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Egg Recall Expectation; Dueling Rallies at Ground Zero; Hostage Situation Ends in Manila, Gunman Shot; Cleveland Indians' Third Baseman Goes Above and Beyond to Catch Foul Ball; Tropical Storm Danielle Looking to Become Hurricane; Stocks Down But Bonds Up; New Airport Screening Patdown; Iran's New Nuke & Weapon; Muslim Myth Dogs President Obama; Customer Charge More for Being Obese; Festival Turns into Riot

Aired August 23, 2010 - 09:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Hi guys, good morning. Good morning, everybody.

Animal cruelty, sexual harassment and the hiring of illegal immigrants: all allegations filed against an egg price producer involved in one of the country's biggest egg recall.

And growing outrage outside the proposed Islamic center just blocks from Ground Zero. And it gets emotional. You'll hear from the protesters.

Humiliated at the nail salon. This woman forced to tears after she was charged extra for being overweight.

It's 9:00 a.m. on the East Coast, 6:00 a.m. out West. I'm Kyra Phillips, and you're live in the CNN NEWSROOM.

We want to begin first with an update on our breaking news coverage out of the Philippines with a hostage situation that neared almost 12 hours, we are told, is finally over.

This is what we know. Police in Manila had surrounded a tourist bus where a former police inspector was holding about 16 people hostage. Gunfire had been coming from the bus. That's what reports told us. Plus reports that some people had been shot, possibly killed.

We can confirm that there were victims were transported from the ambulance to area hospitals.

The former officer was armed, we are told, with a rifle and is now claiming that he was wrongly dismissed from the police report -- sorry, from the police force.

We're going to have a live report from the scene in just about 15 minutes.

Now here in the U.S. another major story that we're following this morning. Eggs under tight scrutiny as a health recall expands to a staggering number. Some 550 million are now being recalled as part of this salmonella outbreak. And the tainted eggs have been traced back to a second producer in Iowa.

The Food and Drug Administration says that some 1,000 people nationwide have gotten sick. And the problem is not just limited to the Midwest. The eggs were shipped to a total of 17 states across our country.

More than a half billion eggs have been recalled but here's some perspective. That's not even 1 percent of all the eggs that are produced in the United States. So with numbers that big, the task of tracking down the salmonella is daunting and it is critical.

CNN's Casey Wian is in Galt, Iowa with more.

Hi, Casey.

CASEY WIAN, CNN CORRESPONDENT: Hi, Kyra. Behind me is the chicken feed mixing facility at Wright County Egg. There's trucks that are coming in here, they've been coming in all morning with various ingredients that are put into this chicken feed -- oyster shells, bone meal -- and they're mixed in these giant silos behind me and then eventually fed to the chickens.

It's just one of the potential sources of the salmonella contamination at a company that until now has been largely unknown. Not any more.

(BEGIN VIDEOTAPE)

WIAN (voice-over): This modest building in Iowa farm country is at the center of one of the largest food safety scares in recent history. Wright County Egg is based here. We met the chief operating officer inside but he declined to speak with us about the company, its related businesses and their long history of fines for health and safety violations.

They include animal cruelty, sexual harassment of workers, even rape and the hiring of illegal immigrants. This undercover video obtained last year by the group Mercy for Animals shows how chickens were treated at the company's farm in Maine. The owner agreed to pay more than $130,000 in fines.

We met several local residents who were not happy with Wright County Eggs' expanding presence.

RON ZIN, WRIGHT COUNTY RESIDENT: People moved away because who wants to live by a mega site.

DAN BRIDGES, WRIGHT COUNTY RESIDENT: We've got more migrant workers than we have our own workers. Wages are low.

WIAN: In a statement, the company said, "When issues have been raised about our farms our management team has addressed them swiftly and effectively. It also said the company is cooperating with the FDA investigation into what caused the outbreak of salmonella and led to the recall of half a billion eggs.

About a thousand people have become ill this summer including the Danielson family in Minnesota.

TODD DANIELSON, TAINTED EGG VICTIM: Everybody had diarrhea. That was kind of the first thing. And then headaches. And then throwing up. And then it was body aches.

Couldn't even move. I mean, it was, like, in your joints. It hurts so bad. I mean it's -- it was worse than any flu I've had.

WIAN: Already lawsuits are being filed in several states by people who say they became sick eating eggs from Wright County Egg.

(END VIDEOTAPE)

WIAN: The FDA says it is still searching for the original source of the salmonella contamination. The agency also says that since May of this year there has been a four-fold increase in salmonella cases nationwide -- Kyra?

PHILLIPS: Wow. Casey -- all right, we'll stay on top of the story with you, Casey.

FDA investigators say that they've tracked down the source of that salmonella but that's only part of the job.

