optimum Capital Management, joining us from New York. Always good to see you.

MACK: Thank you so much.

WHITFIELD: The tangled case of a missing Iranian nuclear scientist who has mysteriously re-appeared gets another twist. This time involving three American hikers who were jailed in Iran. Why their moms have renewed hope of a homecoming?

(COMMERCIAL BREAK)

WHITFIELD: Here's the headline. Three months in the making, BP has shut off the flow of oil from that broken well in the Gulf of Mexico. It is day 88 of the crisis, but the relief is only temporary. Once BP finishes testing within the next day or so, crews will likely reopen the valves and resume siphoning oil to awaiting ships on the ocean's surface.

And a rare earthquake rumbled across the Washington, D.C. area this morning (INAUDIBLE). It had a relatively modest magnitude of 3.6. There were no reports of damage. It was centered near Davisburg, Maryland, some 20 miles northwest of D.C., and as many as 300,000 people actually felt the shaking.

And will Apple admit to a lemon? Not likely, but the tech giant has announced a news conference for this afternoon. Apple is expected to address antenna problems with its iPhone 4. So, the iPhone problems may be no laughing matter. For exasperated owners who are dealing with dropped calls, but apparently, the late-night comic, Jimmy Fallon, is not among them. Listen to his take on the situation.

(END VIDEO CLIP)

JIMMY FALLON, HOST: Did you, guys, hear this? Apple has called a major press conference tomorrow to discuss the iPhone 4. Well, they actually tried to call like three days ago, but it finally went through just now. So very excited.

(END VIDEO CLIP)

WHITFIELD: All right. So, once again, iPhone or at least Apple will be having a news conference later on today about that iPhone. It's scheduled for 1:00 p.m. eastern, 10:00 a.m. pacific.

(COMMERCIAL BREAK)

WHITFIELD: All right. Checking our morning passport now. A fire in a hotel in Northern Iraq killed 29 people including one American. About two dozen others were injured. A short-circuit was blamed for the starting of the fire. The hotel is popular with tourists because it sits in what is considered a safe province.

An explosion in Ciudad Juarez, Mexico killed at least three people. Investigators say either a grenade or a car bomb went off. About 20 people were hurt. This happened on the same day as the announced arrest of a leader of the Juarez drug cartel.

And the murky case of an Iranian nuclear scientist who claims he was kidnapped by the CIA is getting even more tangled. The U.S. claims Shahram Amiri came here voluntarily a year ago, and officials say they paid him millions for information on Iran's nuclear program, but Amiri is now back in Iran, and that could have a far-reaching impact.

Reza Sayah is live in Islamabad and bring us up to speed now.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Yes, Fredricka. Shahram Amiri, the Iranian nuclear scientist, of course, got a hero's welcome when he got back to Iran on Thursday. But based on what U.S. officials were telling CNN, Amiri was no hero to Iran. One U.S. official essentially describing him as double crosser who betrayed Iran when he voluntarily came over to the U.S. and gave up valuable Iranian nuclear secrets in exchange for $5 million benefits package.

Of course, Amiri denies all this. He continues to insist he was kidnapped by U.S. agents after which he escaped. Although, he hasn't explain exactly how he escaped. So, Fredricka, it's like (ph) contradictions, still a lot of things don't add up in this story. But if, indeed, behind the scenes Iranian officials find out that this man did defect to the U.S. and gave up money in (ph) nuclear secrets, look for that hero's treatment to end very quickly in Iran. WHITFIELD: So, Reza, I wonder, you know, with Amiri's return, what does that mean for, perhaps, those three American hikers that are being held in Iran? Might there be some sort of swap deal?

SAYAH: I think a lot of people are curious to note if behind the scenes perhaps there's a secret deal between the U.S. and the Iran, Amiri going to Iran in exchange for these three U.S. hikers who've been jailed in Iran for almost a year now. And I think that speculation surfaced because this week, the mothers of the three hikers who were recently there in Iran visiting their children wrote an open letter to the Islamic Republic of Iran asking for the children to be released.

Here is an excerpt of that letter by the hikers' mothers, "our children imprisoned in the absence of any certainty as to their fate or to the specific allegations against them is unlawful and inhumane. We urge the Iranian authorities to live by the principles of compassion that we so admired in the Iranian people during our visit. It surely does Iran no good in the eyes of the world to continue to deprive our children of their liberty."

Now, at this point, there's no indication from either side, U.S. or Iran, that there's going to be a swap. In fact, Iranian deputy foreign minister, Hassan Gashgavi, flatly denied the possibility. Here's what he had to say. "Amiri's escape has nothing to do with the three U.S. citizens who are under arrest in Iran. The Americans have not made such a claim, and it's not true. This is a propaganda scenario that the foreign media follows, and it is totally baseless. We deny this. Time will prove that this is false." Despite this statement, Fredricka, the mothers of the hikers are still hopeful that with Amiri's return, Iranian officials will be convinced to release these hikers.

