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Sandusky Jury Resumes Deliberations; Sandusky Accuser Speaks Publicly; Wall Street Rebounds From Bank Fears; U.S. Banks Downgraded; Record Floods Ravage Minnesota; Park Ranger Falls 3,700 Feet Off Mountain; Huge Support For Grandma Bullied On Bus; Candidates Court The Latino Vote; Romney Mum On Deportation; Deadly Standoff At Afghan Hotel Ends; Man Charged With Calling In Bomb Threat; Gas Prices Could Hit $3/Gallon By Fall; Cancer Survivor Plays Ball With One Arm; Wall Street's Health Care Bet; Heat are NBA Champs; Paralyzed Teen Goes for the Gold; Streisand Back in Director's Chair; Tell-Author Sues John Travolta; Bullies Write Apologies to Bus Monitor; Alec Baldwin and David Letterman Drop Their Pants on TV

Aired June 22, 2012 - 10:00   ET

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

CAROL COSTELLO, CNN ANCHOR: -- until a final ruling. He got a two-run double last night and guess what, Peralta takes the loss. Washington leads in the league by three games.

Let's go to the link shall we, shot of the day of the Travelers Championship. Bubba Watson, yes, that went exactly, exactly how he planned it.

The ball rolls up and into the cup for an eagle. Watson finished round four under par who's two strokes back of the leader, David Matis. That's a look at sports this morning. The next hour of CNN NEWSROOM starts right now.

And good morning to you. I'm Carol Costello. Just ahead in the NEWSROOM, deadly rescue on Mt. Rainier. Three climbers trapped at the top make it down safely, but one of the rescuers falls almost 4,000 feet to his death.

Health care price tag, all eyes on the Supreme Court as it gets ready to rule on President Obama's landmark health care plan. We're taking a look at how Wall Street is tied to the case and which could be the biggest winners and losers.

Face it, embrace it, defy it, conquer it, that is the motto of this inspirational and record-setting swimmer getting ready to compete in the para-Olympic games. We're going to talk to Victoria Allan live about her remarkable success.

But we start this morning in Pennsylvania. Jurors right now are meeting behind closed doors to decide the fate of Jerry Sandusky who arrived at the courthouse a few minutes ago.

The jury deliberated late into the night. They ended their discussion less than 12 hours ago as a matter of fact. They are now reviewing testimony from two witnesses who appeared on the stand.

National correspondent Susan Candiotti is outside the courthouse. Susan, bring us up to date.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, hi, Carol. It turns out that the jury is now in court because last night they asked to rehear some testimony from a couple of key witnesses this in this case, assistant graduate student Mike McQueary and Dr. Drenoff.

Now Mike McQueary is the witness who testified that he stumbled upon Jerry Sandusky with the young boy in the showers back in 2001 and he said, in his words, you don't have to be a rocket scientist to know what is going on.

He described during his testimony that he saw Jerry Sandusky facing a boy who had his hands up against the wall and that the boy was being sexually assaulted.

Dr. Drenoff had testified for the defense saying that Mike McQueary had only said he heard slapping sounds. But now the jurors are in open court and they are listening to some role playing.

The prosecutors are playing Mike McQueary and the other one is playing the prosecutor asking questions and the jury is watching all of this and eventually the defense will read Dr. Drenoff's testimony into the record as well. So they are back in action in court right now.

COSTELLO: Susan Candiotti reporting live for us this morning.

In the meantime, another Sandusky accuser is speaking out publicly. His interview appeared last night on NBC's "Rock Center" with Brian Williams. He says that Sandusky abused him more than 100 times over the course of several years.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: If Jerry Sandusky were sitting right here --

TRAVIS WEAVER, SANDUSKY ACCUSER: I'd punch him in his mouth.

UNIDENTIFIED FEMALE: Would you say anything first?

WEAVER: No. There would be no reason to say anything. He knows what he did. I know what he did.

(END VIDEO CLIP)

COSTELLO: Travis Weaver did not testify in the trial, but has filed a civil suit against Sandusky. He says he carries around a tremendous sense of guilt because by not saying anything earlier. He believes Sandusky was able to abuse more boys.

OK, this is what it looked like on Wall Street right now. Just about 35 minutes after the opening bell. Guess what, the Dow is in positive territory, up about 81 points.

That's kind of good news because of the news that sent international markets plunging overnight. Ratings agency, Moody's, downgraded the health of 15 banks including several big ones that you have entrusted your money to big names like Bank of America, Goldman Sachs, JPMorgan Chase, Citigroup and Morgan Stanley.

