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Rebels Control Gadhafi Compound; Inside Gadhafi Compound; East Coast Earthquake; Should Perp Walks be Public?; Power Restored To Nuke Plant; Bracing For Irene; Nancy Reagan Doing Fine After Fall; Where's Gadhafi?

Aired August 24, 2011 - 06:00   ET

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

CHRISTINE ROMANS, CNN ANCHOR: -- hiding. He's calling on Libyans to drive the criminals, traitors and rats out of Tripoli.

ALI VELSHI, CNN ANCHOR: I'm Ali Velshi, and here's something you don't see or hear every day or decade. An earthquake epicenter just outside of D.C. felt up and down the east coast this morning. The quake is raising concerns about a nearby nuclear power plant that had to go into emergency mode.

CAROL COSTELLO, CNN ANCHOR: Hurricane Irene carving out a path of destruction and the United States may be next. I'm Carol Costello. The eastern seaboard bracing themselves for the worst of Irene on this AMERICAN MORNING.

ROMANS: Good morning, everyone. It is -- it's Wednesday, wow halfway through the week, August 24th. Welcome to AMERICAN MORNING. It feels like it's halfway through the week, but we had just like a hundred years of news in two days.

VELSHI: We in the news business like when there's news, but we started off yesterday with what was going on in Libya, these hurricane preparations, and then an earthquake.

ROMANS: Right.

COSTELLO: Did you feel it?

VELSHI: Christine and I were together. We were working. I thought it was a little vertigo and then I said, is that the subway? And we were with somebody who said the lights are swaying.

ROMANS: Yes. The whole lighting grid was swaying.

COSTELLO: I did not feel it. I was actually in a shoe store buying shoes and my husband --

VELSHI: You thought that's what it was.

COSTELLO: My husband is in Baltimore. He really felt it. So he e- mails me and he says, get out of wherever you are. I'm thinking how does he know I'm buying shoes?

VELSHI: Hopefully, gladly there are more stories of that sort. ROMANS: Only something like that could take Libya off the moment by moment, because remember, we were watching yesterday amazing pictures for the battle for Tripoli.

VELSHI: You know, it's still goes on. Rebel fighters are tightening their grip on the capital right now. They're in control of the Gadhafi family compound, the biggest prize, Gadhafi himself continues to elude them.

The rebels stormed the heavily fortified complex yesterday. You saw that while we were on the air. It's the symbolic center of Gadhafi's power for the last four decades. It fell with remarkable speed.

There was cheering, a lot of celebratory gunfire as you can see there. Rebels looted his arsenal, trashed the symbols of the Gadhafi reign. Gadhafi did speak to a radio station and said his retreat from the compound was a tactical move.

In a second radio message overnight broadcast on two Arabic networks, Gadhafi remains defiant.

(BEGIN VIDEO CLIP)

MOAMMAR GADHAFI (through translator): I call to all Libyans, tribesmen, youth, seniors, women and loyal fighters, to clear the city of Tripoli and eliminate the criminals, traitors and rats.

We could let the tanks and cannons shell the city of Tripoli and demolish it on their heads, but this is not right. The military cannot shell the buildings and the houses.

The rebels are hiding between the families and inside the civilian houses. It's your duty to enter these houses to take them out.

(END VIDEO CLIP)

VELSHI: Now, there are still pockets of resistance from pro-Gadhafi forces in Tripoli. Case in point, dozens of journalists including CNN's Matthew Chance are virtual hostages at the Rixos Hotel in Tripoli.

Gadhafi loyalists are in charge there. They're not allowed to leave the hotel. Matthew told us yesterday morning that the Gadhafi forces are saying that they're protecting them.

ROMANS: He reports he had a Mars bar for breakfast. They have been able to actually secure some food, but they are still stuck in that hotel.

COSTELLO: That must be like hell now because --

ROMANS: Yes.

COSTELLO: Yes, for many, many reasons.

ROMANS: Yes. COSTELLO: The world watched as Libyan rebels broke through the walls of Moammar Gadhafi's fortress like compound. It was symbolic as historic. There were scenes of joy and scenes of chaos. CNN Sara Sidner followed the rebel fighters inside.

