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Live From...
Early Flood Damage Estimates in Pennsylvania Top $13 Million; Terror Trial Ruling; Fed Expected to Raise Interest Rates; Rice, Russian Foreign Minister in Blunt Exchange on Iraq
Aired June 29, 2006 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Dolgeville, New York, just one devastated town in the fight against the floods. This hour, we'll talk to one of the owners of the restaurant that was swept away in the water right there.
The second hour of LIVE FROM starts right now.
Bridges washed away, hundreds of homes flooded, countless roads ruined, and that's just the first look at damage along the rain- swollen Susquehanna River in Pennsylvania. In dollar amounts, state officials say they are looking at $13 million worth, at the very least.
CNN's Mary Snow is heading to Bloomsburg, the only large town on the river without flood protection. She joins us by phone.
What are you seeing?
MARY SNOW, CNN CORRESPONDENT: Well, Fredricka, today is a stark contrast to yesterday because the water is receding. And people say they have never really seen it recede this quickly, and they have lived through a number of floods.
What's happened here is that the mandatory evacuation order that was imposed yesterday has been lifted. And that order affected about 200,000 people. So people are returning to their homes.
Some are looking at an absolute mess, though, as the waters receded. They are looking at floods in basements and mud. Some say that it will take them weeks.
Now, we are expecting to hear from Governor Ed Rendell this hour, and he will update everyone on the situation in Pennsylvania. It was just yesterday when he declared 46 of the state's 67 counties emergency -- he declared emergency declarations in those counties.
Now, the next area of concern, though, is the Delaware River, because it is cresting today. And that is really where the attention is shifting.
We're actually going to head to the banks of the Delaware River, where some towns are looking at potential flooding. Some have already seen some. But here in Luzerne County, near that Wilkes-Barre area where so many people had to leave their homes, a sigh of relief. But it will be quite some time before it all gets back to normal. Some of these communities are without drinking water, without power, but many people are relieved here.
WHITFIELD: And so, Mary, even though a lot of people live along the river, and this is really particularly unusual, even compared to the last couple of years of some pretty serious flooding, do most of these people have flood insurance?
SNOW: You know, I talked to some people who do have flood insurance. I talked to one resident who doesn't. And believe it or not, said that she was going to stay and live in this area, even though she had to leave her home yesterday.
It is very tough, because some of these homes are getting flooded in their basements. People I talked to who said that they didn't expect even to get much help say they are determined to stay here because they like it so much, even though it does cost them a pretty handsome amount of money to constantly be cleaning up and repairing from these floods.
WHITFIELD: All right. Mary Snow, thanks so much, on the way there to Bloomsburg.
Well, as rivers crest then fall, the damage across Pennsylvania is becoming clearer by the minute.
On the phone us with, John Comey, with the state's emergency management agency.
You all call it PEMA. Well, what are you able to assess now that the river in some areas is starting to recede?
JOHN COMEY, EXECUTIVE ASSISTANT, PEMA: Well, fortunately, in most areas, the river has started to drop, in some cases faster than anticipated, which allowed the officials in the northeastern part of Pennsylvania, in the Wilkes-Barre area, to allow residents to return to their homes. And that has been in work about two hours now. So there is substantial damage. We are going to be shifting gears as we speak to begin the damage assessment process as we transition out of the actual response phase.
WHITFIELD: And with the evacuation orders lifted, people starting to return to their homes and businesses, what is being observed?
COMEY: People have to be safe, have to be careful. In some cases, the homes may have been water-impacted. In other cases, they may have had their utility services shut off as a precaution.
It's extraordinarily important for people, again, to be safe. Don't turn on lights that may have been wet. Don't try to re-light pilot lights if they are not sure what they are doing.
WHITFIELD: How do you convey that to people? Because a lot of folks don't have power, they're not watching television. A lot of times they're not listening to the radio either to get these kind of instructions. How do you convey it? COMEY: Well, hopefully, it's going to be word of mouth, people that are listening, that do have battery-operated radios. In many cases, these communities have a history of flooding. Pennsylvania is one of the most flood-prone states in the nation.
They have been through this, in some cases, many times before. They can probably help us write the manual on how to deal with these things.
WHITFIELD: When you look at damage assessments, while visually you are able to make some observations, how do you calculate it in terms of dollars at this juncture?
COMEY: We don't. And the federal government doesn't require us initially to do a dollar assessment.
We're looking at the number of homes and businesses affected, not the dollar impact. A residence is a resident, whether it's a $1 million or a $100,000 residence. It's the family's impact that we're looking at, not the dollar cost.
WHITFIELD: What kind of federal assistance are you and a lot of the residents and business owners there counting on, especially as so many people have lost trust in agencies like FEMA, and, you know, federal disaster as a whole, as a result of Katrina? What are the expectations there?