Business correspondent Christine Romans is live. So are we in for a rebound or a slow rebound?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It's a rebound in the stocks. I mean, a little bit of bargain hunting is what they call it on Wall Street. I mean, these stocks have been battered so badly.

I mean, some of them are down 50, 60, 70 percent over the past few years. So they are picking up a little bit today after getting just hammered yesterday.

The Dow Jones Industrial average is up about 0.06 of 1 percent, but it was down more than 2 percent yesterday. So you need another 170 points to get back to where you started on Thursday morning.

This is all about the bank downgrade, Carol, but also because the world growth is slowing, quite frankly. Moody's downgraded those 15 banks, including five big American banks in part because of a soft patch in the global economy, because of increased regulation, because of more uncertainty, because of concerns about the health of the global economy, among other things.

That's why those got hit yesterday. They are coming back a little bit though this morning. Just a little bit.

COSTELLO: OK, so what does this mean for me and you?

ROMANS: You know, it doesn't mean anything for how you are doing your banking, quite frankly. But Mike Mayo, a bank analyst said that what you're looking at right now is probably the worst 10 years for bank lending since the great depression.

These banks are all trying to have as Jamie Dimon from JPMorgan Chase calls it a fortress balance sheet that can protect them and insulated them from anything crazy that could happen in the world, right?

So that means they are very risk averse in terms of lending and they are being very careful in making sure they have very big cash reserves. In some cases, it's regulators who are making sure that they are holding on to money even as regulators say, can you lend more?

So they're getting kind of conflicting advice, but what it means for us, interest rates are very low and, quite frankly, because the global economy is slowing, Carol, I think you're going to see gas prices continue to come down.

So how this is going to affect you, this sort of summer slump that we're worried about is, slow jobs growth, low interest rates, falling gas prices. Those are things that we will feel right now. COSTELLO: Yes. Remember back in the day a couple months ago when everybody was predicting $5 a gallon gas? Well, they were wrong, Christine, and I'm glad. Christine Romans. Thanks.

Duluth, Minnesota, finally getting a break today, sunny weather for the cleanup after this week's massive flooding. Nine to ten inches of rain in less than 24 hours, that rain fell on already saturated ground triggering floods. As the city's mayor told me, the low-lying areas took the hardest hit.

(BEGIN VIDEO CLIP)

MAYOR DON NESS, DULUTH, MINNESOTA (via telephone): Duluth is a beautiful city built upon a rather steep hill so all of that rain that was falling further up the hill then started rushing down and into our lower neighborhood. The combination of the rain falling on our lower neighborhood and the water rushing down the hill created a tremendous amount of pressure that overwhelmed our storm water system.

(END VIDEO CLIP)

COSTELLO: The mayor said though the city is open for business, but he is warning people not to drive around barricades.

Now to Washington State where a park ranger fell nearly 4,000 feet to his death trying to rescue people stuck up on the mountain. Nick Hall was helping to rescue four people trapped on the summit of Mt. Rainier when he slipped and fell.

Three of the step climbers were rescued by helicopter. This morning, rescuers will try to reach the fourth climber who stayed on the mountain overnight with two rangers.

Now an update to a story we told you about yesterday, you know, the one about the school bus monitor ruthlessly bullied by a bunch of middle schoolers. People all over the world giving their support after the video of her abuse went viral.

(BEGIN VIDEO CLIP)

UNIDENTIFIED KID: You're a troll. You're a troll.

UNIDENTIFIED KID: How about if I bring my knife to -- cut you and my knife would go through you like butter because it is all lard.

(END VIDEO CLIP)

COSTELLO: Karen Klein, of course, is the 68-year-old grandmother, you see here. She makes about 15 grand a year doing that job. A web site raising funds to send her on a dream vacation, you cannot believe how much money this web site is raising.

It's up to almost half a million dollars in donations. Last night, Anderson Cooper told Karen Klein Southwest Airlines has offered Klein and nine others an all expenses paid trip to Disneyland. He also read apologies from two of the boys who were taunting her. (BEGIN VIDEO CLIP)

ANDERSON COOPER, HOST, CNN'S "AC 360": Do you accept the apologies?

KAREN KLEIN, BUS MONITOR BULLIED BY STUDENTS: I haven't gotten one yet. One is supposedly being mailed, but I haven't gotten that one. The other two I might not get anything from any way.

COOPER: What do you want to happen to these kids?

KLEIN: I want them to make sure that they never do this again to anybody.