(BEGIN VIDEOTAPE)

SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT: Following behind rebels who are taking us into the compound. They say it's safe. We know that sometimes they are not sure exactly what they might encounter even inside of that large compound.

But we were seeing amazing celebrations in the neighborhood right near Bab Al Azizya and we're hoping to get into that compound in just a few moments here.

We are walking into Gadhafi's compound of Bab Al Azizya. The rebels have taken the compound. We're going in to see what we can see. This is Bab Al Azizya. They now have people standing as security. They're telling us OK, OK.

We can go inside to the compound. So as everybody runs into this compound, you're seeing people go in and take out weapons. Look just over there behind you, is a huge box. This box -- can I look? Some of the weapons inside of the Gadhafi compound of a handgun and a rifle.

These are more guns, more guns. These guys have found and so they've been taking some of these things out. The weapons that are coming out of this compound are just massive. There's so many of them. Boxes of them just people carrying them.

Carrying them out, they're even taking some of the trucks that belonged to Gadhafi forces. We have to run out of the compound now. We see gunfire coming from outside the compound. It's getting -- it's getting too close. So we're leaving. We're not going into the compound.

Now from outside of the compound firing towards us. We're getting out of here. Bab Al Azizya. Yes, the rebels have been inside and going around it, but there's definitely still some resistance. It sounds like it's coming from the other side.

Rebels saying on the other side of the compound, there are some rockets and gunfire coming from Gadhafi loyalists. So there's no way we're going all the way inside. We went in the second gate, but I think it's not safe.

(END VIDEOTAPE)

VELSHI: Wow. That is remarkable and that's what Sara was experiencing all day yesterday and into the night. She's joining us now live from Tripoli. CNN's Sara Sidner.

Sara, remarkable what you've seen in the last 24 hours and I understand moments ago, that you are still seeing, you're still witnessing fire coming into that compound or toward that compound from presumably from pro-Gadhafi forces?

SIDNER: Yes. It is coming. It is coming basically from the neighborhood where we do know there has to be some of Gadhafi forces. Basically what's happening, you're seeing the rebels going into the compound right now, because there is this fire fight still going on.

Basically, just over my right shoulder, you can see some of the damage and how far these mortars are falling. We have so far heard about six mortars fall around the area. One second, OK.

We've heard some mortars fall around us about six mortars have fallen and we've seen smoke coming from some of the compound as well. So we know that fire is getting into the compound of Bab Al Azizya and it is still not a safe place to be.

COSTELLO: So, Sara, who are all the people surrounding you, beeping their horns?

SIDNER: These are the rebel fighters who are going in. I think now basically what's happening is they're hearing all of this gunfire and they're going in so they can try to push out the Gadhafi forces from the other side and it's getting quite loud.

What you're also seeing are a few, just a few, civilians, who have come to this area. They've never been inside this compound. This was a place where you had to be a very close friend or ally to get anywhere near it. There were massive amounts of security and so now, people want to come and sight see.

The problem with sightseeing, we've seen families with children driving in, is we have literally heard bullets fly past our head and seen mortars falling not far from us. So still a very uncertain place to be.

Now we do know the Gadhafi forces are outside of the Bab Al Azizya compound, but that doesn't mean anything because the mortars can fall right there as we saw today.

ROMANS: Sara, it's Christine, can you tell me how organized the rebels seem to be? Some seem to be, you know, opening boxes of guns as if they've never had a gun. We know that NATO, we heard yesterday from the Transitional National Committee, that NATO is helping organize things.

But street to street, these are the rebels who are in charge. How organized are they at this point? It seems more like a celebration than a military offensive?

SIDNER: Well, it's a celebration now, but it was a military offensive less than 24 hours ago. There was a massive firefight here and they are organized enough to push the Gadhafi forces out of one of the most important buildings or the most important building in this entire city.

It is equivalent to the White House. It's equivalent to a king's palace. This is one of the most important places that people feel is a symbol of the Gadhafi regime, his personal space. What I can tell you now is that in the streets of Tripoli, things are very calm in much of the city.

We've driven around the city a bit today. We are hearing mortars now, just one second, we have to figure out if this is incoming or outgoing. OK. So that's outgoing. It sounds like that's outgoing.

