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New Yorkers Take Warning in Stride; Iraq Raids Net al Qaeda Operatives, Intel; Questions Raised about New Orleans Police Chief's Past; Mold Closes University in New Orleans

Aired October 07, 2005 - 13:00   ET

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

KYRA PHILLIPS, HOST: Another day, another possible threat to New York subways. This time the HAZMAT team gets a call. We go live to New York with the latest.
Gripping inside al Qaeda. An intercepted letter says the terror group has cash flow woes. Leaders peeved about tactics used by underlings in Iraq.

And the president tells America's drug makers, "Hit me with your best shot." Amid growing concern over the potential of a global pandemic. He wants a bird flu vaccine, and he wants it now.

Live from B Control here at the CNN Center in Atlanta, I'm Kyra Phillips. CNN's LIVE FROM starts right now.

Specific, but of doubtful credibility, uncorroborated, but impossible to ignore. It's an audacious terror threat that's keeping New York police officers on their toes and in subway passengers' briefcases, purses and backpacks all across the city.

And if you've been watching CNN, you've also seen the soda can scare that closed off part of the Penn Station for an hour. Sources say Iraq was the origin of a threat against New York subways, supposedly, potentially involving a dozen or more operatives and bombs hidden in baby carriages.

A federal official tells CNN the local authorities made the threat public, quote, "out of an abundance of caution."

In stride may be the best description overall of New Yorkers' reactions to the latest blip on the radar.

CNN's Allan Chernoff is at Penn Station. Hi, Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Hi, Kyra.

Well, no question, people are just going about their business. The subways today, busy as they typically are, and why is that? Well, hey, if you look down here, you can see traffic just busy. We've got a red light right now, but in a moment, those cars will be flooding behind me.

If you want to get anywhere in New York City during the middle of the day, you've got to take the subway, if you want to get there fast. And which New Yorker does not want to move fast? That's why people are back in the subway in spite of the threat that we did have.

Now, earlier today, we did have a little bit of a scare in Penn Station, right behind me. The folks in the hazardous materials uniforms were in there checking out a green soapy substance that was coming out of, according to our video, looked like a Pepsi bottle. I know there have been reports that it was a can. But it looked more like a bottle to us.

They determined that, in fact, it was not hazardous at all. The police commissioner describing it as a, quote, "Drano-type substance," referring to the commercial drain cleaner.

So Penn Station now entirely open, and that means not only the subway is open but also Amtrak trains, Long Island Railroad, New Jersey Transit. This is one of the nation's busiest transit hubs. And it is completely operating, all clear right now.

But the city clearly still very much on high alert. Plenty of law enforcement officials in Penn Station, right now, below ground, behind us.

And the mayor was asked about all of this within the past hour. He was asked whether or not the city was overreacting. He said we want to err on the side of caution.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: I have an obligation to take care of the 8.1 million people who live in the city and all the people that come into the city every day. And we will do exactly what we did. When we see a threat, we are going to increase our presence, wherever that threat is. We have people that I believe have the ability to analyze information. And together, we have made a decision, and it was the right decision.

(END VIDEO CLIP)

CHERNOFF: There's another reason that the city was only too happy to go public with this, once they actually did have the information, and they felt that they could go public with it. After the federal officials and the Army overseas were able to nab a couple of the folks they believe behind this threat.

The fact is, when the city makes an announcement publicly, everybody is on high alert. And so the eyes, even the ears of the public, certainly, part of that front line battle here in New York City, the battle against terrorism right here in the biggest city in the nation -- Kyra.

PHILLIPS: Allan Chernoff, thank you so much.

So how does a major city chase what may be a phantom threat arising fro a war zone halfway around the world. If anybody can talk us through it, it's former FBI agent, former D.C. homicide detective, current law enforcement analyst and friend of LIVE FROM, Mike Brooks. You know, let's talk about Ray Kelly for a minute, because he got into that post and immediately built this terror beat with, you know, David Cohen, deputy commissioner of intelligence, Michael Sheehan, deputy commissioner for terrorism.

MIKE BROOKS, CNN LAW ENFORCEMENT ANALYST: Right.

PHILLIPS: And then he brought in all these homicide detectives, sent them to Israel, Singapore, London. I mean, it's incredible the base that he has built. He knows what he's doing.