(BEGIN VIDEO CLIP)

DR. MARGARET HAMBURG, COMMISSIONER, FOOD AND DRUG ADMINISTRATION: It's also very important that we work with them to understand the network of distribution because we have a very complex food production system in this country.

And the eggs go to wholesalers, distributors, food service companies in different states but then sell or distribute the eggs to other places so that you start with a couple of farms in Iowa you can get nationwide exposure. And that's what creates a challenge.

(END OF VIDEO CLIP)

PHILLIPS: So if you have eggs in your refrigerator, we wanted to pass along some advice coming from the FDA now. If you've discovered that you have recalled ones, don't eat them under any circumstances. Either toss them out or return them to the store.

If you get sick and suspect it was from the recalled eggs, call your doctor. The health effects can be extremely serious. And if you're unsure whether your eggs are involved in that recall, don't eat them and throw them out immediately.

Well, the imam who wants to build the Islamic center near New York's Ground Zero has new comments about the controversial project. In an interview appearing in the "Al Wasat" newspaper today, Abdul Rauf says that he hopes that the center will offer an Islamic approach that allows for harmony and understanding among all religions and other ideas.

The imam also praises freedoms preserved under the U.S. Constitution. Rauf is in the Middle East on a State Department- sponsored tour to discuss Muslim life in America.

About 450 people opposed to the Islamic center are being built near Ground Zero were protesting in Lower Manhattan while a smaller group around 250 were voicing their support for the center.

As CNN's Susan Candiotti reports, the two sides were separated by miles on the issue, but only one by block within the rallies.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): Passionate protesters. They argue then an Islamic center and mosque two blocks away from Ground Zero is what they call a slap in the face to those killed on 9/11.

ANDY SULLIVAN, ANTI-ISLAMIC CENTER ACTIVIST: This is Andy from Brooklyn. Forget about it.

CANDIOTTI: Andrew Sullivan is urging blue-collar workers to sign a pledge refusing any job at the proposed religious site. Hard hats were handed out at the protest rally. This man who works for the Fire Department put one on.

MIKE MEEHAN, ANTI-ISLAMIC CENTER PROTESTER: They built it uptown, I'd have no problem with it. Believe it or not. I would have no problem. Just not down here.

CANDIOTTI: For others the Muslims behind the project are nothing short of sinister.

SHAWN GILFEATHER, ANTI-ISLAMIC CENTER PROTESTER: I think the people that are backing it, the people that are funding it are actually in cahoots with them. You know, with the terrorists.

CANDIOTTI: About a block away supporters scoffed at suggestions that an Islamic center would be a cover for terrorists.

DR. ALI AKRAM, ISLAMIC CENTER SUPPORTER: There are many Muslims who lost Muslim family members at Ground Zero, so when they come to visit Ground Zero as a memorial, they should be able to walk two blocks down and pray for their loved ones.

CANDIOTTI: An Ohio Army reservist on his way to Afghanistan sees the controversy as a perfect platform to prove what troops are fighting for overseas.

LT. COL. CHRIS DZIUBEK, ISLAMIC CENTER SUPPORTER: They have the -- certainly the right and the ability to do whatever they would like. And that's what I like about the country is the ability for people who disagree with one another to hash it out without guns.

CANDIOTTI (on camera): On Sunday, the wife of the imam involved in the Islamic center controversy said there are no changes planned, but that a move could be considered after consultations, as she put it, with all major stakeholders. DAISY KHAN, EXECUTIVE DIRECTOR, AMERICAN SOCIETY FOR MUSLIM ADVANCEMENT: We have to be cognizant that we also have the constitutional right. We have the Muslim community around the nation that we have to be concerned about.

And we have to worry about and the extremists as well because they are seizing this moment. And so we have to be very careful and deliberate in when we make any major decision.

CANDIOTTI: The Islamic center planners say they're working with a rabbi to pattern the building like a Jewish community center. But that's of little interest to protesters.

Susan Candiotti, CNN, New York.

(END VIDEOTAPE)

PHILLIPS: Two (INAUDIBLE) men from Iran were putting the West on edge this morning. Saturday the Islamic Republic began fueling its first nuclear power plant and to share a facility the Iranians say is built solely for generating electricity.

Then yesterday in Tehran President Mahmoud Ahmadinejad unveiled the country's newest military weapon. An unmanned droned aircraft. Iranians are calling it the ambassador of death and say it can execute high-speed bombing missions.

How might other countries view these latest developments -- and seeming defiance -- out of Tehran? We're going to drill it down later this morning in our "AM Extra" with John Roberts. That's ahead in just about 20 minutes.

The founder and editor of the whistleblower Web site WikiLeaks said that Swedish authorities reached the height of irresponsibility in ordering his arrest. Swedish authorities ordered the arrest of Julian Assange on rape and molestation charges on Friday. Then on Saturday, that order was dropped.