WHITFIELD: All right. Reza Sayah from Islamabad. Thanks so much for that update.

Meantime, a stunning admission by the president's press secretary saying the Republicans could gain control of Congress in the midterm elections. We'll take a look at the fallout for Democrats and how Republicans are seizing on this opportunity.

Right now, let's flash back to this day in 1935, and a birthday you might not feel like celebrating. Seventy-five years ago today, people got their very first look at the parking meter. 150 of them were installed in Oklahoma City.

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WHITFIELD: All right, Republicans are trying to take advantage of what they call a civil war in the Democratic Party. Top Democrats expressed frustration after comments by President Obama's Press Secretary to a Sunday news talk show about the upcoming midterm elections.

(BEGIN VIDEO CLIP) ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think people are going to have a choice to make in the fall, but I think there's no doubt there are enough seats in play that could cause Republicans to gain control. There's no doubt about that.

(END VIDEO CLIP)

WHITFIELD: All right. CNN chief political correspondent and "STATE OF THE UNION" host Candy Crowley is here. So how in the world will the Democrats kind of recover from that and does that indeed provoke some in-fighting?

CANDY CROWLEY, CNN HOST, "STATE OF THE UNION": Yes it did provoke some in-fighting. But I have to tell you I think more than anything, what this shows is the tension on the House side among Democrats about the upcoming election. Because all Gibbs did, really, was state the math of it.

There are enough seats in play where the Republicans could take over. I mean that is a simple fact. That the Democrats went as ballistic as they did about this, seeing this as some sort of admission that it was vulnerable -- it tells you something about how they're viewing the fall.

Having said that, yes, there was some tension, and it wasn't just that remark, but preceding it was some grumbling by House Democrats that perhaps the White House hadn't done enough or the administration hadn't done enough to back them up. That they, the President hadn't gone out and really sold his agenda, so the House was taking hits for some of the more unpopular things.

So they all came out of meetings, singing sweetness in light and saying oh, there was no big deal, so it is in their interest to stay together and that appears that at the end of this week that's where they are.

WHITFIELD: Ok, so leading us to midterm elections, this White House will be able to tout Wall Street reform, health care reform. I'm wondering how the White House might help Democrats use this to their advantage leading up to this elections to say, all right, these two, mission accomplished.

CROWLEY: Well, there's that: there's health care, there's Wall Street reform, there's the stimulus plan that the White House says really has helped turn around the economy, none of it selling really well.

So what -- what is the administration doing? I think if you listen carefully to that Gibbs bite that you just played where he talked about voters having a choice.

Well, the White House has set about, saying, ok maybe we aren't where we're supposed to be, maybe things aren't great, but the fact of the matter is look at the party who got you in here, and is that really where you want to go? So they want to set up this decision, as Gibbs put it as, we can either keep moving forward or we can go back to the folks whose policies brought you this. And I think that's how they're going to shape the fall campaign.

WHITFIELD: All right, this weekend the President goes on vacation, the Republicans are seizing upon that. How is this advantageous for Republicans?

CROWLEY: Well, you know, presidents get to go on vacation, and they always somehow get -- every president I've ever known, there's always been some vacation that became some political point of view.

I think in this particular instance, it's that the President and Mrs. Obama have been to the Gulf and urged people to go vacation there. And so when they go vacation, they're going to Maine. And I think that's what the Republicans are complaining about. I can't imagine that this story, as we say, has much leg.

WHITFIELD: All right. And this weekend on "STATE OF THE UNION" what should we expect?

CROWLEY: You should expect to hear a little more about that intra-party tip from Steny Hoyer, who is the Democratic leader in the House. We'll also going to talk to the Senate Republican leader, Mitch McConnell about the very heavy-duty agenda the senate has this fall, whether that's doable or whether it's going to be a lot of politics.

WHITFIELD: All right, Candy Crowley thanks so much. We'll be watching of course as we do every Sunday morning.

CROWLEY: Thank you.

WHITFIELD: Beginning at 9:00 a.m. Eastern Time, "State of the Union" hosted by our Candy Crowley.

And of course momentarily we're expecting the President to emerge there at the White House, the Rose Garden. We'll (INAUDIBLE) his remarks as it pertains to the Gulf oil spills.

Meantime, let's check in with our other reporters working on so many things beginning with you, Rob Marciano.