BROOKS: And let's include Afghanistan and Iraq, too, Kyra. I mean, he has himself just -- you've got 35,000 officers that are sworn officers with the New York City Police Department. That's bigger than almost any other law enforcement agency in the world. And they were working on the joint terrorism task force for the FBI. They've been doing that since the '80s.

But he says, "If I want the information, I don't want to have to go anywhere else to get it. I want it from my people." That's why he has them on the ground in these locations, so he gets the information first hand.

Because there was a feeling back awhile ago that he wasn't getting the information he needed from some of these task forces, so he said...

PHILLIPS: I'll develop my own.

BROOKS: Absolutely. And they have done one hell of a job. And they said, did they overreact? Well, you're damned if you do; you're damned if you don't. But I think Ray Kelly did the right thing in this particular instance and went ahead and let the people know. Because if something did happen, then they would come back to the mayor and they would come back to the commissioner and say, "Well, if you knew this, why didn't you tell us?"

PHILLIPS: So let me ask you about this. The president of the United States comes before America and says -- and around the world and says in his speech about terror, "We deflected 10 possible terrorist attacks, three here in the United States. But you didn't know about them because we were doing what we needed to do."

But then, you have a situation like this. "Well, we've got to tell folks, we've got to warn them." Why not just not tell us? If they know about a threat and they're on it, why scare the American people?

BROOKS: Well, they felt this threat was viable enough to go ahead and let people know. Because they wanted the eyes and ears of all the people in New York City that ride the subway system.

And when we go back and we look at Madrid, the Madrid incident, we look at London, and you know, we see what happened there with the death and injury of numbers of -- hundreds of people. So why not go ahead and let these people, let the people of New York know? Plus, I think it's a good vigilance alert, to let these people know, if you see something, let someone know about it, even if it turns out to be, like this liquid today. Maybe somebody found this. It might have been a hoax. It might have just been something somebody set there in a can. But at least someone let law enforcement know, the ESU, emergency services people there, HAZMAT techs came in and found out that it was nothing.

But we're going to see this, probably, over the course of the next two, three months. But then people sometimes get lulled back into a false sense of security, like I always say. They need a poke with a stick. And I think by letting people know, getting the eyes and the ears of people out there, they will be more aware of what's going on around them, so if something does happen, they'll know what to do.

PHILLIPS: Well, just so people know, Ray Kelly meets with all of these detectives all across the world, these homicide detectives he has everywhere and all these deputy commissioners, every day. They have a terrorism brief every day.

BROOKS: Every single day. And he's also included the private sector in this. He's taken security directors and vice presidents of most of the major corporations and the financial houses in New York City, and he's brought them into the fold also.

I mean, these people have gone through background checks. They know what's going on. So they can let their employees, their security personnel know if something like this happens so they also can be alert. Because if the financial center in New York City gets shut down, that shuts down the economy of the U.S.

PHILLIPS: Mike Brooks, thank you so much.

BROOKS: Always a pleasure, Kyra.

PHILLIPS: All right. Well, from Tribeca to the Triangle of Death. That's a region south of Baghdad where U.S. and Iraqi forces carried out a top secret raid either yesterday or the day before, raids that the FBI claims partially disrupted the subway threat.

CNN's Barbara Starr joins us from the Pentagon with that and with the tantalizing SOS, apparently, from the top most ranks of al Qaeda . What do you know, Barbara?

BARBARA STARR, CNN CORRESPONDENT: Well, Kyra, it now appears that this New York City subway threat indeed does trace all the way back to Iraq.

Defense and military officials say it was over the last couple of weeks that they gathered intelligence, and that is the only thing they will call it, gathering of intelligence, that had that New York City subway threat in it.

That then led them on Wednesday to conduct a raid in a place called Musayyib. That is south of Baghdad. That was a targeted raid. They were going after three individuals by name. They feel that what they found there was what they were looking for: an al Qaeda cell inside Iraq that was planning attacks outside of Iraq, possibly in the United States.

This raid was conducted, we are told, by both U.S. and Iraqi special forces, along with members of the U.S. intelligence community, the CIA, providing crucial intelligence support.

So that all now, the information they got in that raid, being analyzed to see if there are further clues in it.

But all of this comes, indeed, as you say -- there is a second piece of news about al Qaeda. U.S. officials say they are now in possession of a letter written by Ayman al-Zawahiri, the No. 2 man to Osama bin Laden, a letter he wrote sometime around July to Abu Musab al-Zarqawi, the top al Qaeda leader inside Iraq.