Assange told the Arabic news network Al-Jazeera that it is clearly a smear campaign. Last month WikiLeaks released thousands of classified U.S. military documents on the war in Afghanistan.

It's Day 126 of the Gulf oil disaster, and people and businesses affected by it now have a new place to file claims. The Gulf Coast Claims Facilities takes over for BP.

Attorney Kenneth Feinberg is in charge of BP's $20 billion escrow account. He will hold three town hall meetings in Mississippi today to explain the compensation rules. People who have previously filed a claim with BP will need to file a new claim form, but they won't have to resubmit documentation.

And new developments in that tense 10-hour hostage situation in the Philippines. A former police officer has taken hostage several tourists aboard this bus. And just moments ago, we learned that that gunman was shot and killed. Some of the hostages still alive. We'll have more details in a live report from Manila.

ROB MARCIANO, AMS METEOROLOGIST: I'm Rob Marciano in the CNN Severe Weather. Record heat and a good pretty good nor'easter heading up the East Coast, torrential rains and some wind in eastern New England.

We'll talk about that plus tropical storm Danielle. CNN NEWSROOM is coming right back.

(COMMERCIAL BREAK)

PHILLIPS: All right, let's get back to that hostage situation in the Philippines. Just within the last hour it finally came to an end in Manila. A former police inspector held several people aboard a tourist bus, this tourist bus, hostage for 10 hours. There are reports of fatalities, but police have not yet spoken to reporters about that. The gunman is dead we are told.

CNN's Anna Coren is actually at the scene. Earlier she had to take cover because of gunfire that was taking place there.

Anna, can you give us a little background and bring us up-to-date on the situation now?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT (via telephone): Kyra, we can confirm that three people have been killed. One of those being the gunman, 55-year-old Rolando Mendoza. He is a former policeman who took this tourist bus hostage bus at 10:00 AM local time. That is roughly 11 hours ago. He took the bus hostage with 25 people onboard, 21 of those, Hong Kong nationals.

That -- that was the situation. Police established contact and began negotiations. He initially allowed nine hostages off the bus. He allowed food on the bus. Police said that he was cooperating. And then late this evening -- or late this afternoon, I should say, roughly around 6:00 PM local time, things spiraled out of control. His brother approached the bus, asked him to surrender, threw himself on the ground and that is when there was an exchange of gunfire, and that continued for a good hour.

Police SWAT teams surrounded the bus. They used sledgehammers to smash the windows. More gunshots ensued. This was a very, extremely tense situation for a good hour and a half, two hours. Finally, police shot that former policeman, Rolando Mendoza, in the head.

So we can confirm that three people are dead. One of them being the gunman. Seven hostages have walked off the bus alive. We don't know the situation of the other five hostages onboard, Kyra.

PHILLIPS: So Anna, can you confirm that this former officer did this because he was upset that he had been fired?

COREN: That is correct. He was fired last year following an investigation by the ombudsman on charges of robbery and extortion. He boarded this bus, and once he took it hostage, he said that he wanted his name cleared, that he was innocent, that he wanted to be reinstated. He also wanted his pension, which he would be entitled to next year at the age of 56.

So they were his demands. Police were negotiating with him. Things obviously dramatically spiraled out of control early this evening, and that has led to the deaths of three people, including the gunman. The seven people have walked off, five people we still don't know their condition, Kyra.

PHILLIPS: Anna Coren, live from Manila. Anna, thanks.

In Chile, rescuers say that miners trapped for nearly three weeks are still alive. The 33 miners are almost a half mile underground. They sent a note yesterday to rescuers on the surface that just simply said, quote, "We are fine in the shelter, the 33 of us."

This is actual video of those trapped miners, but getting them out is going to be really difficult. Officials caution that it could take four months to actually rescue them.

If you think your morning traffic commute was difficult, imagine being stuck in traffic for nine days. China's national expressway headed into Beijing is backed up more than 62 miles. The gridlock started August 14th because of construction. Some drivers play cards to pass the time. Others are just angry for the vendors who popped up along the road, who say they are overcharging for food and drinks while everybody's stuck there.

It's been just over a year since pop superstar Michael Jackson died, and today his personal physician is headed to court. We're going to tell you what lies ahead for Dr. Conrad Murray and the involuntary manslaughter case against him.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories. The egg recall now up to a half billion eggs in 17 states. The FDA says about 1,000 people have gotten sick from the salmonella outbreak. The feds are linking it to two Iowa egg producers.

Iran showing off the newest weapon in its arsenal. State TV saying that the unmanned military drone can carry out long-range bombing missions. The unveiling comes as Iran is fueling its first nuclear energy plant.

And a hostage situation appears to be over in the Philippines Seven hostages who were held on a bus are alive. The gunman was shot in the head and killed. Two bodies have been taken off that bus now. Right now, we don't know if one of those -- actually, we did just update the story, I apologize. There were three dead bodies taken off that bus. One of them, the gunman.