(END VIDEO CLIP)

COSTELLO: There could be a silver lining to all those -- we're glad for Karen Klein. She is going to go to Disneyland and she does have nine people to bring with her so good for her.

OK, on to our next story. There could be a silver lining to all of those economic problems in Europe. Average gas prices hit 3 bucks a gallon or less in just a few months.

(COMMERCIAL BREAK)

COSTELLO: Now to the 2012 presidential race. About 90 minutes from now the nation's largest group of Latino Elected Officials will hear from Florida Senator Marco Rubio.

And at 1:35 Eastern, President Barack Obama will address the group. Yesterday, the president faced tough criticism from his Republican challenger, Mitt Romney when Mr. Romney talked with the group.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Some people I have asked if I will let stand the president's executive order. The answer is that I will put in place my own long-term solution that were in place and supersede the president's temporary measure. As president, I won't settle for stop gap measures. I will work with Republicans and Democrats to build a long-term solution.

(END VIDEO CLIP)

COSTELLO: So Governor Romney still won't say out right if he will overturn the president's new order that essentially ends deportation of young illegal immigrants, at least temporarily.

Congressman Randy Forbes of Virginia is here now. He's a Romney surrogate. Welcome.

REPRESENTATIVE RANDY FORBES (R), VIRGINIA: It's good to be with you, Carol, as always. COSTELLO: Thanks for being here. Governor Romney says we need a long-term solution to our immigration problem, but he didn't explain exactly what he would do with the 800,000 people who are in this country illegally, through no fault of their own, and are American in every way -- every other way, rather. So why didn't Governor Romney just outline a plan for those people?

FORBES: Well, Carol, I think the governor did outline a plan and I think we have to step back and recognize this is a big problem that impacts a lot of families and a lot of people's lives. But I think there is a question that we need to ask and that is --

COSTELLO: What's his plan?

FORBES: I think he sets forth a plan that says basically this. I don't think that any time we use this approach that says that the end justifies the means and we begin to pick and choose which laws are going to be enforced and which ones are not, I don't think we get a good result.

And I think what the governor indicated was the fact that we need a comprehensive plan that is not going to be just a two-year band-aid that has worked for political purposes, but one that really has some pillars that you can build a foundation upon.

And he lay forth what those pillars were and he said that, you know, he believes that if you have served this country and our military, risked your life for this country, that ought to be a path to citizenship.

I think that's common ground that we can get laws that both Republicans and Democrats can agree on Congress and push forward. The other thing he said that we needed to focus on making sure that we're getting skilled employees here instead of just randomly using our visa process. Again, that's common ground.

COSTELLO: Why doesn't he just come out and rescind President Obama's executive order and be done with it? Why does he just say that? If he wants that kind of plan, not a stop gap measure because he thinks that's harmful, why not say, I'm going to rescind the executive order on day one?

FORBES: Well, I think because he wants to talk about what we need to do as a permanent fix, which is his plan. I think the governor needs to be commended for coming out with a plan five months before he's president instead of waiting three and a half years after he's been sworn in as President Obama has done.

COSTELLO: But he did come out with a plan, a plan that deals with the 800,000 people living in this country illegally, but are American in every other way. He did not outline a plan to deal with those people at all.

FORBES: He outlined a plan because, Carol, as you know, that's a portion of the problem. But one of the things that we hear across our offices all the time with constituent services is people that are very, very concerned about the abysmal inefficiency of administration for documentation for people that are here legally.

One of the things that the president could have done is begin to put efforts to address that. I think Governor Romney very clearly pointed out that we need to get that process more efficiently and do it.

I think the governor has laid out a plan that is going to include all of this and it's going to be a plan that lasts far after this two-year period of time has expired.

COSTELLO: Our CNN contributor, Rubin Navarrete, wrote an op-ed on cnn.com about Governor Romney's speech and I'm going to read part of it for you. He said, "Governor Romney doesn't have to prove that he'll be tough on illegal immigration. He has to prove that he'll be something that Republicans usually aren't when it comes to immigration, smart and compassionate."

I think he's talking about this because originally in the heat of the primary battle Governor Romney suggested illegals will self-deport if they can't find jobs and that would solve are our problems.

In his speech yesterday, Governor Romney softened his rhetoric. Does that mean he felt that he was being too harsh? Does he not believe in the self-deportation thing anymore? What does that mean?

FORBES: Well, Carol, I think the governor was very clear in recognizing that this is a large issue that impacts a lot of families and I think one of the things that we see the governor doing is laying out a plan that's going to reach to the heart of this issue.