All right, we got to go. Sorry. That's coming -- that's coming towards us. We got to get out of here. Sorry, guys. Let us get to a safer place and we'll get back to you.

VELSHI: Get to safety. Get right to safety. That's something else. We're now just hearing as well there's shots being fired outside that Rixos Hotel where Matthew Chance and his three colleagues from CNN are staying as well.

So a lot of activity -- it tells you something when Sara can stand there and distinguish between incoming and outgoing.

COSTELLO: Have you ever been to the war training that CNN offers. You learn to differentiate the sounds. They're distinctive. She also has a lot of people around her. It's not like she's standing out there alone. She's got security surrounding here and people who really know the ways of warfare.

ROMANS: Now we know that the transition committee, the rebel government at this point has said that they hoped to have a security committee to be in charge of that facility, to be in charge of Tripoli, but it was going to take several days.

VELSHI: Right.

ROMANS: So When you talk about the organization of the rebels, it doesn't look like that's in place. It doesn't look as though there's not --

COSTELLO: Supposedly they're moving in the headquarters for the rebels is Benghazi right now. So I think they're moving from Benghazi to Tripoli and set up shop and make that their headquarters. But obviously, they can't do that until this thing with the compound is all set and done, which is not.

ROMANS: I have to say that Sara Sidner, Matthew Chance, Arwa Damon, our folks there have done amazing reporting over the past few days. To see Sara just right there at the gates, you know, again trying to recognize what's incoming and outgoing, just really amazing reporting --

COSTELLO: I don't think her mother would feel the same way.

ROMANS: I don't think so either. I think you're probably right.

All right, it's a story everyone else is talking about this morning as well, the day that the east coast shook. The 5.8 magnitude earthquake collapsed some homes near the epicenter in Virginia.

It caught millions off guard in the middle of a work day in places like New York City where people were -- dozens of stories above the ground feeling the floors move and sway. And now the earthquake is bringing attention to a nuclear power plant that sits just about 85 miles from the nation's capital.

Our Brian Todd is live outside the North Anna nuclear plant in Mineral, Virginia. Tell us what the situation is there this morning, Brian.

BRIAN TODD, CNN CORRESPONDENT: Christine, we've found out a short time ago that power from the main grid was restored to this nuclear power plant overnight. That's the power that fuels the cooling systems for the nuclear reactors and spent fuel pools here.

But both nuclear reactors at this power plant remain shutdown as they walk through the safety checks. That's one part of how an entire region is recovering from this quake.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: May be an aftershock, but you're allowed to go back in the building at this time.

TODD (voice-over): To millions of people on the east coast, this was the big one.

UNIDENTIFIED FEMALE: You believe you've just witnessed an earthquake in Washington, D.C.

TODD: It's the strongest quake to hit the Virginia area since 1897, a 5.8, rattling nerves and shaking buildings in the nation's capital.

UNIDENTIFIED MALE: I really thought it was some kind of bomb because I never felt nothing like that before in Washington.

UNIDENTIFIED MALE: I was on the bus and the bus did a shimmy.

UNIDENTIFIED FEMALE: I don't know what was happening. I thought the building was about to collapse.

TODD: The quake was centered near Mineral, Virginia, about 40 miles from Richmond and 83 miles from D.C., but could be felt all the way in Martha's Vineyard where the president is on vacation.

Shaking was felt in more than a dozen states in all even into Canada. NBC's cameras focused on the White House caught the shaking as it happened. Some of the masonry of the National Cathedral fell off.

And the National Park Service says engineers found a crack near the top of the Washington monument. It will be closed indefinitely to keep visitors safe. Many government buildings, including the Pentagon, were evacuated.

But no major damage was reported. Further north in New York City, people ran from skyscrapers, down flights of stairs as they sway. UNIDENTIFIED FEMALE: The building shook back and forth. It actually rocked.

TODD: Near the epicenter of the quake, the North Anna Nuclear Power Station, the earthquake triggering an automatic shutdown there. Diesel generators kicked in to keep the reactor cores cool, but I spoke to a plant executive who wanted to make sure we knew everything was under control.

(on camera): What do you want to say to the public as far as right now.