(COMMERCIAL BREAK)

PHILLIPS: Going head over heroes -- heels, actually, for a foul ball. We've seen moves like this before. This was actually Cleveland Indians' third baseman Jayson Nix getting his props this morning for some pretty good acrobatics. Sporting such fine leather work yesterday in Detroit. Going above and beyond the railing to grab that fly ball. And we've got some slow-mo replay for you.

Rob Marciano, big baseball fan.

MARCIANO: Yes.

PHILLIPS: Not a bad move, huh?

MARCIANO: Not at all. Very agile move there. And it's come off unscathed, relatively speaking.

PHILLIPS: And it is -- there we -- Oh! You kind of tend to wonder, though, if it's really worth it when you take that kind of pain.

MARCIANO: You got the highlight reel?

PHILLIPS: It's kind of graceful.

MARCIANO: Well, you know -- when contract negotiations come along, it may be worth the paying and the pain. And certainly next year's all-star ballot, for sure.

Hey, good morning, Kyra. Good to see you again. We do have some rainfall that's been pounding much of the northeast for the past couple days, really. Started off a decent weekend, and then yesterday, the rain really started coming down. And it's doing that right now.

Places like Boston and New York City getting hid with not only rain, but some wind, especially up around the Boston area and out towards Cape Cod. Not the best of beach days here. We've got winds anywhere from 20 to 30 miles an hour. And some of these areas have seen a little bit of rainfall that has caused some flooding.

Check out some of the issues that, not only the northeast is seeing, but the southeast. This is Queens, New York, just over on the other side of the river, where some of the roadways looked just like rivers last night. Manpower, in some cases, had to move these vehicles along. And this morning probably just as slow a commute.

Some of the rainfall tallies across the northeast, pretty staggering. Ridgewood, New Jersey, 6.29 inches of rainfall. Syracuse, New York, upstate, 4.21. Poughkeepsie, just up the Hudson Valley, 3.26.

And, well, Savannah, Georgia getting into the act as well. Not only have we seen some rain, but there have still been some record high temperatures in some areas across parts of the midsections of the country. And here you go. Corpus Christi, Texas, 101. Texarkana, Arkansas, 105. And San Angelo, Texas, seeing a high temperature reading of 105 degrees as well. Let's talk about Tropical Storm Danielle This was a little TD, it looked like -- I think, Saturday it developed. The storm yesterday. Probably will be a hurricane by the end of the day today or at least tomorrow morning.

It is pretty far out there. A couple thousand miles away from the US. 60-mile-an-hour winds. It is moving towards the US, but right now the wind patterns and the overall weather pattern probably will make it to re-curve towards Bermuda. Maybe even east of Bermuda.

Still far out there, things can change, and we won't take it off our radar screen just yet. But so far so good this hurricane season. So far so good, Danielle, but Danielle will probably become a hurricane either later on today or tomorrow. We'll have to monitor that carefully. Kyra?

PHILLIPS: All right, sounds good. Thanks, Rob.

MARCIANO: All right, see you.

PHILLIPS: Let's go cross country for some news around the US now. First stop, Washington. A new start for the USDA employee who was wrongfully accused of racism. Shirley Sherrod is scheduled to meet tomorrow with Agriculture Secretary Tom Vilsack. The department official confirms that they will discuss a new job offer.

Also this morning in Los Angeles, the suspect in the Grim Sleeper serial killings scheduled to be arraigned. Lonnie Franklin, Jr. is accused of killing ten women in the south LA area between 1985 and 2007. The nickname Grim Sleeper came from the long breaks between those attacks.

Also, due in an LA courtroom today, the physician who was with Michael Jackson at the time of his death. Dr. Conrad Murray admits to giving the pop star the powerful anesthesia that's blamed in his death. Murray says that he gave Jackson a much smaller amount than what was found in his body.

Iran has a new nuclear power plant, a new weapon, and new taunts. We're going to tell you who's concerned and why.

(COMMERCIAL BREAK)

PHILLIPS: All right, you hear the opening bell right there ringing on Wall Street. But lately, a lot of people have been pulling out of the stock markets. So, what are they buying instead? Bonds. Patricia Wu at the New York Stock Exchange with the details.

I tell you what, that's exactly what my financial planner was telling me to do. Shift more of my money into bonds.

PATRICIA WU, CNN BUSINESS CORRESPONDENT: That's right. It's a good financial planner, Kyra. Basically, the thing is people are scared, you know, that we had a very choppy week on Wall Street last week, and we still got the high unemployment rate. There's renewed talk of a double-dip recession. So, people want something that makes them feel safe. So, they're piling into bonds.