But I think the governor's all along -- he's been very clear that most individuals in this country are here because they want jobs. This administration has done a dismal job of creating those jobs. I think the governor realizes he's going to do a much better job and that's going to really help a lot of individuals across the country.

COSTELLO: So do you think that the governor still believes self- deportation is a good policy if it doesn't apply to those 800,000 illegal immigrants who were born here and are Americans?

FORBES: Carol, I'm going to leave the governor to reply to any specific questions that you might have for him. I'm here today to talk about what I think the best plans are and where we need to move forward as a country would be. And that's the plan that I was discussing just a few minutes ago.

COSTELLO: So do you think that he -- you know, President Obama does lead Governor Romney when it comes to Latino support out there by a wide margin, by at least, what, 30 percentage points. Do you think that Mitt Romney made headway yesterday?

FORBES: Well, I think the governor has continued to make headway because I think the governor is putting forth proposals that are not just political proposals, but proposals that are actually going to work and turn this country around.

I think most individuals across the country, I think regardless of what our nationalities are, we want to make sure that we're turning around this country.

We know we're not going to do it unless we get this economy going. I think as individuals start listening to the governor's plan, they are going to realize that he has proposals that are going to get America working again.

Turn this economy around and I think that's going to be the number one issue in this campaign and I think as people see that more and more you're going to see these polls continue to move in favor of Governor Romney as we move in to the November elections.

COSTELLO: Congressman Forbes, thank you so much for being here this morning.

FORBES: Thank you, Carol. It's great to be with you.

COSTELLO: Sure.

Checking our top stories now, we begin in Afghanistan where a standoff at a hotel near Kabul is over with seven Taliban militants dead and 50 hostages free. Kabul police say the militants stormed the hotel, killed 15 civilians and we're locked in a fierce gun battle with Afghan and NATO forces that lasted 11 hours.

In Tennessee, a federal jury charges a man accused of calling it a bomb threat at the site of an Islamic center. Prosecutors say Javier Korea called the Islamic center on September 5th and left a message, saying among other things, on September 11th there's going to be a bomb in the building. Korea faces a maximum penalty of 20 years if he's convicted.

In money news, the average price of a gallon of gas is going to be as low as $3 by Halloween. Oil industry experts say the prices will keep ongoing down over the summer, but get this, the lower gas prices are actually the result of a slowdown in the entire global economy.

In sports, this 6-year-old -- boy, did he beat the odds. He's playing teeball with one arm. Riley Rhoden had a cancerous tumor on his left arm when he was 2 years old and the only doctors could save him was by amputating his arm. Riley says the hardest part is catching the ball and then throwing it.

(BEGIN VIDEO CLIP)

RILEY RHODEN, 6-YEAR-OLD CANCER SURVIVOR: Like, how am I going to do this? I have no idea how to play before. I throw the ball kind of high but, take my glove off, throw it, catch it.

(END VIDEO CLIP)

COSTELLO: He is awesome. His parents say Riley is an inspiration and a miracle.

They have been out of work and underwater on their mortgage. This middle-class mom wants to know how Governor Romney would help her. That's coming up on "Middle Class Talk Back."

(COMMERCIAL BREAK)

COSTELLO: Time for "Middle Class Talk Back," a segment we kicked off last month. We wanted to give middle class Americans a chance to ask direct questions of the presidential candidates.

Today, it's Moira Bindner's turn. She's from Alexandra, Virginia. She and her husband have suffered long periods of time without jobs and the mortgage is under water. This week she had a question for Governor Romney.

(BEGIN VIDEO CLIP)

MOIRA BINDNER: Governor Romney, it seems that one of the issues for the campaign this year that is being ignored is the millions of Americans whose homes are underwater. What are you going to do, especially when the federal government holds many of these loans, to help support the middle class americans who are not bad people but who are in situations where the principal really needs to be reduced?

(END VIDEO CLIP)

COSTELLO: Moira, we did send your question to the Romney campaign and they did not respond. Most likely because the Romney camp -- they run a tight ship, they like to keep on message and this week the message deals with immigration. That said, Mr. Romney did talk about foreclosures during his nasty primary fight.

(BEGIN VIDEO CLIP)

ROMNEY: I'd make sure that we get the government out of housing and let the private sector do its job. We need to allow the market to reset, as opposed to trying to stop the flow of the market. Let the market do its work, reset and let home values start coming up. And then finally, get this economy going again. You've got to have jobs.