It is a letter about al Qaeda strategy and problems, according to the letter, U.S. officials say. They say that Zawahiri says that there are problems, that many al Qaeda leaders, of course, have been captured or killed, lost to the cause. That Afghanistan, that the al Qaeda has resigned to the fact that they have lost Afghanistan, and that the top al Qaeda leadership is so cut off that they have very limited communications and that they need money.

He also reprimands Zarqawi in this letter, we are told, says that he should stop some of the more violent beheadings that are now shown on so many media outlets around the world, that that is alienating the Muslims around the world.

And finally, U.S. officials say they have reason to believe that Zarqawi did, in fact, receive this letter from the No. 2 man in al Qaeda. But where it leaves everything at this point is unclear, because U.S. officials say they are convinced the letter is genuine. But it still is not clear that it isn't some perhaps deception. It's not entirely clear exactly what the state of play is inside al Qaeda at those top inner circles -- Kyra.

PHILLIPS: Barbara Starr, live from the Pentagon, thank you.

CNN is committed to providing the most reliable coverage of news that affects your security. Stay tuned to CNN for the latest information day and night.

(BEGIN VIDEO CLIP)

PHILLIPS (voice-over): Next, on LIVE FROM, the life of Riley comes under scrutiny. New Orleans' interim police chief, Warren Riley, faces tough questions on his record.

SEN. TED KENNEDY (D), MASSACHUSETTS: This has to be a wake-up call for the administration. I think the Congress is ready to respond in a bipartisan way. The leadership has to really come from the top. It's overdue.

PHILLIPS: Political feathers are getting ruffled over bird flu. Leading Senate Democrats say the Bush administration isn't acting quickly enough to prepare for a possible pandemic.

And later, school's out at one of America's premiere black universities. No thanks to Katrina. How will they be able to recover?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

PHILLIPS: Averting Armageddon at best, policing proliferation at least, Nobel missions either way, acknowledged once again with a Nobel Prize for Peace. This year's honor goes to the International Atomic Energy Agency, typically referred to as the U.N.'s nuclear watchdog and its director, Mohamed ElBaradei. All say that they're shocked, stunned or speechless, but it's not a total surprise. The Nobel committee has a habit of spotlighting nuclear issues on decade anniversaries of the A-bomb attacks on Japan in 1945.

ElBaradei spoke to CNN from his headquarters in Vienna.

(BEGIN VIDEO CLIP)

MOHAMED ELBARADEI, NOBEL PEACE PRIZE LAUREATE: I'm overwhelmed. I'm humbled. I'm delighted. It's -- I'm full of emotions right now. I feel a lot of responsibilities on my shoulder because the prize meaning stay the course and do more of the same. And we have a lot of difficult issues ahead of us. So it's strengthened my resolve, but I'm very conscious of the heavy responsibility my team and I have to shoulder.

(END VIDEO CLIP)

PHILLIPS: In the hours and days after Hurricane Katrina slammed into New Orleans, we witnessed some of the more desperate acts of survivors: looting. Some of the city's finest have been accused of taking part. Earlier today, Chief Warren Riley told CNN 13 are now under investigation as the city takes steps to put a stop to any more looting.

(BEGIN VIDEO CLIP)

ACTING SUPERINTENDENT WARREN RILEY, NEW ORLEANS POLICE DEPARTMENT: We've actually created a 100-person anti-looting squad, with the assistance of the Louisiana -- the Louisiana State Police and the New York State Police. So we have those areas that are unoccupied being patrolled by anti-looting squads with assistance from the military. And the remainder of our department is focused on those populated areas.

(END VIDEO CLIP)

PHILLIPS: As for the 249 officers who did not show up for work during the hurricane, Riley says that some of them simply couldn't get to their posts. In another cases, hearings will be held and some officers could be fired.

Meanwhile, the acting chief is trying to defuse another issue, one that makes him out to be the bad guy. Here's CNN's Drew Griffin.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): The new police chief of New Orleans is coming clean on a record he knows is about to be exposed.

RILEY: I have in fact been suspended five times in my career.