And you know, when people start piling into something, the prices go up and the yields go down. They're piling into government bonds and into corporate bonds. And we got a charge of the U.S. to actually ten-year yields for the last three months. And you'll see when we get that chart up, that the line is going straight down on those yields. Also, with corporate bonds, IBM is selling $1.5 billion worth of bonds this month at a yield of just 1 percent.

And there we have the ten-year treasury yield for the last three months, and you can see how that line is going down. So, basically, the thinking is people would rather gain just a little than lose a lot. And analysts are saying that the only thing that's going to move that confidence factor back up and move those investors back into the stock market, the big thing is the unemployment rate. That's got to come down.

Companies got to start hiring for those investors to start feeling confident again. Now, for today, we do have a higher opening expected. We'll take a look at those numbers right now. The Dow is actually up about 27 at 10,241. The NASDAQ is up about 10. And the S&P 500 is up four.

Back to you, Kyra.

PHILLIPS: All right. Patricia, thanks.

WU: Sure.

PHILLIPS: Be prepared for what could be a more intrusive frisking in airport security lines. "The Boston Herald" is reporting that a new procedure is being tested now at the Boston and Las Vegas airports before being rolled out nationally.

Listen to this. Under the present search technique, screeners use pat down motions of their hands over passenger's clothing and then switch to the backs of their hands over sensitive body areas.

We've all been through that, right? The searches will be done with front of the hand sliding motions over greater parts of the passengers' bodies, including the sensitive areas. TSA male officers search male passengers. Female officers search females, but something tells me this still doesn't make that any better.

All right. Iran has a new nuclear power plant, a new weapon, and new taunts directed at old foes such as Israel and the U.S. Iranian president, Mahmoud Ahmadinejad, unveiled the new military drone, an unmanned aircraft dubbed as the ambassador of death. And this morning, Iran's press TV is quoting him as saying Israel is, quote, "too weak to attack Iran," and that he's dismissing any prospects of U.S. military action against the Islamic Republic.

Time for our "A.M. Extra." John Roberts is talking with us about this.

JOHN ROBERTS, CNN CORRESPONDENT: Good morning. Good to see you here for a change.

PHILLIPS: It's nice to hear. Face to face. There's also something we keeps talking about. Negotiations don't work, sanctions don't work, there's always talk of military action, and we kind of tell the same story over and over and over again. What makes this any different, this conversation today?

ROBERTS: As with all things Iran, it seems to be Groundhog Day. There was some evidence that the sanctions are beginning to bite just a little bit, but that may be extending time to sort of the critical moment if and when Iran develops a nuclear weapon more than anything. There's new evidence that Iran is going to say, OK, the sanctions work, we're giving up our nuclear program. Look at the belligerence when they rolled out that Karar drone, Karar means destroyer.

It's a medium range. It goes about 620 miles and can carry four bombs. It means it could hit sites in Saudi Arabia and Turkey, places like that. It couldn't get as far as Israel, but the bigger problem is fueling up the Bushehr nuclear plant with fuel rods.

Now, Russia is involved in this, Kyra, so to some degree, the nations in the world are taking comfort, in fact, that Russia will deliver the nuclear fuel and then it will take it away.

But Israel has called this totally unacceptable. It shows that Iran is developing a broader nuclear program where they're looking to getting enriched uranium, highly enriched uranium, to create nuclear weapons.

I talked with Patrick Clawson from the Washington Institute for Near East Policy about that this morning, about exactly how much enriched uranium does Iran have and whether or not it's capable of building a bomb. Here's what he told me.

(BEGIN VIDEO CLIP)

PATRICK CLAWSON, DEPUTY DIRECTOR OF RESEARCH, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: Iran got enough low enriched uranium for a bomb, but the trick is making that low enriched uranium into high enriched uranium and shaping it into a bomb. And as you said, Iran has been encountering some problems. Its program was racing ahead for a few years, but the last couple of years, it seems to have been held back.

Hopefully, by the effective sanctions, quite possibly by some western sabotage, we've had some reported spies in that program. We don't have a good sense, but we do know that as long as the international inspectors are going in there, we'll have some warning about Iran's overt program. And so far, they've been pretty bad about keeping any covert facilities hidden. We've been pretty good about finding them.

(END VIDEO CLIP)

PHILLIPS: All right. Back to the issue of military option, because it is such a chase, a back and forth, and you see the threats and they come out with these updates. Now, it's talking about the unmanned drone. But military sources here in the U.S. have said Iran is definitely on our radar, but we're strapped. We got two ongoing wars that. That brings in Israel. Could Israel take on this role of a military option without the support of the U.S.?

ROBERTS: That's the big concern and that's the big speculation. What is Israel going to do about this? It's likely according to Robin Wright who used to be with "The Washington Post." He's now with the Institute of Peace that they wouldn't take a Bushehr like they did the Osirak Nuclear Power Station in Iraq back in 1981 or they took that facility in Syria a little more than a year ago.