(END VIDEO CLIP)

COSTELLO: But will Romney revise his views now that he's trying to win hard over independent voters? That's what Romney has done on immigration.

He now makes no mention of self-deportation for illegal immigrants, but talks about the need for a long-term solution and the auto bailout first Romney said Detroit should go bankrupt.

Now he takes credit for the auto industry's come back. So Moira, who knows? Maybe Romney will change his tone on foreclosures, too. Of course, we'll keep pestering his campaign for more answers.

All eyes on the Supreme Court as it gets ready to rule on President Obama's landmark health care plan. We're taking a look at how Wall Street is tied to the case and which companies could be the biggest winners and losers.

(COMMERCIAL BREAK)

COSTELLO: Just about 30 minutes past the hour, checking our top stories.

This morning, Jerry Sandusky back in court as jurors resumed their deliberations in his trial. They are reviewing testimony now from two witnesses. Sandusky's own son, Matt, is claiming now that he was molested by Sandusky. Sandusky's charged with 48 counts. He denies the charges.

In Washington State, a ranger is killed trying to rescue four people on Mt. Rainier. Nick Hall fell 3,700 feet to his death. The 34-year-old ranger was trying to evacuate the injured climbers to a helicopter when he slipped and fell down the mountain. Crews plucked three climbers off the mountain last night and they will try to get the fourth this morning.

The clear forecast, people in Duluth, Minnesota, can breathe a sigh of relief and start the cleanup today. The city suffered historic flooding this week between 9 and 10 inches of rain fell in less than 24 hours. Duluth's mayor says there's at least $50 million in damage just to the city's infrastructure.

All eyes on the Supreme Court which is expected to rule on President Obama's health care bill possibly next week and that includes Wall Street. The Supreme Court's ruling is sure to be a market moving event and there will be some big winners and big losers.

Alison Kosik is at the New York Stock Exchange. So -- what's the Wall Street predicting any way?

ALISON KOSIK, CNN CORRESPONDENT: Well you know Wall Street, Wall Street is all about placing bets, Carol. And the market at this point seems pretty darn convinced the individual mandate is a goner.

In fact, we're hearing that investors are pricing in at least a 60 percent chance the court is going to say it's unconstitutional to require people to buy health insurance. But some analysts are going the other way betting the entire law will be upheld.

Now I that happens here are the big winners, hospitals and Medicaid, HMOs. Hospitals will benefit because they'll have more customers, more people will go if they insurance and those patients will actually be able to pay their bills. Medicaid providers will also benefit from more customers. The Affordable Care Act could shift at least 15 million more people into Medicaid.

Ok so the other scenario is, what if the entire law is thrown out? And several analysts thinks big insurance companies will rally. One analyst says for insurance companies, free enterprise is better than regulation. So if the whole law goes away, all the expensive new regulations they go away, too. Drug companies and medical technology companies could also get a boost. The Affordable Care Act did impose some new fees on these industries of course so if the act is thrown out Carol, those fees would be kicked out as well -- Carol.

COSTELLO: Ok so this individual mandate that requires all Americans to have insurance right?

KOSIK: Yes right.

COSTELLO: Or at least most of them. So if the Supreme Court strikes down the individual mandate as unconstitutional, how does that affect the rest of the health care law because that's how the individual mandate was supposed to fund the entire bill.

KOSIK: Ok. This is the scenario. If -- if the rest of the health care law is intact. So especially from the standpoint of health insurance companies, that would be actually a worse-case scenario. Because what would happen is they have to take on sick customers while healthy people would not have to buy coverage. Insurance companies could wind up seeing their costs skyrocket.

As for hospitals, they would be left treating uninsured people who may not be able to pay their bills. Plus, fees on drug companies and medical technology makers, those would still stay in place.

Also, you'd have a tremendous amount of uncertainty in the market and you know that if there's one thing Wall Street doesn't like, it doesn't like not knowing what is going to happen, a.k.a., uncertainty -- Carol.

COSTELLO: Yes like what happened yesterday.

KOSIK: Yes exactly.

COSTELLO: Thanks, Alison Kosik.

KOSIK: Sure.

COSTELLO: King James, this morning Lebron James is sitting atop the basketball world. Yes, the elephant is out of the room. Miami wins the NBA championship, igniting a wild celebration. We will take you to the party.