COMEY: We're hoping that the federal government will recognize the need for assistance. We, having, again, been through this many times as a major flood-prone state, are well aware of the limitations of the national disaster assistance program, but it does provide a helping hand for homeowners, businesses, and local governments to help begin the rebuilding process.
We -- our expectations are realistic, and we are optimistic that the -- when the request is made -- and let me stress, at least at this point, we're still assessing the extent of damage and a request has not been made.
WHITFIELD: All right.
COMEY: But we -- the Federal Emergency Management Agency has been a partner with us over many years. And we don't always agree, but I think, by and large, the system does help people get back on their feet.
WHITFIELD: All right. John Comey of the Pennsylvania Emergency Management Agency.
Good look to you.
COMEY: Thank you very much.
WHITFIELD: And we expect to hear from the governor of Pennsylvania later on this hour. Governor Ed Rendell is holding a 2:45 p.m. briefing. We'll bring that to you live. Thirteen New York counties under water and under states of emergency are just starting to dig out and dry out. After an aerial tour, Governor George Pataki says property damage in his state will hit at least $100 million.
The upstate city of Binghamton seems to have gotten it the worst. Fifteen thousand people fled as the Susquehanna River spilled its banks and kept rising to nearly 12 feet above flood stage, the highest level in recorded history.
And forget what was on the menu here, because the Dolgeville restaurant is off the map now. It collapsed into the West Canada Creek yesterday as its owners watched helplessly. And we hope to talk to the owners in a moment.
A setback, meantime, for President Bush. Some say for the war on terror overall.
The Supreme Court ruled today that the president overstepped his authority when he ordered military tribunals to try terror suspects at Guantanamo Bay, Cuba. Mr. Bush says he'll work with Congress to find a new way to handle the detainees.
CNN Congressional Correspondent Dana Bash joins us now from Capitol Hill.
Already, folks are trying to come up with some decent alternatives there on the Hill.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: You are absolutely right, Fredricka. This really puts the ball squarely in Congress' court. That's certainly how at least some leading Republicans are viewing the way this Supreme Court ruling was written, but, of course, all things in Congress these days is also politics.
And before I go to that, I'll start with what the Democrats' reaction was.
By and large, Democrats came out with statements saying probably what you would imagine, that they called this Supreme Court ruling a repudiation of President Bush's claim of sweeping wartime power. I'll read you one statement from Senator Edward Kennedy of Massachusetts which kind of was emblematic of the Democrats' response.
He said, "The decision is a stunning repudiation of the Bush administration's lawless behavior at Guantanamo. As we approach the Fourth of July, it is entirely appropriate that the Supreme Court has reminded the president and Secretary Rumsfeld that there is no excuse for ignoring the rule of law, even when our country is at war."
Now, that from Democrat Ed -- Ted Kennedy, I should say, of Massachusetts.
Now, meanwhile, Republican leaders, I can tell you, are already meeting, discussing just how to move forward with this in terms of legislation. Just after this ruling came down this morning, we asked the chairman of the Armed Services Committee, John Warner, what he thought.
Let's listen.
(BEGIN VIDEO CLIP)
SEN. JOHN WARNER (R), CHAIRMAN, ARMED SERVICES COMMITTEE: I'm sure we will look at other means to provide them justice under our laws and international law. We might look to the federal system and other means by which to provide that. But, there also could be an acceleration of efforts to return them to their native countries, to the extent those countries will accept them.
(END VIDEO CLIP)
BASH: Now, you just heard Senator Warner talking about two possibilities, perhaps taking the detainees and putting them through civilian courts, or maybe returning them back to their country. But I can tell you that, since that, it seems as though perhaps the prevailing idea here on Capitol Hill, especially from Republican leaders, is to work with the White House to try to come up with actual legislation to do what the White House is trying to do. That is, try the detainees at Guantanamo in military tribunals.
Senator Lindsey Graham, we heard him on CNN just about a half an hour ago explaining what he is working on. I can tell you, he's already had meetings on the phone with the White House this morning, talking about just how to deal with this legislative. And essentially, what he is pushing is putting together legislation to allow these detainees, I should say, to go through military tribunals.
He also, in some ways, agreed, Fredricka, with Democrats. He, in talking to him just a short while ago, said that the White House should have come to Congress initially to do this and that the Supreme Court was essentially saying that, broadly, when you're talking about the war on terror, that the Congress should have a more active role, along with the executive branch, and that's exactly what's going to happen. He said that they're going to work on this legislation, they hope, perhaps, even to get it through by -- by the fall, maybe in September -- Fredricka.
WHITFIELD: All right. Thanks so much.
Dana Bash on Capitol Hill.
And you'll know in just a few minutes whether your credit card interest is going up again. Fed chairman Ben Bernanke and his team are expected to raise interest rates for the 17th time in two years.