UNIDENTIFIED MALE: Well, the power plant is safe, the operator responded well, both units are shut down, maintaining a safe shut down condition. There was no release of radio activity.

(END VIDEOTAPE)

TODD: And to clarify the nuclear reactors here are still shutdown. An official just told me a short time ago it's unlikely that they'll be back on-line later today. That will take some time as they walk through the safety checks.

But they did get power from the main grid back here overnight. The power that fuels the cooling systems here for the reactor and for the spent fuel pools. Christine --

ROMANS: All right, Brian Todd in Mineral, Virginia. Thanks, Brian.

VELSHI: All right, coming up on AMERICAN MORNING, a new Gadhafi messages from parts unknown urging Libyans to take out rebels who have taken over Tripoli. We just heard from Sara Sidner that there is still a firefight going on at the Gadhafi compound in Tripoli. Obviously, we're not going to leave that story.

ROMANS: And also hear how explosions rock a small town in Iowa as a school bus goes up in flames. The terrifying thing caught on video on this AMERICAN MORNING.

(COMMERCIAL BREAK)

VELSHI: Hurricane Irene is on the move and gaining strength. Check it out this video from the Turks and Caicos Islands yesterday. Ninety-mile-per-hour winds ripping through those trees, rain relentlessly pounding the area. Meantime, Puerto Rico reports one death linked to the storm already.

Irene may hit the U.S. by the weekend. Widespread damage is possible from Coastal Carolina all the way up to major cities in the northeast and emergency preparations are under way.

ROMANS: All right. Jacqui Jeras on the CNN Hurricane Center Tracking. She is tracking Irene. Jacqui, a lot of people in the Carolinas are watching this nervously, because they haven't seen one like this in a while. JACQUI JERAS, AMS METEOROLOGIST: Yes, they haven't. In fact, it's been 15 years, you know, since they've seen at least a major hurricane. And this one just shy of major status, but it's going to get there, 110-mile-per-hour maximum sustained winds. It has to be 111 to be a major hurricane.

And the hurricane hunters are going to be flying into this thing about two hours from now and they're going to sample the atmosphere. They're going to take their drop zones (ph) in there. And they're going to find out just how strong those winds actually are as opposed to just estimating it by looking at the satellite picture.

But, boy, look at that satellite picture. You can really see the eye on this thing now. It is really tightening up and it's intensifying and getting stronger as it heads towards the west/northwest through the Turks and Caicos and on up into the Southeastern Bahamas.

The forecast track does have it taking that more northwesterly turn and then rounding up and taking a turn towards the north. So we're not talking about impact until we head towards this weekend.

And notice how large that cone is, guys, and look at how far into the northeast this thing goes as well. So a lot of people need to be on alert and these models have been trending eastward and some of them even keep it off the coast. Even if it stays off the coast, guys, we do think it will be a big rain and wind maker, especially in the Mid- Atlantic and Northeast. We'll talk a little bit more about that and the flood threat coming up later on this hour.

ROMANS: All right, Jacqui Jeras. Thanks, Jacqui.

COSTELLO: Jacqui actually has her hurricane emergency kit with her and it's not even going to hit Atlanta right now.

JERAS: I do.

VELSHI: She's a very - she's -

JERAS: I might show it to you later.

VELSHI: -- the epitome of preparation, as we should all be.

ROMANS: Got to have your junk bag at a moment's notice.

JERAS: We have it for our viewers (ph). Come on.

ROMANS: Thanks, Jacqui.

COSTELLO: Yes, yes. She's a weather geek. She is.

Now is your chance to talk back on one of the big stories of the day. The question for you this morning, should perp walks be public? Dominique Strauss-Kahn is now a free man. You know the story by now. The man once considered a good bet to be president of France has been cleared of rape charges, because his accuser lacks credibility. But back in May, that was not the case. The rich and powerful Dominique Strauss-Kahn was taken downtown by New York City Police and became the star of a very public perp walk. Many in France were appalled. Even New York Mayor Michael Bloomberg eventually came out against public perp walks saying, "I've always thought the perp walk was outrageous, even if they're guilty they're not guilty until they're convicted and yet we vilify them."