GRIFFIN: Warren Riley has been a cop for the past 26 years. His five suspensions include three for minor car accidents on duty. There is a suspension for not showing up for an assigned municipal court date, also minor. At issue, though, is the fifth suspension. It involved Terri Prevost's sister, Sherry.

TERRI PREVOST, SISTER OF SHERRY ROBINSON: Warren has a daughter, and I've posed this question to him: "You have a daughter. Wouldn't you have wanted someone else to take an extra mile to help your daughter, regardless of what the law stated back then? This was a battered woman who was in need of much help from you."

GRIFFIN (on camera): On February 17, 1995, a battered woman named Sharon Robinson, in need of help from anyone, came to this office of the New Orleans Police Department. She told a tale of a cop, a boyfriend, who was threatening to kill her, holding a gun to her head. She even told an officer that this officer had cut off all her hair and said no one would want to date a bald woman.

(voice-over) She gave that report to an officer named Warren Riley. That officer, Warren Riley, gave the report to no one. Three months later, Sharon Robinson was murdered.

PREVOST: I don't hold him personally for her death. I just felt like he could have done just a little bit more.

GRIFFIN: Terri Prevost is appalled that the officer who refused to intervene in her sister's domestic abuse is now the new interim chief of New Orleans. While she does not directly hold Warren Riley responsible for Sharon's death, she does question his judgment.

Riley's report of his encounter with Sharon Robinson, detailing the violent relationship with her cop boyfriend, did not appear at the New Orleans Police Department until the day after her murder.

RILEY: I am the person who actually brought that, at the time of her death, brought it to our Public Integrity Bureau.

GRIFFIN: The boyfriend immediately became a suspect, though he was never charged. Riley, then a lieutenant, was suspended for three days for failing to accept and document a complaint from a woman accusing a police officer of threats, aggravated assault and battery.

Last night, the chief called that suspension another minor incident.

RILEY: I did my job appropriately at the time. I was, in fact, reprimanded for it, but that was basically -- Superintendent Pennington, who was the chief at the time, basically stated in civil service that it was a mistake.

GRIFFIN: A mistake that Riley calls a mix up, that did not cost him much at all. After his suspension, he continued rising through the ranks, eventually becoming the No. 2 man at the NOPD.

Now, the man who Terri Prevost says looked the other way when her sister, battered and beaten, came to his door is now running the New Orleans Police Department.

(END VIDEOTAPE)

PHILLIPS: Once again, that was our investigative reporter, Drew Griffin. Warren Riley was named acting police superintendent just eight days.

Well, coming up on LIVE FROM, mold puts degrees on hold.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Look at the mold.

DR. NORMAN FRANCIS, PRESIDENT, XAVIER UNIVERSITY: We don't want to walk through here.

UNIDENTIFIED FEMALE: You don't want to breathe this stuff. This stuff is bad.

FRANCIS: No.

(END VIDEO CLIP)

PHILLIPS: It's one of New Orleans' most famous universities. But it's out of commission, thanks to Katrina. We're going to talk financial books and textbooks with the head of Xavier.

Plus, as FEMA trailer cities spring up along the Gulf Coast, Vice Admiral Thad Allen joins us live with his post-Katrina progress report.

(COMMERCIAL BREAK)

(STOCK REPORT)

(COMMERCIAL BREAK)

PHILLIPS: Now in the news: as predicted, attacks are on the rise in Iraq with election day fast approaching. Among the most recent victims, six U.S. Marines, all killed Thursday by homemade bombs in the Anbar Province, where multinational forces have launched a major offensive against insurgents.

More money for the war. The Senate unanimously OK'd $50 billion for the troops in Iraq and Afghanistan. It's part of a massive military spending bill the White House has threatened to veto. That's because of a provision banning the mistreatment of prisoners.

Overall, the price tag for the war on terror is staggering. A new congressional report estimates that it could exceed half a trillion dollars in the next five years. Researchers conclude the Bush administration is spending about $7 billion a month, most of it on Iraq.

It's not clear when, but presidential adviser Karl Rove will testify a fourth time before a grand jury investigating the leak of a CIA operative's identity. This time, there's no guarantee he won't be indicted. Rove is among White House insiders who talked to reporters working on the story.

Returning and repairing, that's what many people along America's Gulf Coast are facing five weeks after bracing for Hurricane Katrina. But for some, it's not just their homes that need fixing. CNN's Soledad O'Brien has that.