You'll hear the announcement first right here on CNN, the most trusted name in news.
(COMMERCIAL BREAK)
WHITFIELD: Want to check the Big Board there. And the numbers just shy of hearing the new federal interest rate hikes.
(STOCK MARKET REPORT)
WHITFIELD: Federal Reserve Chairman Ben Bernanke and his team are expected to raise those interest rates for the 17th time now in two years. You'll hear that announcement first right here on CNN any moment now.
Our Susan Lisovicz and Ali Velshi are standing by in New York to break the news to us.
But first, let's talk with Susan Lisovicz now and try to get a better understanding, Susan, just why it seems these interest rates -- these hikes, that is, keep happening every couple of weeks or so. What is the best explanation?
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, the Federal Reserve feels that the best way to combat inflation is to raise interest rates, to make money more expensive for all of us. And that's what it's been doing for the last two years, and that has been working, to some degree. We are seeing the U.S. economy slowing down.
We've seen it in the housing market for the past year. We've seen it in job creation numbers more recently. We've seen in it manufacturing. But what hasn't happened, and this is really troublesome to the Fed, is that even if you strip out energy costs, which we know are sky high, we are seeing price hikes, whether it's rent, whether it's hotel rooms, whether it's your airfares, and that is troublesome to the Fed. And that's why the fed is expected to hike yet again today, and this would be the 17th hike -- Fred.
WHITFIELD: And what's also troublesome and worrisome is this slowdown, and that perhaps we're moving in the direction of a recession?
LISOVICZ: Well, that's the balancing act that the Fed has to do. It wants to slow down inflation. It wants to kill inflation, basically, but it doesn't want to hurt the economy.
And, in fact, Alan Greenspan, for all of the great tributes that have been paid to him, actually, when he took over as Fed chairman, some 18 years ago, the U.S. economy actually did go into inflation (sic). What is going -- what is going good for the economy right now is that the Fed was working from such a low level.
Remember, the Federal Reserve after 9/11 brought the federal fund rates down to 1 percent. We hadn't seen that in nearly 50 years. So that's good.
But what's also tricky for the Fed in this balancing act is that it takes six to 18 months for it to ripple through the economy. And the Federal Reserve has just officially done what the street expected it to do, raising rates for a 17th consecutive time to 5.25 percent. That would be the highest rate that we've seen in more than five years -- Fredricka.
WHITFIELD: All right. Well, maybe we should bring in Ali Velshi on this, too, now that we now a 5.25 percent increase. So, directly, what does this mean to you and me and everybody else out there?
ALI VELSHI, CNN CORRESPONDENT: Well, it means 25 points more on the fed rate, which means 25 points more on the prime rate. So the prime rate will now move to 8.25 percent.
The prime rate is the rate that banks charge their best customers. And what it also means is that everybody else who has got a line of credit, a home equity, credit cards, those things are all tied to the prime rate. So the cost of your money just went up for the 17th time in a row. It is more expensive to borrow money in this country, to do business in this country, to take out a home equity loan on your house.
The Federal Reserve's commentary now is that the reading on core inflation has been elevated in recent months. This is what this is all about, whether inflation is actually there or not.
The Fed is saying that ongoing productivity gains have held down the rise in labor costs. They are saying, however, that inflation is not done.
We are now seeing -- I just want to tell you this. Look at the market. The market was up 82 points when you were talking to Susan.
WHITFIELD: Right.
VELSHI: The Federal Reserve has raised interest rates .25 percent. Look at that, we are now up 130 points. We were up 19 points on the Nasdaq.
WHITFIELD: And why is that that?
VELSHI: Now up 27 points. Because everybody expected this to happen. Some people thought it might even be 50 basis points, half a percent. The fact that the Federal Reserve says that it's 25 basis points means we might be coming to the end of this -- might be coming to the end of this interest rate bonanza that we've been in for the longest time.
WHITFIELD: And so, Susan, back to you, you talked about, you know, as we were anticipating the rate increase, you talked about how it might make it harder for people to borrow against their home or borrow, period, whether it's to buy a home or a car, et cetera. This is what we're seeing now.
VELSHI: That's exactly right. That's exactly right.
And the question remains, do you -- do you go on with this? Do you handle the higher exchange -- the higher interest rates, or is this coming to an end?
As Susan said, with house prices slowing down, your house is your biggest asset. If the cost of borrowing against that becomes more expensive, combine that with gas prices, energy prices, the American consumer is getting squeezed.
We're also hearing...
WHITFIELD: Well, Susan...
VELSHI: Sorry, go ahead.
WHITFIELD: I'm sorry about that, Ali.
Susan, let me get you on this. Your thoughts?