It doesn't appear to be a need to do that, but these other nuclear facilities, when they had the enrichment centrifuge cascades, there's another highly secret facility said to be near the holy city of Qom. That is much more of a concern for Israel. Is it possible that Israel could launch a unilateral strike and take that out? If it appears as the Iran is very close to getting a nuclear weapon, Israel might just do that. The United States has some plans as it does with many contingencies around the world to launch an attack against Iran, but would that be a good idea?

So, there seems to be some time here. It was thought that maybe as early as next spring Israel might want to strike against Iran's nuclear facilities, the highly enriched uranium for action (ph) facilities. That timetable seems to have been according to Dr. Clawson and Robin Wright pushed back a little bit, maybe to a year, maybe a little bit more than a year, but no question that the further down the road Iran gets with this nuclear program and it's really more just symbolic than anything perhaps with the Bushehr nuclear plant, the greater the anxiety becomes, the greater the tensions rise and the greater the possibility that somebody will take some military action against Iran.

PHILLIPS: (INAUDIBLE) there. I mean, Iraq is a huge concern. We already know that Iran funnels weapons into Iraq. And there has been this fear about what happens if the terrorists got their hands on nukes. That brings up a whole another issue, but we'll keep talking about it.

ROBERTS: Yes, that's the nightmare scenario that nobody really wants to think about, but everybody is being vigilant to ensure it doesn't happen.

PHILLIPS: Thanks, John.

ROBERTS: You bet.

PHILLIPS: More than a half of million eggs have been recalled in 17 states now. And more recalls could be ahead. We'll update you.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories. The egg recall now up to a half billion eggs in 17 states. The FDA says about 1,000 people have gotten sick from the salmonella outbreak. The feds are linking it to two Iowa egg producers.

A ten-hour hostage crisis in the capital of Philippines has ended. A former police officer had taken several tourists on a bus hostage. He's been killed along with two of the hostages. The policemen fired for extortion, had claimed he was innocent and wanted his job back.

Iran is showing off the newest weapon in its arsenal. State TV says the unmanned military drone can carry out long-range bombing missions. The unveiling comes as Iran is fueling its first nuclear energy plant.

(COMMERCIAL BREAK)

PHILLIPS: You couldn't even turn on the news the last few days without hearing something about President Obama's religion. He's a Christian, but a poll that came out last week actually suggests more than a third of Americans don't know that. Nearly one of every five Americans actually thinks he's a Muslim. David Brody of the Christian Broadcasting Network has interviewed the president several times about his faith.

He wanted to get his perspective on all of this. David, just to put this in perspective, you know, we're talking about this because when the whole mosque controversy being built or being expanded near Ground Zero became a big headliner, the president came out and made comments about the Muslim faith so that poll went up, more people thinking that he's a Muslim. But you said the White House was clued into this perception problem way before Mr. Obama even took office.

DAVID BRODY, CBN WHITE HOUSE CORRESPONDENT: There's no doubt about it. I've interviewed him four times. The first time was back in 2008. It was interesting because we had just wrapped up the 15- minute interview or so when we had talked about his Christianity because he's been pretty outspoken about his Christianity, at least during the campaign he was.

And then, we were done with the interview and I remember Robert Gibbs coming over to me and say, hey, we want him to address this whole Muslim poll situation as well that had been out there. Actually, it wasn't a Muslim poll, it was Muslim e-mail that was going around that President Obama or at that time candidate Obama was a Muslim.

And so, we asked him about that as well. That had not really taken hold in the media at that point, obviously, but there they were already being very proactive about this knowing that there was some damage of this thing got hold. And indeed, that e-mail chain, if you will, started going around the country. And that was the beginning of all this.

PHILLIPS: So, when Gibbs pulled you aside in 2008, and you had this conversation once again with the president, did the president come forward and say, look, I'm a Christian. This is crazy. We need to put this in perspective. BRODY: Absolutely he did. The pretty much power phrasing exactly what you said. I mean, he said, look, I'm a Christian. I am not a Muslim. He actually said those words. And he said I don't -- I'm not attended on Midrasha (ph), and he went on to address the charges within that e-mail. So, he was pretty outspoken about it. He wasn't hot under the collar about it, but he knew that there could be some potential damage.

I mean, he even admitted the fact that, you know, there's no reason for this type of information, this misleading information to get out there because it could do, not just damage to his campaign, but he just felt it was just wrong for a moral perspective, if you will.

PHILLIPS: So, what do you think the president should do? Because he's reached out to the Muslim world. You remember just a few months after he took office in Cairo, he made that speech. We carried it live. Does he need to roll into a big Christian mega church like T.D. Jakes or Joel Osteen or one of these guys that has a huge audience and say, hey, this is where I stand. I'm speaking to you now.