(COMMERCIAL BREAK)

COSTELLO: Oh, the Heat answered the haters. You know those of us not from Miami and or not in Lebron James's corner. The Heat whacked the Oklahoma City Thunder last night 121-106 to win the NBA title. The guy I just mentioned, he know he was the MVP of the finals, any who. Miami's hometown paper "The Herald" celebrated with this banner -- "Kings".

CNN's John Zarrella was outside the arena last night. Whoa it was quite the party. JOHN ZARRELLA, CNN CORRESPONDENT: Yes Carol. It really was. And you know look at this. It's already raining on our parade and we haven't even had it yet.

COSTELLO: Oh, darn.

ZARRELLA: It was -- you know, you're just going to have to embrace it, Carol and move on. That's all I can say to you.

COSTELLO: I know I'm fine.

ZARRELLA: But you know it was -- it's back to normal here in Miami this morning. But anything but last night. You know, about ten hours ago, this place was absolutely insane after the final buzzer.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Who's number one now? Who's MVP now? The Heat are number one. We're number one.

UNIDENTIFIED MALE: I've been a Heat fan since I was born man, I'm so proud of my dude Lebron, finally got his ring.

UNIDENTIFIED MALE: Wait until he got his second ring.

UNIDENTIFIED MALE: Wait until he got his second ring. This is a great -- this is the happiest day of my life.

UNIDENTIFIED MALE: They rock. We won the finals.

UNIDENTIFIED MALE: You know, I have spent two years fighting across the country with every non-Miamian I know defending my team. They all hate us. And as Franklin Roosevelt said, I welcome their hatred. This is an emotional win for all of Miami, for me. You know you never forget your first championship. This is our second. It's our first one at home. This is special.

(END VIDEO CLIP)

ZARRELLA: I just love the Miami fans. Don't you?

COSTELLO: I welcome their hatred?

ZARRELLA: I mean they're -- it's the greatest moments in their lives. They are -- they are quoting from Roosevelt. It's just terrific. And you know the only thing we're waiting for now, Carol, is when is the parade going to be? It will be right down here on Biscayne Boulevard and Orlando at the Miami Arena and I know you're going to come down for it.

COSTELLO: I'm getting on a plane right after the show. Not. John Zarrella, reporting live from Miami.

Oh another inspirational story to tell you about this morning. She was paralyzed from the waist down but it has not stopped her from going for the gold. Coming up, a swimmer who is making history and living her dreams all at the same time.

(COMMERCIAL BREAK)

COSTELLO: Now for a story about living your dreams and reaching your goals. Victoria Arlen, became paralyzed from the waist down when she was 11 years old because of a rare neurological disorder. But now at 17 she's done something spectacular. She's broken a pair of world records recently at the U.S. Paralympics swimming trials in North Dakota.

And now she's headed to London to go for the gold at this summer's Paralympic Games. But not before she stopped CNN's NEWSROOM. Victoria Arlen joins us live from Manchester, New Hampshire.

Welcome.

VICTORIA ARLEN, PARALYMPICS SWIMMER: Thank you.

COSTELLO: I am so excited to talk to you because I'm such a terrible swimmer.

ARLEN: Oh, really?

COSTELLO: I was really curious because I use my legs to keep me afloat and, of course, you can't do that. So how do you do that?

ARLEN: Well, at first I had a life jacket because I was afraid to swim without my legs but after a while I trained my arms to just -- I tread water constantly but after a while you forget that you don't really -- you really don't need your legs. You just have to have your arms to do a lot more work.

COSTELLO: I can't imagine how strong your upper body is.

ARLEN: Yes, well, because everything I do is all upper body. So how I get around and everything. So it's gone stronger -- definitely stronger than the last two years.

COSTELLO: So tell me, when did you decide to become an Olympic swimmer?

ARLEN: It wasn't really a plan. When I was 5, everyone has their dreams of going to the Olympics or being a professional athlete but it was never really a thought I would actually happen. And I actually got into swimming just to kind of get in shape and just to like -- just for the fun of it.

So my parents wanted me to be able to be safe in the water again despite my paralysis and then I started doing little competitions and I was winning. So I just -- it just kind of all fell into place.

It really wasn't expected. I mean, I even went to the trials not even expecting to do how I did. I just wanted to swim and just have fun. This is all a bonus now.

COSTELLO: Wow. I know that your mom had a lot to do with your fabulous outlook on life. Tell us what she --

ARLEN: Oh, totally.

COSTELLO: Tell us what she said to you.

ARLEN: Well, we were -- a lot of people -- once I started back into the Paralympics swimming, I really wanted to go to London. And about a year ago, some people were doubting me saying that I came too soon -- like too late into the swimming world to have that be attainable. And my mom -- we were driving home actually from a swim meet.