LISOVICZ: Yes. Well, you know, I'm looking at the statement, too. I just got in it my hands. And I think one of the reason for the big reaction, a triple-digit gain, as Ali indicated, is that -- that the Fed actually was what it calls a little dovish in the statement.
It's not saying that another rate hike or a suggesting that another rate hike may be forthcoming. And the next meeting is on August 8th, if I'm not mistaken. So I think the street was expecting that there would not only be one, but perhaps yet another rate hike before the Fed is all done.
Of course, there's no way to know. There's lots of data that comes.
But just one thing I wanted to throw into the fire is that why is -- why is the -- why does the Fed keep raising rates? Well, we got the latest read on the GDP. That is the broadest measure of the economy for the first quarter, and that was huge. That wag 5.6 percent.
We haven't seen that kind of growth in two and a half years. And that was actually faster than what everyone was expecting.
So, inflation remains a problem. And the economy still seems to be growing, not in a -- we're not going to say the "R" word.
WHITFIELD: All right.
And so, Ali, you know, while you talk about home equity loans, it's going to be harder for people to borrow against their own homes.
VELSHI: Right.
WHITFIELD: Does this mean it is going to be more difficult for people to borrow -- to purchase a home, perhaps even those first-time buyers?
VELSHI: Let me show you. Let's look at that chart.
The blue line on that chart is a 30-year fixed mortgage. That's the interest rate. The yellow line is a home equity loan.
Now, mortgages are not set by the fed rate. They are set in the bond market. So while you have seen some increase, some -- from 2004, when it was at its all-time low, look at the home equity. That's the same as your credit cards, that's everything that's tied to prime rate.
That has gone up. When the fed rates go up, that goes up. So if you're one of these people who has 80 percent of your home on a fixed- rate mortgage, but you've got 20 percent on a home equity, you know, that little portion of what you pay, or your credit cards, or other loans, that has gone up.
Now, these are the same people who pay extra for gasoline to heat their homes and on these loans. We don't -- Americans don't save a lot of money, and this is the little bit that they've got to spend. If you take away the money that Americans have to spend on discretionary things, the things that we just all like to buy, going out and eating, clothing that's what slows the economy down. You can't spend, because you're paying that money to interest.
WHITFIELD: And, Susan, before I let you go, and Ali, let me just ask you, how much of this, whether it be this rate hike or even a potential one in August, if it comes to that, Susan, might this be Ben Bernanke wanting people to know exactly who he is?
LISOVICZ: Well, that was -- that -- you know, Wall Street investors are always very anxious when -- when there's a decision on interest rates. The fact that this guy, Ben Bernanke, is still relatively new, just creates even more apprehension. And he had given some conflicting statements.
I think that as bright as he is and experienced as he is, he was unaware of just how much scrutiny that a Federal Reserve chairman is under.
And, Ali, you can pipe on this, too.
I mean, every syllable is dissected. And what happens in the world's largest stock market and the world's largest economy certainly impacts the rest of the world. And so what he says, everyone listens.
The markets reacted. The markets reacted quite a bit to him in the last several months. And it's reacting to what he had to say as well today.
WHITFIELD: All right. Susan Lisovicz, Ali Velshi, thanks so much on that breaking news of the federal interest rate now going up to 5.25 percent.
Washed away. Homes and businesses give way to floodwaters in the Northeast. We're waiting to hear from the governor of Pennsylvania. He'll be briefing reporters on the flooding in his state. CNN will bring you his remarks live.
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WHITFIELD: It's fast, it's powerful, and it's still rising. The Delaware River, it's nearing crest in Trenton, New Jersey. Thousands of people are out of their homes, and it could be days before they are allowed to go back.
Reporter Tony Caputo of CNN affiliate News 12 New Jersey is on the riverbank.
(BEGIN VIDEOTAPE)
TONY CAPUTO, REPORTER, NEWS 12 NEW JERSEY: Folks, I don't know of a better way to show you the sheer power of the Delaware river right now. We are in Trenton.
Let me show you a look under the railroad bridge. It connects New Jersey and Pennsylvania. Amtrak, New Jersey Transit use that bridge, and look at the force of that water and the waves crashing in to the base of that bridge.
Now, we understand from the commissioner of transportation that he has spoken within those in the know and they say that bridge is just fine. It will handle that force.
And I spoke with a member -- a resident, rather, here in Trenton a short time ago. He says that's worse than anything he's ever seen before. The impact and the force hitting the base of that railroad bridge is really something to see.
Now, let me get you to take a look at Route 29. This is the road that's been closed since last night throughout this Trenton area. And you can see why, folks.
I mean, this is near Waterfront Park and Kathmandu and the downtown Trenton area. And it's completely wiped out in certain sections that dip a little lower than others. Not far from the state House as well.