(BEGIN VIDEOTAPE)

SOLEDAD O'BRIEN, CO-HOST, "AMERICAN MORNING" (voice-over): The president of Xavier University, Dr. Norman Francis, surveying the damage done by Hurricane Katrina.

(on camera) Is it weird for to you come back the first time and check out the damage?

FRANCIS: You know, I wake up at night wondering about it. Not my house. My wife is worried about the house. But I, you know, I just put it out of my mind.

This is the science complex, the whole science complex.

O'BRIEN (voice-over): There is a lot to worry about. The buildings are badly damaged. The greenhouse and the science building, practically brand new, will have to be replaced. Big trees have toppled over. The dorms have suffered probably the worst damage.

Still, Dr. Francis is optimistic.

FRANCIS: Just looking at what I see, the grounds I think we can put together and, you know, take a good power washer and power wash and make sure we got all the molds out. I think we're going to make that January 6.

O'BRIEN (on camera): To open the whole university?

FRANCIS: Yes.

O'BRIEN (voice-over): That's the plan, to reopen in January.

Dr. Francis took us on a tour of his beloved university. We start in the library, the waterline there only a couple of feet high in a city where some houses were up their eaves in water. So the bad news, to some degree, is pretty good news. Books are destroyed, but not too many. The computer lab is safe. Dr. Francis estimates it will cost $12 million to $15 million to repair and clean up the university. The school has an incredible history, opening its doors to African-American students in 1915.

But Xavier is not a wealthy school. Its endowment, just over $50 million, is tiny compared to other bigger institutions.

FRANCIS: The story goes that I go to Rome and the pope gives me money. When I go to Rome, the pope asks me for money. And people don't know that. Catholic colleges are not supported by the Catholic Church.

O'BRIEN: It's small, but mighty. It's school of pharmacy world famous. And even though Xavier has just 3,000 students, it places more African-Americans into medical school than any U.S. university.

FRANCIS: I say invest in us, because we produce the human capital that makes this country strong.

O'BRIEN: The pitch so far is working.

FRANCIS: I'm waiting for some of the ones who can step and hit the ball over the fence.

O'BRIEN: A million.

(CROSSTALK)

FRANCIS: Exactly.

(END VIDEOTAPE)

PHILLIPS: Dr. Norman Francis joins us now live from New Orleans. I'm curious, Norman, has anybody stepped up to the plate? Have you gotten a big check since we last talked?

FRANCIS: No, we haven't gotten a big check. We've got some small, but then some medium ones that we appreciate very much, but we're still looking for the big ones to come forward. A lot of people are very interesting in doing something. But I'm hoping, particularly my friends in the Catholic community, will see and feel what we mean for this country and step up and help us.

We need to make a plea to everyone, but particularly, our Catholic heritage and our citizen whose have watched us, or some who have not watched us, but who ought to know what we have meant for this country, and also for the church, as well as for those young people who have already been born, and it's a promise that we've made to them that we're going to give them a chance to be somebody.

PHILLIPS: Now, Norman, let's talk about that Catholic community, because I don't think a lot of people know this. Xavier University was founded by Katharine Drexel, someone who is now Saint Katharine Drexel, because Pope John Paul II canonized her. This was a rich white woman who gave up everything to make life better for poor Indian children, American-Indian children, and African-American kids. This university has tremendous heritage and background. You would think if Saint Katharine were still alive, she would expect the pope on down to be giving money to Xavier University.

FRANCIS: I would think so. And she's not here, but certainly helping us greatly where she is. I think she would want us to say, she took up the cross, if you will, and made life worthwhile for Catholics, particularly blacks, and now for all religions, in particular, black Americans. And I think now, she would say, she carried the burden a long time; it's now time for the church to take that burden, because the need is still as great as it's ever been.

And for us, the other side of that cross is, all the money that she had stopped at 1955. So the last 50 years, we've been going on our own. And now Katrina has set us back for a bit, and we need help, and hopefully we will get that help. And it's still time to help us. It will always be time to help us. I'm calling on my Catholic friends. I'm calling on the religious. I'm calling on all who have the wherewithal to put something together. Come to our aid. We need it. We're getting it from our sources, and we would like to have their help.

PHILLIPS: Well, let me ask you, Norman, have you heard from the Vatican? Have you heard from any major Catholic leaders about Xavier University?