MARCIANO: Good morning Fred, we have heat advisories in effect for the northeast, including Washington, D.C. which woke up to an earthquake, 3.6 magnitude. So we'll have an earthquake and weather check in the next hour.

PATRICIA WU, CNN CORRESPONDENT: I'm Patricia Wu in New York. Financial reform is just a signature away from becoming law, but some opponents are already calling for its repeal. Will the bill make it harder for Americas to get loans and make bailouts permanent? We'll do some fact checking in the next hour.

KOSIK: And I'm Alison Kosik at the New York Stock Exchange, where the DOW is down triple digits despite better than expected earnings from Bank of America, Citigroup and GE. I'll take you behind the numbers and tell you what has investors troubled. That comes up in the next hour -- Fred. WHITFIELD: All right. Thank you ladies and gent.

Meantime, the British government says releasing the Lockerbie Bomber was a mistake. Two hundred seventy people died in the bombing of Pan Am flight 103 back in 1988. In our next hour, we'll talk to a family member of a victim about the British government's admission.

(COMMERCIAL BREAK)

WHITFIELD: Maybe not on the iPhone4. A big question today -- what will Apple announce? The company is taking the very unusual step of holding a news conference after mounting criticism against the iPhone4. Josh Levs has been following all this for us. So Josh, what should we expect?

JOSH LEVS, CNN CORRESPONDENT: There's so much chatter about this. Everyone wants to know what they're going to say today.

I can just say off the top, no inside scoop here, just no one is expecting them to announce a recall. No analyst that's taken a legitimate look at this is seriously thinking that they're going to announce a recall will be made.

And the reason -- I mean this is an analyst for CNet who says it will cost $1.5 billion if they do that; and people are loving this iPhone.

In the first three days they bought 1.7 million. Even now with some bad press, people are still buying them. The question is, what will they do?

First, let me present the problem again, in case you all don't know exactly what it is. Here's an iPhone4 image. I used to use, like an extra one but it actually helps you to see it bigger.

The idea is this iPhone is a lot lighter, about 25 percent thinner, than the previous ones. And they achieved that in part by snaking the antenna through this metal band around the outside. Analysts have now figured out, that if you ever put your finger over there, it can mess up your call and you can lose reception.

All right. Now we have some video too. We can show that. But the basic idea here is that we need to know now what Apple is going to announce today to do something about this. So if it's not a recall will they say you can come in and get a free fix?

Or a lot of people are looking for them to offer free cases. Because if you have a case, that's covering that area, people who have tested it had figured out, you're not likely to have that problem.

But there's also a really interesting business angle that was happening today. You know, Apple has this pretty amazing relationship with the public and with large parts of the media in the sense that they come out with new products and people have so much excitement about it. We had an analyst earlier today on AMERICAN MORNING who said, what's happening today is a sign of Apple needing to take a new step in its public relations. Take a look.

(BEGIN VIDEO CLIP)

ERIC DEZENHALL, CRISIS MANAGEMENT EXPERT: Apple consistently violates every damage control cliche without any consequence. They're secretive, they lash out at consumers, they're entitled, yet at the same time the reason why there's no consequence is because when you are an insurgent, sort of a bad boy, that is a privilege that you have, because people will love you no matter what you do.

But now Apple is no longer just an insurgent, they are a trend- setting market leader, so the behavior of the past has to shift.

(END VIDEO CLIP)

LEVS: And that's what we're seeing today, this is a shift for Apple in terms of holding this news conference; a very unusual step for them. This isn't one of their big staged events that you hear about months in advance. This has been calling just a few days in advance, a news conference to respond to what's going on.

And part of what happened this week is this. That the Consumer Reports -- this is very well respected announced that it would not recommend the iPhone 4. And this is a good summary of what they're facing right now. Because while the iPhone4 is popular, "Consumer Reports" says it's a great phone. They love all these features, but they say this is a serious problem. And simply because of that it's not worth recommending.

Clearly Apple has to do something. We are making calls all day following this -- we'll be following the news conference and we'll be the first to tell you exactly what Apple is doing.

WHITFIELD: You know, it's an interesting juxtaposition because at first people had bragging rights that they got it first. I was in an elevator the other day in the office building and people were talking about -- one woman was complaining that her calls keep getting dropped off, so people are outraged about all that.

LEVS: That's why the Apple feels like in general, you know, now it's having best reception but this with the finger thing covering one little area knocks it out. It's a big problem for that.

WHITFIELD: Yes. All right, Josh Levs, thanks so much.

LEVS: You got it.

WHITFIELD: Of course, stay with CNN, because of course we're going to have live coverage of Apple's news conference scheduled for 1:00 p.m. Eastern time, 10:00 a.m. Pacific.