She stopped the car and I'll never forget this and she said, "Don't you ever let anyone tell you, you can't do something. If you believe you can do it, you can do it. " And from there it all changed and within a month I was training for the trials and now I'm going to London. So it's incredible.

COSTELLO: It really is. So does a lot -- you know, with competing it's hard because it's psychological, too. So what percentage do you think is psychological and what percentage do you think is physical?

ARLEN: I think it is 95 percent psychological because if you're not in your race mode or in that calm mode you're not going to perform well. Your body is not going to perform well and you just have to trust your training and your body. And physicality is a huge point but I think between the two of them it's 50/50 because they work hand in hand, for me at least.

COSTELLO: Ok. What advice would you give to other disabled people?

ARLEN: Probably just to stay true to yourself and believe in yourself and don't let it define you. You know, just rock -- rock your disability and totally just prove all your doubters wrong and live your life to the fullest. It's not a bad situation. Only if you make it.

COSTELLO: Victoria, thank you so much for being here. And good luck in London.

ARLEN: Thank you so much.

COSTELLO: We'll be following your progress. Thank you so much for joining us.

ARLEN: Thank you.

COSTELLO: Barbra Streisand isn't done in front of the camera just yet. Actually, she's not done from behind the camera, I guess. Details of her big return to the director's chair.

(COMMERCIAL BREAK)

COSTELLO: Sixteen years after her last gig as director, Barbra Streisand is going back behind the camera and she's trying to line up a pretty impressive cast.

"SHOWBIZ TONIGHT's" A.J. Hammer joins me from Los Angeles. This is intriguing.

A.J. HAMMER, HLN HOST: It sure is, carol. Her name has been attached to this new film, it's called "Skinny and Cat", which would reportedly star Colin Firth and Kate Blanchette. So we reached out to Streisand's publicist. He confirmed that she is hoping to direct "Skinny and Cat", which she described as an epic true love story about writer Erskine Caldwell and photojournalist, Margaret Bourke-White (ph).

Now, he went on to say that while the project is near and dear to Bab's heart, it's not a go until they have the money. That is always the case in Hollywood, really anywhere, I guess.

When we asked about Firth and Blanchette, he replied, "Well, let's just say that they are unofficially attached." I mean really, who is going to say no to Barbra Streisand, right? The last film that she directed was "The Mirror has Two Faces". That was all the way back in 1996 and of course, before that Carol, she directed "The Prince of Tides". That was in '91 and it, of course, got an Oscar nomination for Best Picture.

COSTELLO: Yes. So she's getting kind of bored. She wants to jump back into the water.

HAMMER: Yes.

COSTELLO: You're also following this legal action against John Travolta and his attorney. Yet another legal action, I should say.

HAMMER: Yes. And it's a libel suit this time against Travolta and his attorney, Martin Singer. And this goes back to a couple of years ago to public statements that were made by a guy named Robert Randolph. Randolph made some pretty racy allegations about Travolta's sex life. In a book that he wrote and then tried to sell to publishers called, "You'll Never Spa in this Town Again".

And he revealed some of the stories from the book in an article that was posted on Gawker called "The Secret Sex Life of John Travolta". So at the time, Travolta's attorney Marty Singer, fired off this letter defending his client denying what Randolph was saying and among other things, alleging that Randolph had been in mental institutions and had suffered brain damage.

Randolph is suing saying that those statements are defamatory. They impacted his ability to sell this book. Singer and Travolta have both publicly responded to these allegations calling the suit absurd. And Singer is publicly now threatening to sue the attorneys, Carol, who filed this suit for malicious prosecution. We will watch to see where this thing goes.

COSTELLO: All right. A.J. Hammer, reporting live from Los Angeles. Thank you.

HAMMER: You've got it.

COSTELLO: We have to update this story and bring you up to date about what is happening with Karen Klein, you know, the school bus monitor who was ruthlessly bullied by a bunch of middle schoolers?

As you know, people all over the world were giving their support after this video of her being taunted viciously went viral.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You're a troll. You're a troll. You're a troll. You old troll.

UNIDENTIFIED MALE: How about I bring my knife and (EXPLETIVE DELETED) cut you. If I stabbed you in the stomach (EXPLETIVE DELETED) my knife would go through you like butter because it's all (EXPLETIVE DELETED) lard.