One New York City councilman has even proposed a ban on perp walks in light of the DSK fallout, yet the perp walk remains a staple across the country and why not.

As CNN Legal Analyst Jeffrey Toobin says they're practical. The perp needs to be transported. Besides, he says, jurors are smart enough to recognize a perp walk is not proof of anything.

Casey Anthony, anyone? Like, she was walked in front of the cameras a million times and she was found innocent. Heck, though, the perp walk can even be a way for a suspect to thumb his nose at accusers.

Remember Mob boss John Gotti? No one did a perp walk like him. He celebrated it. Didn't he own it?

So the "Talkback" question today, should perp walks be public? Facebook.com/AmericanMorning. Facebook.com/AmericanMorning. I'll read your comments later this hour.

ROMANS: All right.

VELSHI: All right. Coming up, Facebook is making some changes to its privacy settings. Find out how it could save you from potential embarrassment.

ROMANS: Will I know how to do it?

VELSHI: That's the second question.

Twenty-two minutes after the hour.

(COMMERCIAL BREAK)

VELSHI: Twenty-six minutes after the hour. "Minding Your Business" this morning.

The Dow gained about three percent in a solid rally on Wall Street yesterday. The NASDAQ up more than four percent, the S&P 500 gained almost 3.5 percent, pushing stocks higher.

Good news from the FDIC that a number of - the number of failing banks shrank for the first time in almost five years. Markets also got a boost from growing buzz that the Federal Reserve Chief Ben Bernanke could announce new measures to help the economy later this week. But, economists tell CNNMoney.com they think Bernanke will not make such an announcement in his speech Friday in Jackson Hole, Wyoming, instead opting for a holding pattern to ride out the ailing economy.

Lots of buzz about this address because at the event last year the Fed chief hinted at another round of economic stimulus which it implemented a few months later.

A potential market mover today, some fresh economic data on durable goods orders for July comes out in about two hours. Right now, U.S. stock futures for the big three indicators are trading lower ahead of the opening bell. Weighing on investor sentiment this morning, Moody's is cutting Japan's credit rating. Did it overnight. The reason, wide - wide budget deficit and growing debt problems due to the natural disasters that rocked the country earlier this year.

After the announcement, the Japanese government unveiled a $100 billion emergency package to help fight the spike in the yen and help the country's export business.

After a ton of consumer complaints, Facebook is switching up its privacy controls. Users can now choose who sees a photo or a status update right when they post it. Also, no more photo tag surprises when you log on. They have to be user approved. It also peeks at what your profile looks like to other people.

AMERICAN MORNING right back after the break. Stay with us.

(COMMERCIAL BREAK)

ROMANS: It's half past the hour. Good morning.

Top stories:

New reports of incoming fire around the Gadhafi compound, but no sign yet of a Libyan dictator. In a new radio message, Gadhafi calls on Libyans to clear Tripoli of the rebels he says who stormed his compound and taking control of the city.

Also, our Matthew Chance reports that fresh clashes are now taking place outside Tripoli's Rixos Hotel where some foreign journalists and some dignitaries are being held by Gadhafi loyalists.

COSTELLO: All the power has been restored to a nuclear power plant in Virginia after an earthquake that shook the East Coast yesterday. However, the plant's two reactors remain off-line while workers walk through safety checks. Generators kicked in and the plant says no radiation was leaked.

VELSHI: Hurricane I ripping through the Turks and Caicos Islands. Take a look at these pictures -- and the Bahamas. It strengthened into a category 2 storm with winds over 100 miles per hour. Jacqui Jeras says Irene could intensify and slam the U.S. by the weekend.

Widespread flooding, damage possible from the coastal Carolina areas, all the way up to major cities in the Northeast. Emergency preparations are under way. Meantime, Puerto Rico reports one death linked to the storm.

COSTELLO: OK. Now, back to Libya. His whereabouts are still unknown, but Moammar Gadhafi continues to voice his defiance, urging Libyans to cleanse Tripoli of traitors and rats. He said that in a radio message. It comes after rebel fighters overran Gadhafi's fortress-like compound in the heart of the capital. The rebels claim to control 90 percent of Tripoli.

John Burns is the London bureau chief for "The New York Times." He joins us from Cambridge, England, via Skype.