Again, completely wiped out. The commissioner says nobody will be allowed to even go near this road, including those who work for him, until 12 hours after that water recedes, because he wants to give it time to settle, make sure there are no sinkholes and things of that nature.
And remember, folks, if you are in an area where there's some water on a road, and you have access to it, be very careful, because you could drive over and it that roadway could give. You just never know. So play it safe.
We'll certainly keep you up to date on the situation here in Trenton.
I'm Tony Caputo, News 12, New Jersey.
(END VIDEOTAPE)
WHITFIELD: Troubled waters also flow across Pennsylvania. As the Susquehanna River recedes, new problems come to light. Damage and debris as far as the eye can see, plus a need for fresh drinking water. Tens of thousands of people have just been given the OK to go back to their homes to take stock. Two-thirds of Pennsylvania's counties remain under states of emergency.
We expect to hear from the governor of Pennsylvania later this hour. We'll bring it to you live.
A diplomatic exchange that wasn't so diplomatic. Blunt words at the G8 foreign ministers' conference in Moscow between U.S. Secretary of State Condoleezza Rice and her Russian counterpart. It was supposed to be a private conversation, but it was caught on tape.
CNN senior international correspondent Matthew Chance is live with the story.
What happened?
MATTHEW CHANCE, CNN SR. INTERNATIONAL CORRESPONDENT: Thanks Fredricka.
Well, it's not very often we can bring you the detail of the meaty discussions that diplomats have behind closed doors, but this is an exception, because we were waiting for a press conference when CNN plugged its cables into the audio equipment that was provided by the Russian government and was treated to this kind of unexpected access to a conversation that was taking place between behind closed doors between two key foreign ministers, the secretary of state, Condoleezza Rice, and her Russian counterpart, Sergey Lavrov.
Let's listen in to what they had to say to each other.
(BEGIN AUDIO CLIP)
CONDOLEEZZA RICE, SECRETARY OF STATE: Sergey, the problem is there's a need for improved security in Iraq, period. You know, it's not -- it's -- the problem isn't diplomatic missions. The problem is journalists and civilian contractors and, yes, diplomats as well.
But the problem is that you have a terrorist and insurgent population that is wreaking havoc on a hapless Iraqi population that's trying to fight back and on a coalition force that's trying to fight back. And the implication that somehow by declaring that diplomats need to be protected it will get better, I think it's simply not -- not right.
(END AUDIO CLIP)
CHANCE: Well, that was a reference by secretary states, and very frank and candid remarks there about the security situation in Iraq. Clearly, to an issue that was being discussed here about the four Russian diplomats who were recently killed in that country. But between Sergey Lavrov, the Russian foreign minister, and Condoleezza Rice, there was also some very blunt diplomatic exchanges.
Let's take a listen into the conversations they had.
(BEGIN AUDIO CLIP)
RICE: I just want to register that I think it's a pity that we can't endorse something that has been endorsed by the Iraqis and by the U.N., but...
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: Condi, Condi, Condi.
RICE: ... if that's the way Russia feels, that's fine.
LAVROV: No one challenges the sovereign right to endorse them, but when you can consider assistance programs in IMF and the World Bank, you do not automatically just endorse whatever the government endorses. It's -- it's an important part of the exercise to consider specific features of an assistance program.
(END AUDIO CLIP)
CHANCE: Well, of course, when these conversations were over, they came out to meet reporters and present it to them, a formulated statement in which everybody was in agreement. But, clearly, you can hear from that audio -- and behind the scenes there's still a great deal of debate going on about the kind of wordings -- wording -- these foreign ministers use when speaking to the press.
WHITFIELD: So, Matthew, if that audio was put out by mistake, was this conversation considered to be off the record? And then if so, what's the reaction from both sides as to the fact that it was actually recorded?
CHANCE: Well, I haven't heard any reaction so far, but certainly I think we can assume it was inadvertently put out, perhaps by the Russians who were looking after the audio in this news conference. Certainly, as I mentioned, this is the kind of frank diplomatic exchanges that you don't normally hear in public.
This was taking place behind closed doors. It was meant for the ears of the two participants, Condoleezza Rice and Sergey Lavrov, and the other foreign ministers of the G8 group of industrialized nations, as well. I certainly don't think that kind of division was meant for the wider public -- Fredricka.
WHITFIELD: All right, Matthew Chance, thanks so much for that update.
U.S. and Canadian authorities announce the arrest of more than 40 suspected drug smugglers, along with the seizures of several aircraft, narcotics and cash. The almost 2-year-old investigation, named Operation Frozen Timber, centered on Washington state's border with British Columbia, which has become a favored route for alleged smugglers in the past few years.
Our Jeanne Meserve is in Bellingham, Washington, and joins me now on the phone -- Jeanne.