FRANCIS: Not really. I know the pope did send an emissary here. I think Pope John II, as you know, visited Xavier's campus. He knew us very well. He probably would have already called, but we have not heard in the sense of saying we know what you've been through, we know what you need, and we'll be there. Hopefully, that will come.

I will say to you, if it doesn't come, I will make the call. And we've already gotten commitments earlier, before Katrina, that the cardinals and the bishops wanted to help us. We're in dire need. We lost a chapel in Katrina, and we were already planning for a separate building We now have no chapel anywhere, and we need to build one. That would be a great project for the Catholic Church.

PHILLIPS: Well, let's hope the pope is listening right now. We'll stay on top of that, Norman, I promise.

Now let me ask you another question. Eighty-five percent of your students are on financial aid. What do you need for those student whose need to finish their education? Is it Congress you need help from?

FRANCIS: We need the Congress greatly. And what those students who are on that aid, 85 percent, had to struggle just registering in August of '05. Can you imagine what it's going to be when we open back up in January, when they have no homes, their parents may not have any jobs. What we really need is for Congress to make what I call an investment in human capital. Surely we need the investment for the buildings. But America's future is based on these young people who registered in August at all of our institutions, and certainly with Xavier, and we need the Congress to double what they had in the financial aid from the past and put it for those youngsters. We'll have to get incentives for those youngsters to come back, because I know several of them are going to struggle.

And these are bright young people. Sure, they're economically disadvantaged, but there's never been a relationship between being poor and being smart, and I think we have to invest in young people who are going to be productive. And as I've said so many times, these young people will pay back in taxes many, many times more than the investment we're making now in financial aid, so it's time to make that investment. And I hope Congress steps up to the plate themselves.

PHILLIPS: You make a very good point, Norman. I mean, so many of your students are economically in a rough spot. And we've already seen what's happened to this city. We have looked at what has been exposed, and that is poverty, that's never been dealt with. Now at your university, here are students that would never have a chance to go to college, but because of what Xavier offers, they are able to do that, and now they've luckily been transferred to universities like Cornell, and Penn, and Howard and Morehouse. But this university needs to survive, not only for historical sake, but for what it's doing for African-American students.

FRANCIS: Exactly. And let me tell you, they are ready to come back. They are very grateful for all the schools that have opened their doors. But they are ready to come back. And, remember, they have excelled to such an extent that they're nationally known. If we were playing football, we would be in the Super Bowl, you know, so we're in an academic Super Bowl, and we've been doing it, we can continue to do it, and we need to have these youngsters get the chance to be productive. I'm convinced in that group may be someone will find the cure for cancer, or someone who will find things that we have never dreamed about, and I think American needs them, they need us, and I think this is the time.

Sometimes catastrophes bring the best out in people, and I think Katrina has sent a message to all of us. Katrina said, you don't have to worry about the material things, because I can take it away from you in one day, and she did. But it's the soul, and the heart and the commitment that we have to do good and do good for other people, and that's what we are asking people to help us do now, and help these young people. That's the only reason why we are all there.

PHILLIPS: Well, you're a living example. You went to Xavier. You were a shoeshine boy. And now, look, you're the head of this university. And failure is not an option for you Dr. Norman Francis. I hope the Catholic Church is listening. You know how much I love you.

Thanks for being with us today.

FRANCIS: Thank you.

PHILLIPS: All right.

FRANCIS: I appreciate you for giving me the opportunity. Thank you.

PHILLIPS: It's always my pleasure.

Well, straight ahead, he's in charge of the Gulf Coast recovery and says it won't be another Florida. Admiral Thad Allen talks about those controversial FEMA trailers with us, coming up next. But he's got a plan. He's going to tell us about it.

(COMMERCIAL BREAK)

PHILLIPS: Trailer communities are popping up all along the Gulf Coast. A temporary solution, the government says, to the housing shortage facing so many storm victims.

Coast Guard Admiral Thad Allen continues to oversee federal relief efforts following Hurricane Katrina. He joins me now live from Baton Rouge. Sir, it's great to see you again.

ADM. THAD ALLEN, U.S. COAST GUARD: Hello, Kyra, how are you?

PHILLIPS: Doing pretty well. And I know, as usual, you're probably not doing much sleeping because you're all over the place, trying to make life better for individuals. And today, you were in Alabama. Why don't you tell me what you saw there, and are things getting better for folks there in the trailers?