Thank you for being with us this morning, John.

JOHN BURNS, THE NEW YORK TIMES: Thank you.

COSTELLO: So, you heard Moammar Gadhafi's radio messages. He remains defiant even though Tripoli is falling. What do you make of that?

BURNS: Oh, I think it's absolutely in character with this, to put it politely, quirky man. I think he's been delusional for quite a few years and becomes more delusional as this end game for him develops.

COSTELLO: Is there a comparison to Saddam Hussein?

BURNS: Well, Saddam was a more cold-blooded killer. They're both killers -- much more calculating. That's not to say that Gadhafi is not a wild fellow with sort of moxie of his own. There are, of course, situational comparisons.

Both of them vowed to stand with their people and both of them then at the last minute vanished. We don't know whether these radio calls are coming from, but one very dark possibility, I don't want to be an alarmist about this, but having stayed for a considerable length of time this summer in the Rixos Hotel where the journalists are, I think we need to bear in mind that Gadhafi has appeared in that hotel before and appeared to us, occurred on one occasion when I was there, to have some sort of secret access to the hotel interior, possibly by tunnels.

The darkest possible interpretation of the current events, since they are holding journalists, in effect, as hostages in that hotel, would be if Gadhafi himself had resorted to the hotel or some sort of tunnels beneath it. It would be high on the list of possibilities, along with the underground complex under his own command.

COSTELLO: Well, it's interesting, John, you say that. Right now, there's a firefight going on outside of that hotel and yesterday, we interviewed the spokesperson for this opposition group, and he believed that this was the new headquarters, if you will, for Moammar Gadhafi.

Do you really think it's possible? I mean, is there a tunnel underneath that hotel, you think?

BURNS: We don't know. All I can tell you, when I was there, he managed on at least one and possibly two occasions, one we're certain of, come into the hotel, to have an audience, tribal leaders, not more than 50 yards from where the journalists were sitting, having dinner. That suggested that will was a means of getting him and out of the hotel, not through the lobby, not through any access point that we knew of, and there were strong rumors when I was there that this vast hotel complex -- which by the way was built by his son, Saif al-Islam al Gadhafi, who also appeared there, you'll recall, about 36 hours ago when he turned out not to have been captured by the rebels, the hotel is some people call it a six-star prison. It's extremely modern. It has a huge 18,000 square foot spa. And it seems to me that it would be one place that he might go.

And another reason, again I don't want to be an alarmist about this, my colleagues, including your Matthew Chance are there, but you have to ask yourself why would those regime elements who are evident to the journalists in that hotel, who are middle-level or low-level people, why would they not have fled and taken their families to safety somewhere else? Why would they stay there? There's something they're protecting there. It's not the hotel.

The hotel is a very core (ph) place to try and to defend. It's extremely vulnerable. It's in flat land, almost all the ground floor space has great big plate glass windows looking to the outside. It's not a good place to try to defend -- unless -- unless your trump card was you could say you had somebody in there and that you were going to protect him at all costs including the lives of others.

Now, that's possibly to be an alarmist and we have to hope that's not the case and he's more probably in his own command compound in the underground complex which we know of, definitely, beneath Bab al- Aziziya complex.

COSTELLO: Let's hope that's not true, because then you know, all types of scenarios come to your mind, how do you get the journalists out of there safely and they're there alone and the opposition, the rebels, out there firing upon the Gadhafi supporters and that's a scary scenario.

BURNS: Well, as I say -- I think -- it's not good to raise unnecessary alarms. But I think if we, put it this way, why are -- are the low-level, medium-level elements of the regime staking things out at that hotel? Why would they do that?

It might be possibly because they have their own families there. some of them and they want to protect them. Because they know NATO is not going to bomb, they think, they assume that the rebels will not launch a full-out attack, when 35 foreign journalists are there, and the rebels still depend on the support from NATO and the West.

So, you know, it's a very, very complicated situation because the longer that goes on, I must say, the more concerned I've become about my colleagues in that hotel.

COSTELLO: John Burns, London bureau chief of "The New York Times," thank you so much for joining us. We appreciate it.

VELSHI: Very insightful and gives us something yet more to think about or worry about.