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Fredricka, officials are calling it audacious, brazen. They are seeing helicopters being used to ferry marijuana from Canada into the U.S.. They come into remote mountain areas here, where they cannot be detected by radar, where there are very few people to see them. They make their drop in just a matter of a few minutes and sometimes unload cocaine, which they then ferry back to Canada.
What is truly amazing about this is that some -- in some instances, they are alleged to have used unlicensed pilots who have done this very low-altitude flying through the Cascade Mountains to make these drops. They have now announced these busts, which they say involve, as you said, more than 40 arrests on the U.S. side, six on the Canadian side. They have seized roughly 8,000 pounds of high- grade marijuana, 800 pounds of cocaine, three aircraft and $1.5 million in U.S. currency.
But with all of that, Fredricka, officials acknowledged that they may just be exposing the tip of the iceberg here. One agent told me that this is a, quote, "perfect scheme for smuggling" -- Fredricka.
WHITFIELD: So does that mean, Jeanne, if this is the tip of the iceberg, they expect more arrests?
MESERVE: They say they are continuing their investigations and it would not surprise anybody if there were more arrests. Some of the law enforcement people with whom I've spoken said this obviously points out the porousness of the border, a vulnerability. Of course right now, the smuggling appears to only involve marijuana and cocaine, and as dangerous as that may be, they say it could involve things far more dangerous than that under some scenario; for instance, people, weapons of mass destruction.
WHITFIELD: And so Jeanne, do U.S. or Canadian authorities say anything about any apprehension they have of publicizing, you know, this kind of surveillance, given that this might, in some way, impede any other potential busts?
MESERVE: Well, they're -- they don't want to give away their sources and methods. They had a big press conference this morning, and they were asked some specifics of some of the surveillance video which they released. They just didn't want to give the bad guys that hint. But they wanted the bad guys to know they're on their case, in part because the people who are doing the smuggling has been so brazen. "Playboy" magazine did an interview with some of the smugglers which was published in 2005, and in that article, the smugglers boast that they are better than FedEx.
WHITFIELD: Wow.
MESERVE: That they could fly at times of high threat alert in the United States. They said only red alert would stop them. Little did they know that actually, at that time, they already were under surveillance, that investigations were already under way. But I think this is clearly an effort by the authorities, both on the and U.S. and the Canadian side, to let the drug smugglers know they know what they're up to, and they do have some means of catching them.
WHITFIELD: All right. At least except in this case, you know, these -- I guess suspects will not be delivering on time as FedEx usually does, given that was the comparison. Jeanne Meserve, thanks so much.
Dolgeville, New York, just one devastated town in the fight against the floods. Next, we'll talk to one of the owners of the restaurant that was. Stay with CNN, the most trusted name in news.
(COMMERCIAL BREAK)
WHITFIELD: A picture may say 1,000 words, but in some cases, that's still not enough to tell the whole story. We've been showing you the last moments of a restaurant in upstate New York. That one right there, swept away in a creek gone wild. Well, it's not the only loss and not the most tragic loss to the floods, but it is still heartbreaking, especially for Sheryl Cool and her mom.
Sheryl joins me by phone from Dolgeville, New York, to talk about it. And I say, Sheryl, you and your mom, because together you owned and operated that restaurant, right?
SHERYL COOL, RESTAURANT CO-OWNER: Yes, we did.
WHITFIELD: Well, tell me about the kind of investment you and your mom apparently had made to try to upgrade it recently before all of this happened.
COOL: Well, we've been -- we've remodeled the kitchen. We just brought in brand new commercial stoves. We put new tile floor down, new walls, new ceilings. We were remodeling the bar area, making the restaurant part bigger.
WHITFIELD: And then this huge rain sweeps the area. The creek rises. Where were you at the time of this creek rising? Did you in any way anticipate that your restaurant was in as much danger as apparently it was?
COOL: Actually, nobody said anything about the building going until it started going.
WHITFIELD: Really.
COOL: And that's pretty much when we knew it was going was right at the moment.
WHITFIELD: So where were you and your mom during all this?
COOL: We were across the street. I was across the street watching.
WHITFIELD: So you watched it happen?
COOL: Yes. My mother was in the car because she was devastated and didn't want to see anything going on.
WHITFIELD: Oh. COOL: She was exhausted from it. She had been up there since 5:30 in the morning. Nobody notified her, but a girlfriend notified her that lives in the apartment next door that got evacuated at 5:30. That's how we were notified.
WHITFIELD: But thankfully, neither you nor your mom were in the restaurant, no other personnel, correct, in the restaurant when -- at the time of these waters rising, et cetera?
COOL: No, no. The rise -- the restaurant was open the night before until midnight.
WHITFIELD: Yes.
COOL: And I guess the water was pretty bad then, but nobody contacted us at all.