ALLEN: Well, they are. Kyra. We traveled this morning down to the Bayou La Batre, where we met with the folks in the neighborhoods down there that were most impacted by Hurricane Katrina, in Alabama and then I had meetings with Governor Riley. They have specific issues down there, as most regions do. There's concerns about temporary housing, debris removal.

We walked through some neighborhoods, we met with some of the folks that are trying to reconstruct their lives. They had a real serious conversation about the status of the shrimping fleet down there, which is the economic engine. I've got a couple to-do lists from Governor Riley, and we're going to be getting back to him. But it was very good trip this morning.

PHILLIPS: All right, so, good. Things are looking better in Alabama. Let's talk Louisiana. You mentioned debris removal. You know, Mayor Ray Nagin coming forward, talking about having to lay off 3,000 city workers. Give us a reality check, sir. We've seen the piles of debris. It's a nightmare. How are you going to get everything out of there?

ALLEN: Well, it's pretty difficult. But as you know, we had four major contracts awarded at a national level right after the hurricane hit. At a local level, we have those national contractors hiring subcontractors, especially from the New Orleans area. And we are ramping up. In the last couple of days, we were moving about 65 cubic yards of debris a day from New Orleans.

PHILLIPS: Wow. Al right, back to the trailers for a second. We've been running a number of pieces, looking at Florida and these trailer communities that were created after Hurricane Andrew. And people still haven't left those trailers. And a lot of them haven't made an effort to go out and find work and to find a home. It's sort of become an easy access situation for them. There are crime issues. It's an eyesore. What gives you the confidence that what's happening in Florida will not happen in Mississippi and Louisiana?

ALLEN: Well, Kyra, we're trying to take a comprehensive approach to this. First of all, we're trying to understand the clientele that we're dealing with. One of the things that's really hard to get your arms around is the fact that we had over 300,000 people leave New Orleans in different directions. And they're all over the United States now.

What we've done recently is we've actually gone and mapped the different zip codes in New Orleans over the areas that were flooded, where we have a reasonable expectation to believe that coming back into those neighborhoods may be problematic. And then we're trying to find those concentrations of people, reach out to them and help them find new housing solutions, including the new transitional housing allowances that the administration has put forward to allow them to rent and find a bridging strategy to a final home.

PHILLIPS: Well, let's talk about those in the Ninth Ward, specifically the Lower Ninth Ward. A lot of renters, very much lower- income area. What about those residents, sir? So many of them in shelters have nothing to come back to. I know that even your staff, they've employed a number of people from Ninth Ward, which is extremely admirable. What are you doing about those folks and what's the talk about this neighborhood rebuilding?

ALLEN: Well, Kyra, there are couple things we need to do. First of all, we need to know where they're at. And what we've been doing is finding out where people have registered and what they've declared as their addresses. And that then tells us, for instance, how many people from the Lower Ninth Ward might be in Houston or San Antonio or Fort Chafee in Arkansas and so forth.

And then what we're going to try and do is put caseworkers with these folks to sit down and talk with them and explain to them that the areas that they came from may be inhabitable. And then list the things that they can do, whether it's transitional housing benefits or small business association loans, where they can actually get back into a house.

And we're going to emphasize the governor and the mayors want these folks back, but there's also an element of personal choice. And the real goal here is to get these folks out of shelters and out of transitional housing and into permanent homes.

PHILLIPS: And I know you've visited so many of those shelters. That's one of the most amazing things about you. This isn't just a job, but it's a passion. And you're putting this on the forefront. How soon do you think you can get the thousands of people that are still living in these shelters out of there and into some type of housing?

ALLEN: Well, as you know, we've established a goal of the 15th of October to have folks out of mass-care shelters. We've done pretty well. If you go back to about the 26th of September, right after Hurricane Rita, we were looking at 185,000 folks who were housed in shelters. As of the 5th of October, we were down to about 68,000. As of this morning, it's down to about 44,000, Kyra. So I think we're on a good glide slope.

We have to mindful to get the folks out of shelters and also take care of the folks that are in hotel rooms. And, in fact, today, we're hosting a multi-state conference here in Baton Rouge to take the state, federal and local workers, including the folks in all these states that have Katrina victims that have moved them, and how we're actually going to reach out and touch them and provide them with housing solutions.