BRODY: There's no doubt. I mean, here's part of the problem. I think the T.D. Jakes or the Joel Osteen or whoever ends up being this kind of bridge, if you will, to the conservative evangelical community would probably be a good idea by the president. The problem is you don't want to come across as they pandering or being making it look like, look, we got a poll problem and now we're going to go talk to the conservative evangelicals. So, you don't want it to come across that way. You want it to be sincere.

And all along this president has been very sincere in terms of what he believes and how he has tried to communicate that. But look, I mean, in terms of the T.D. Jakes and Joel Osteens, that's part of it. But the problem here for the White House is that because they've needed to kind of talk to the Muslim world, some of his critics will say cater to the Muslim world, this is continue to play into the perception that the President, for some -- some people do believe that that he's a Muslim.

And look, I mean, he has -- there are a litany of things they believe about the President, but the President is just continuing to talk blue in the face until he --

PHILLIPS: So --

BRODY: -- he's trying to convince people he's not. But --

PHILLIPS: So David, we -- we-- you know, we've seen video of President Bush going to church, leaving church, Bill Clinton also, the whole -- the whole photo op of them attending Sunday church in D.C., but we haven't -- I don't think we've seen that with Obama, right? And does that fuel this perception problem?

BRODY: Well, no doubt about it. We have not seen the visuals. Look, I mean, there are reasons why he's not attending the church in D.C. and the White House has explained that. But -- or joined a church in D.C. But the fact of the matter is we don't have visuals on that --

PHILLIPS: Explain to the viewers again David, not everyone may remember.

BRODY: Right. Well, the President is basically -- the White House is pretty much saying look, it would be a mob scene. I mean, you know that the President wants folks there in D.C. to worship in peace, if you will and there's no reason that he necessarily needs to cause a big commotion going to church every week in D.C.

Having said that, he does go to church in Camp David or at Camp David up there when -- when he goes up there. So -- but -- but look, I mean, I think you put all of this together, Kyra, obviously his name causes some people to have a problem to begin with, right?

I mean, after that you know we know he lived overseas and then we talk about how some of his rhetoric towards Israel has been pretty tough, at least according to his critics. So that's been an issue.

You know the Jeremiah Wright's church and now of course we're not seeing him go to church. You put it all together and there are people that will take all of this and -- and start to question it. And I think I can tell you right now, Kyra, this isn't going away for the White House.

I think the conventional wisdom out there from the White House and others is that -- well, let's let this blow over. This will be a headline in a week what the media do is do diligence with this and then we'll move on to more important things.

That's the easy conventional wisdom story. I'm not so sure that that will be the case. I think this goes down to a trust issue for these 25 percent, 24 percent of folks that are -- that are out there that will -- that do have a trust issue with the President on this issue.

PHILLIPS: David Brody, thanks.

Well, it's no secret that obesity is costly to your health, but it can cost you in other ways, too. Just ask the lady who went into the nail salon and ended up paying an extra charge because of her size.

(COMMERCIAL BREAK)

PHILLIPS: We haven't cut the V.A. any slack on this newscast and mistakes this egregious don't deserve slack. Dirty hospital equipment that exposed thousands of vets to HIV and Hepatitis, letters telling vets they had Lou Gehrig's disease when they didn't. A towering backlog of claims, high rates of PTSD, and suicides.

With a track record like that, I have to wonder, does the Department of Veterans Affairs have any business running Arlington National Cemetery. Well, some veterans groups and lawmakers say it's worth considering now. The Army runs Arlington currently, and that hasn't worked out so well. Unless you consider thousands of mislabeled or empty graves, tombstones dumped in creek beds and millions of dollars wasted trying to upgrade the record system.

The V.A. already manages more 100 cemeteries, so it's not like this would be anything new, but we're talking about Arlington National Cemetery, the most hallowed of America's hallowed grounds. I know something needs to change there but I'm not sure that the V.A. is the one to pull it off, not until it gets its own affairs in order.

Especially now that combat troops are coming back from Iraq, politicians and veterans groups pushing for this change should be careful what they wish for. It would be a shame if the V.A. dishonored the dead as it has the living.

All right, here's a story where I really want your input. It's about the high cost of obesity. We've seen airlines kick big passengers off the plane, right? Or make them buy two tickets instead of one.

Now I want to take you to a nail salon in Atlanta. A woman goes in for a manicure/pedicure and gets stuck with surcharge, an obese surcharge. Listen to both sides of this story from WSB TV's Eric Phillips and then let's talk.

(BEGIN VIDEO CLIP)

MICHELLE FONVILLE, FORMER CUSTOMER: I was humiliated. I almost cried. I turned my face to just -- you know because tears were forming in my eyes.

ERIC PHILLIPS, WSB-TV: Michelle Fonville says her experience at Natural Nails in Dekalb County (ph) on Monday turned from pleasant to painful in a matter of moments. She says things went downhill after she got her manicure/pedicure and eyebrow arch. And the manager gave her the bill.