WHITFIELD: And so now, the helpless feeling of watching your business, your livelihood, get washed away like that, there's nothing that you or anybody else could do. What were some of the thoughts going through your mind?
COOL: Fifteen years of my mother's hard work, earnings, just down the drain. Just her whole life just went down the river.
WHITFIELD: And now tell me about flood insurance. What kind of insurance can at least help you perhaps get back on your own two feet as business owners again?
COOL: Well, where we were located on the East Canada (ph) Creek, they don't offer flood insurance, because it's a flood zone. So there is no flood insurance, and we're really hoping that FEMA comes in and helps us, because it is a New York state disaster.
WHITFIELD: Oh, and I understand that you and your mom had invested so much of your own personal savings ...
COOL: Yes, we did.
WHITFIELD: ...in your restaurant, and so at this point without flood insurance, and without knowing what FEMA or anyone else is able to offer, you're at a total loss.
COOL: A total loss.
WHITFIELD: And how's your mom holding up?
COOL: My mother is very numb over this. Very, very numb. She just cannot believe it at all.
WHITFIELD: Well, we wish you the best. You, Sheryl Cool, as well as your mom, Florine (ph), the best in your recovery efforts and hopefully at some point you'll be able to get some assistance so that maybe you can be up and running again at another time. But we're glad you all are safe.
COOL: Yes.
WHITFIELD: All right, Sheryl, thanks so much.
COOL: Thank you.
WHITFIELD: And we expect to hear from the governor of Pennsylvania later on this hour. Governor Ed Rendell will brief reporters on the flooding situation in his state. We'll bring that you to live.
And now a breaking story out of Orlando, Florida. A 12-year-old boy has died on a roller coaster ride at the Disney-MGM Studio Theme Park. Susan Candiotti is working the story for us in Florida. She joins us live.
Susan, what happened?
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Fredricka, just tragic news, obviously, but we got this information from a Florida Department of Agriculture official that apparently about 11:30 this morning, a 12-year-old boy, don't know where he was from, don't know whether he was alone, was riding something called the Rock 'N' Roller coaster at MGM Studios. It features the music of the rock group Aerosmith.
And according to this official, that when the ride ended, the boy was unresponsive. That when other people were getting off the ride, that's when this was noticed. That immediately the boy was given CPR and that he was put into an ambulance and rushed to an area hospital and that at the hospital, the official says, the boy was pronounced dead.
Now, we don't know at this time whether the boy was riding the ride by himself, whether he was on the roller coaster with family members, just don't know at this time. That's all the information the Florida official has.
Authorities got the call at about 1:00 in the afternoon, by -- from Disney. They are -- Disney is obligated to call Florida officials whenever an accident of this kind occurs. And Disney asked -- this is the routine, must ask the Florida Department of Agriculture to send an inspector over to observe.
And, in fact there is an inspection going on right now of the ride. Of course, the ride has been shut down, and you'll remember, just a few months ago, another youngster died on another ride called Mission Space over at Epcot Center. So, unfortunately, not a good year for Disney.
WHITFIELD: And, now, what about the entire park as a whole? We know this roller coaster ride, the Rock 'N' Roller coaster has been closed down, as you said, but what about the entire MGM Theme Park?
CANDIOTTI: Well, in the past, when an accident has occurred, it does not affect the operation of the other rides. Certainly, this one has been shut down while the investigation goes on and the inspection of the ride goes on, and Disney, sadly, has had some experience with this.
Naturally, it would be a matter of concern to the park. We've been unable to get any response from Disney at this time. We do understand that the Orange County sheriff's office is conducting an investigation into this death as well, and so we hope to be getting more information as the day goes on.
You see this aerial view of the ride itself. That, of course, is the guitar that represents the Rock 'N' Roller coast ride there. We have put in calls to Disney, but so far we have not heard back from any spokesman from that organization -- Fredricka.
WHITFIELD: And, Susan, as I'm reading the MGM-Disney Web site and it describes this Rock 'N' Roller coaster as this way, zooms from zero to 60 miles per hour with the force of a supersonic F-14, taken high-speed loops and turns, synchronized, but as we know, Susan, no other reported injuries or problems with that particular ride, as we know?
CANDIOTTI: As far as we know. I don't recall hearing of any in the past. I know, obviously, it's a very fast ride.
WHITFIELD: OK.
CANDIOTTI: There's a tunnel involved as well.
WHITFIELD: All right, well, Susan, I'm going to have to stop you right there, because we now need to go to Pennsylvania, where the Pennsylvania Governor Ed Rendell is speaking to reporters there, talking about the great losses as a result of major flooding.
GOV. ED RENDELL, PENNSYLVANIA: ... in the middle to northern part of the state, are being played out today in the south central and the southeast portion of the state. Fortunately, we did not reach those projections and that saved a tremendous amount of damage and a tremendous amount of threat to life and limb.