(END VIDEO CLIP)

COSTELLO: Ok. You've probably seen that before. Klein is a 68- year-old grandmother. She told CNN she makes about $15,000 bucks a year doing that job. As you know, a Web site is raising funds to send her on a dream vacation. Guess what, it's raised almost half a million dollars in donations.

Anderson Cooper also told Karen Klein Southwest airlines has offered her and nine family members on an all-expense paid trip to Disneyland. He also read apologies from the students who were taunting Klein in that video.

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN HOST: So we received some statements through the police from two of the children who were tormenting you. Josh wrote, quote, "I am so sorry for the way I treated you. When I saw the video I was disgusted and could not believe that I did that." What do you make of that?

KAREN KLEIN, VICTIM OF BULLYING: Of course he's going to say anything. I mean, Josh, he always has this smirk in his face. But I don't know, maybe that's the way he really looked but he always -- after he said something, you know, he always liked to cause trouble no matter what it was. Even if it wasn't picking on me, it was something else.

COOPER: Another child, Wesley said, quote, "I feel really bad about what I did. I wish I had never done those things. If that happened to someone in my family, like my mother or grandmother, I would be really mad at the people who did that to them." Do you accept these apologies?

KLEIN: I haven't gotten them yet. One is supposedly being mailed but I haven't gotten that one. So the other two I might not get anything from any way.

COOPER: What do you want to happen to these kids?

KLEIN: I want them to make sure that they never do this again to anybody. I would like them to be at least kept off the bus for a year and be forbidden to play any sports, at least for a year.

(END VIDEO CLIP)

COSTELLO: The Greece New York School District, the district where the buses flow, they released a statement saying the school will take action against the students but it can't exactly say how those students will be disciplined. Of course, we will keep you posted and we hope that Dorothy and her friends -- I mean Karen and her friends have a great time at Disney World.

An interesting conversation between Alec Baldwin and David Letterman ended with both of them dropping their pants. As you might imagine, both are getting attention for very different reasons.

(COMMERCIAL BREAK)

COSTELLO: From the great movie "Airplane", have you ever seen a grown man naked? Loved that movie. Late night TV viewers got quite a show when Alec Baldwin and David letterman dropped their pants.

Here is CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: It was a day destined to go down in television history, the day not one but two major stars --

ALEC BALDWIN, ACTOR: I've been trying to diet. I've lost so much weight --

MOOS: -- dropped their pants.

BALDWIN: The problem is that none of my clothes fit me so if you put your hands in your pockets, your pants come down.

MOOS: So what if Alec Baldwin may have been trying to distract from his latest meltdown shoving a photographer, such short-term memories departed as he stood there in his shorts.

DAVID LETTERMAN, TALK SHOW HOST: Well, now I'm thinking, should I take my pants off?

MOOS: Sure, you should. Dave modestly disrobed behind the chairs. There are perils to publicly dropping your legs.

HODA KOTB, TALK SHOW HOST: Let's talk about Alec Baldwin's legs for a second.

KATHIE LEE GIFFORD, TALK SHOW HOST: Hairy.

KOTB: Very hairy.

MOOS: A blog called "Seriously, OMG" said, "He has some sexy gams. I just wish he took a weed whacker to them."

GIFFORD: It's like a woman's cleavage. After a certain age, nobody wants to see it.

BALDWIN: They'll be examining my (inaudible).

LETTERMAN: Yes.

MOOS: Actually, Dave, it's your socks that everyone is examining. We've seen them before. For instance, the time you showed them to "Vogue" editor Anna Wintour --

LETTERMAN: Take a look at those honey.

MOOS: But you always kept your pants on.

LETTERMAN: Here they are right here.

MOOS: Fans always wanted to know why you wear white socks and Dave would say, they are gray that he got them as a gift or in bulk at Costco.

LETTERMAN: I got 1,000 pairs of socks.

MOOS: When an audience member says he was inspired by Dave to wear the same socks, letterman gave him three pairs. No one showed more interest than Regis Philbin.

REGIS PHILBIN, TALK SHOW HOST: The man wears knee socks all the way up to his knee. $250 a pair and I got myself a pair of them, too. Check it out, baby.

MOOS: When Letterman and Baldwin finally did drop (inaudible) Dave made his own tabloid headline, "Letterjunk". And when the credits rolled on Letterman, it should have read "Worldwide No Pants".

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

COSTELLO: They were pretty hairy.

I'm Carol Costello. Thanks for joining me today.

"CNN NEWSROOM" continues right now with Ashleigh Banfield in for Kyra Phillips.