She realized she's been overcharge by $5.

FONVILLE: I said, I was been overcharged. I said, she may have made an error but she broke it down and then she told me she charged me $5 more because I was overweight. I said, ma'am you can't charge me $5. That's discrimination, you can't discriminate against me because of my weight.

KIM TRAN, SALON MANAGER: That's -- that's not discrimination. That's not about discrimination.

E. PHILLIPS: The manager tells me it's about the salon chairs that cannot hold more than 200 pounds or it could lead to costly repairs.

TRAN: Twenty five hundred dollars, you think that's not fair. When we charge $24 and have to pay for $2,500. Is that fair? No. E. PHILLIPS: The manager did refund Fonville the $5 overcharge and told her to take her business elsewhere.

TRAN: I told her, I'm sorry but next time, I can't take you.

FONVILLE: It was a matter of fact, you know, attitude and I just couldn't believe a human being was talking to another human in that manner. The word has to get out that that these people are discriminating against because of our weight. I mean, come on, we are in America. You can't do that.

(END VIDEOTAPE)

PHILLIPS: Well, maybe the nail salon should have been transparent and put a sign out in front that said if you are overweight, you have to be overcharged. So that would have saved some embarrassment. But is the customer right or is it blatant discrimination or does the business owner have a right safeguard its expensive equipment.

That's the question up now on my blog. Go to cnn.com/kyra. Tell me what you think. I'll read some of your responses next hour.

And here's what we're working on for the next hour of CNN NEWSROOM. We're going to begin with our correspondent, Casey Wian -- Casey?

CASEY WIAN, CNN CORRESPONDENT: Kyra, could this be Ground Zero of the national salmonella outbreak? We'll have the latest on the investigation into the link between salmonella and big Iowa egg producers.

STEPHANIE ELAM, CNN CORRESPONDENT: I'm Stephanie Elam in New York. Skyrocketing textbook prices are squeezing college students' budgets. We'll run through some affordable options from renting to going fully digital -- that's coming up in the next hour.

ROB MARCIANO, AMS METEOROLOGIST: And I'm Rob Marciano in the CNN Severe Weather Center. The Northeast getting beat up a little bit for the second day in a row. Plus we have a tropical storm in the Atlantic that likely will become a hurricane. We'll follow the track in the next hour -- Kyra.

PHILLIPS: All right guys. Thanks.

Also, we're looking into a case of Saudi Justice that takes the idea of an eye for an eye to another extreme. A judge asks a hospital to paralyze a man as punishment. As you can imagine it's a request that has outraged human rights groups.

(COMMERCIAL BREAK)

PHILLIPS: Well, Earth, Wind and Fire, not exactly the kind of music that you think would spark a crowd's wild side, but here in Ft. Collins, Colorado, the city's bohemian nights went from a fun festival to major chaos. Let's get the story from affiliate KUSA. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: You'd think this video would be shot after a death metal concert, but Earth, Wind and Fire? A few hours after the band finished playing in Ft. Collins, a crowd of about 500 gathered a few blocks away from the stage -- an old town. And began throwing bottles, in officers ruining cars and damaging cars and local businesses.

Police in riot gear tried to quiet the crowd by dispersing tear gas. Two people were thrown through the window at Bob Criswell's pottery shop. They had to be taken to the hospital.

BOB CRISWELL, BUSINESS OWNER: I was told by a police officer that it started off as a fight around in the square, that has spilled out of a bar. When they tried to break it up, the fighters resisted, so the police reacted strongly.

UNIDENTIFIED MALE: Vendor tents which were shut down for the night were destroyed by vandalism, the merchandize was stolen and at least one tent was set on fire.

UNIDENTIFIED MALE: It's ok to have a good time and it's ok to get a little bit rowdy but don't hurt other people who are just trying to make a living. That's somebody's property.

UNIDENTIFIED MALE: Things got so out of hand here along College Av last night. Police had to fire these little red pellets at the crowd to get them to cooperate. These red pellets were found inside a lot of the vendor's tents this morning, along with a lot of other strange stuff.

One vendor found a puddle of urine on his chair.

That's unacceptable. You don't do that to other people's property. You wouldn't do it to yourself. Why would do you it to somebody else?

UNIDENTIFIED MALE: Phillip Moleski (ph) lives next to the stage. The Bohemian nights concert series is part of Fort Collins new West Fest new celebration.

PHILLIPS MOLESKI: People were jumping all over my fence, climbing on the walls, trying to get on the roof or (INAUDIBLE) just to see the concert.

The West Fest had a lack of security I tried telling people to get off the thing and they don't want to do nothing.

UNIDENTIFIED MALE: The downtown business association which heads up the even says the riot happened well after crowds existed the festival area around 10:30 Saturday night.