PHILLIPS: How are you going to do that with so many people in the hotel rooms? As a matter of fact, I've had a number of friends, Admiral, that I've talked to, and they've have said, oh, Kyra, I don't even want to look at my hotel bill. It's just stressing me out.

ALLEN: Well, first thing, we have to identify where they're at and where they came from. Then they have to be advised of the different benefits that are available to them. And then, quite frankly, if they're from certain sections of New Orleans, the Lower Ninth Ward, St. Bernard's Parish, or Plaquemines Parish, they need to have a reasonable expectation of when housing is going to be available there.

And if it's not available immediately, then we have to figure out what -- how we're going to find them housing and let them make some choices about what they want to do with their lives. And it's as much a matter of communicating to them the situation that they're in and allowing them to choices as it is anything else.

PHILLIPS: Well, knowing that you're in charge, I know things will happen. I've already witnessed it firsthand. Vice Admiral Thad Allen, U.S. Coast Guard. Sure appreciate your time today, sir.

ALLEN: Thank you, Kyra.

PHILLIPS: My pleasure.

More LIVE FROM, right after a quick break.

(COMMERCIAL BREAK)

Coming up in the second hour of LIVE FROM is the government's bird flu pandemic plan going to work. Senator Ted Kennedy doesn't think so, and he's working on an alternative. Hear what he had to say on LIVE FROM, coming up in just a few minutes.

But first, considering the massage damage caused by Hurricane Katrina experts studying the storm's impact have reached a frightening conclusion -- it could have been a lot worse. Here's meteorologist Jacqui Jeras.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: What is this?

JACQUI JERAS, CNN METEOROLOGIST (voice-over): As Katrina victims sort through the rubble and pick up the pieces of their lives, researchers are combing through the damage and data to learn more about the power of destruction. Pictures like this show the raw power of Katrina's storm surge. But pictures like this have convinced some scientists New Orleans could have fared worse.

JOSH WURMAN, CENTER FOR SEVERE WEATHER RESEARCH: That tells us that the winds were not 140 miles an hour sustained, probably not even 120 miles an hour sustained. Particularly in New Orleans, which was on the weaker side of Katrina, the winds probably did not exceed 100 miles per hour.

JERAS: That means Katrina probably will be downgraded to a Category 3 when it hit the coast, according to Wurman. And preliminary data from the National Hurricane Research Center supports that.

If Katrina was a 3, what would a 4 have done to New Orleans? The most significant difference would be the wind damage. The damage from a Category 4 is about 40 percent worse than a 3. Take a well-built one-story home. A Category 3 storm may damage the roof and the windows, but a Category 4 would tear the roof off and possibly flatten the home.

In a high-rise, a Category 3 would probably leave the windows intact. A 4 likely would knock out all of the windows and gut the building. But the worst devastation from Katrina and most storms isn't the wind, but the storm surge, which is far worse in a Category 4.

STEPHEN BAIG, NATIONAL HURRICANE CENTER: The difference between a Category 3 and a Category 4 for storm surge rather depends on what part of the coastline are we talking about? In the New Orleans area, it can be a matter of as much as four or five feet.

JERAS: That four or five feet can make a crucial difference in cities like New Orleans protected by levees. Four feet can keep it under or put it over the top.

BAIG: We have problems defining just where sea level is. And the benchmarks that are used to measure the elevations, let's say of the levee heights, may be inaccurate, as much as four feet in their actual real elevations.

JERAS: In this case, we may never know the exact measurement, because the levee breach flooded the city with more water than the surge would have.

And then there's the problem that the city and much of the Gulf coastline are literally sinking. The precise intensity of this storm matters little to the people who lost family, friends, homes and jobs. But it could make a big difference in how the region is reconstructed.

WURMAN: When we think about how to protect metropolitan areas, we shouldn't use Katrina as the bellwether worst-case standard. It was far from the worse case. And if we really want to protect a city from a Category 4 or 5 and the strong side of a Category 4 or 5, we need to do qualitatively different things in terms of levee design, in terms of getting more people evacuated.

JERAS (on camera): National Hurricane Center meteorologists say they expect their final report in a number of weeks, though sometimes research can take longer. Hurricane Andrew was upgraded to a Category 5 storm 10 years after making landfall.

Jacqui Jeras, CNN.

(END VIDEOTAPE)

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