Give you an example. When the county and local officials and Mayor Leighton made the decision to evacuate Wilkes-Barre yesterday, it was based on a projection that the flood crest would be between 38 and 39 feet. As you know, the dikes in Wilkes-Barre themselves are 39 feet tall, and it was felt that -- it was possible that the crest would surmount the dikes or cause the dikes to give way.
And that evacuation was smart. It was proper. It was appropriate. It was made in the name of caution. But with the secondary roads being damaged, had the dikes broken, you could have had a New Orleans-type situation in Wilkes-Barre, and they did the appropriate thing.
By this morning, we had received word that the crest was going to be much reduced. It came in a little under 34 feet. And as a result, the mayor and county officials ordered the evacuation, the mandatory evacuation, to end at 12:00 noon, and people have been, in an orderly fashion, just as they evacuated, coming back into the Wyoming Valley. So I think we were lucky to an extent. But the damage total to Pennsylvania is, at this moment, not calculable. I know all of you are interested in putting a dollar figure on it. It's too soon to put a dollar figure on it. But in terms of a loss of life it looks like at least five lives, maybe six.
In terms of loss of homes and properties and businesses and possessions and things that are dear to people, it's impossible to calculate. The loss for Pennsylvanians is truly priceless.
What went on yesterday and throughout the morning hours and midday yesterday in the northern half of the state, northern central, and northeastern part of the state, was truly remarkable. Had it occurred near a big city, where television coverage, it would -- you'd be seeing images like the shot that was in the "Redding Eagle," you'd be seeing those images all over national TV.
At 12:30 on Tuesday night, I signed a disaster declaration. I was on the phone with Lieutenant Colonel Ralph Periandi of the state police, Colonel Miller, General Wright, the FEMA director Tim Joseph (ph) and Art Stevens from our staff, and at that point, we activated the National Guard.
The Guard was activated at 12:30 on Tuesday night. By 4:00, not withstanding -- by 4:00 a.m., not withstanding terrible flying conditions, we had two Chinook helicopters at Avoca Airport in Wilkes- Barre, and by dawn's early light, there were a total of 13 helicopters that went into operation in the north, central and northeastern parts of the state.
Seven were National Guard helicopters. Four were state police helicopters. Two were from the Coast Guard. And let me say, FEMA and the Coast Guard cooperated with us. They were with us from the beginning here, even before the first flooding started to occur. Those 13 helicopters made over 1,200 water rescues -- 1,200 water rescues, scenes like this, scenes from rooftops. In 16 or 17 occasions, actually the big baskets came down to lift whole families out of -- off rooftops or on houses.
But a total of 1,200 water rescues. Again, because it was in the northern tier and because it was impassable for TV cameras and stations, we have very little footage of that. But the heroism of the people involved should be noted. You know, it's amazing that we were able to activate so many helicopters so quickly. It's amazing that at 12:00 midnight on Tuesday, not one guard personnel knew they were going to be activated, and yet by morning there were 700 -- almost 700 guardsmen in position. Some up there, some in staging areas, some in points of distribution. And there are now 1,000 guardsmen that are deployed.
Ironically, 225 of these guardsmen were from the 111th Air National Guard Fighter Wing at Willow Grove, which, as you know, the Defense Department wanted to close. And it looks like Willow Grove is going to be the staging point for the distribution of FEMA assets: ice, water, meals ready to eat and the like. Those things are going to come into play as people get back to their houses and find electricity down, gas down, water out.
The entire city of Bloomsburg needs water. The Coca Cola Company donated water to us for Bloomsburg. And we went out yesterday -- because the federal assets can only be moved once a declaration -- a federal disaster declaration has been made, we went out and spent over $100,000 yesterday for water, ice.
WHITFIELD: You've been listening to Pennsylvania Governor Ed Rendell there, talking about while there were 1,200 water rescues, they really do feel at this point the worst is behind them, having dodged a big bullet, because the floodwalls appeared to have holed there on the Susquehanna River.
Now, straight ahead, national security. How much do you really need to know? A controversy involving big newspapers heats up on Capitol Hill. This is CNN, the most trusted name in news.
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WHITFIELD: Safe and dry, but it was touch and go for a while in Washington, with floodwaters surrounding the National Archives and three Smithsonian museums. The real threat to documents and artifacts is humidity from the loss of air-conditioning. That's when dehumidifiers powered by generators came in handy.
Drying out the rail lines is another story, however. Commuters are still finding delays as the trains take it slow throughout the Washington area.
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WHITFIELD: Along the way to a Supreme Court ruling on terror trials. What does it mean for the detainees at Guantanamo Bay and what does it mean on the war on terror? We'll look for the answers, when LIVE FROM continues.
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