All right. Washington is expected to start unfreezing some of the $30 billion that it holds in Libyan assets now. The question is: where does that money go? Who gets it? Joining us live now from the State Department is our foreign affairs correspondent Jill Dougherty.

Jill, good morning.

This is the age-old issue, when the U.S. is somehow involved in the overturning of a regime somewhere in the world about not being entirely clear on who it is who's replacing that regime, and to what degree they get the assets of the old regime?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Right. Well, you know, for a while, ever since March when this began, they've been talking with the body that now really effectively is in charge because, obviously, Gadhafi is not in charge of the country at this point. So that is the NTC, the National Transitional Council.

And the U.S., although in the initial stages they have a lot of doubt about them and they're still kind of a desperate group of people, they believe they are working for a democracy and they are now in charge of a lot of parts of the country, so they have to get the money to them. We expect this week that they are going to be, they hope, to be announcing that they will be -- that they are going to be unfreezing $1 billion to $1.5 billion of the $35 billion that U.S. froze, and that was in order to keep that money out of the hands of Gadhafi.

So, they give it to the NTC, the NTC decides how to spend it.

Now, how do you guarantee that they will not spend it on weapons, but spend it on what they say they're going to spend it on, which is humanitarian and getting back services to the people?

Here is how the spokesperson for the State Department, Victoria Nuland, answered that question.

(BEGIN VIDEO CLIP)

VICTORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: The TNC has made strong commitments to the United States. It has made strong commitments in support of the U.S. request to the U.N. sanctions committee with regard to the use of the money with regard to transparency, et cetera. I'm not prepared to go into details from the podium, but we would not have taken this step if we didn't have confidence that the money will be used, will get to the people who need it and used appropriately.

(END VIDEO CLIP)

DOUGHERTY: OK. And then also, there is the NTC stabilization team. And yesterday, they gave a report saying that they're already in operation. They're working with the United Nations on some of these things, Ali.

They're interesting. Number one, security -- they're working with the military groups on the ground. They're also restoring electricity. They say they tried to. There was some equipment breakdowns. They're getting GSM and Internet back up. And also, the most important thing, is getting supplies -- food, medical, and helping people who are in hospital, things like that. So, that is the initial thing that they are working on.

VELSHI: All right. Jill, lots of decisions to be made very quickly at the same time, we're trying to figure out who's forming the government and what control they're going to take of Tripoli. Thanks, Jill. We'll stay in touch with you on this particular topic.

ROMANS: And it's interesting that Gadhafi was a gold bug, if you will -- $8.6 billion is the value of the gold that Gadhafi held. That's all part of this equation about how much money there is and where it goes.

Now, just in from the Tripoli International Airport right now, our team is reporting several rockets have landed nearby, to the Tripoli airport. Our Arwa Damon is there. Our team is on the ground hearing this. They're hearing this. They're seeing the smoke.

We're going to try to get Arwa Damon up on the phone so that we can talk more about what's happening now at the airport, but several rockets landing there.

COSTELLO: So, there's gunfire at the Rixos Hotel.

ROMANS: That's right.

COSTELLO: There is gunfire and mortar shells at the Gadhafi compound.

VELSHI: That's right.

(CROSSTALK)

ROMANS: Rockets landing --

VELSHI: Well, if it's a last stand, this is what's going to happen. I mean, we know there are still pockets of resistance. We spoke yesterday and we'll speak today in a while little from somebody from the transitional authority, the rebel group, the opposition. But they're saying if they got 85 percent of the city, that means there's still 15 percent they don't have.

COSTELLO: Hopefully, it will be over soon, though.

Coming up on AMERICAN MORNING, the Bahamas bracing for Irene's impact. The storm packing winds of 100 miles per hour. We're going to have a live report out of Nassau, next.

VELSHI: Well, some brief scare involving former first lady Nancy Reagan. We'll show you what happened.

It's 42 minutes after the hour.

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VELSHI: OK. Hurricane Irene -- powerful, destructive, and it's only getting stronger.

ROMANS: Irene intensified now into a category 2 storm. That means winds near 100 miles per hour. And it's aiming for the Bahamas, possibly hitting Nassau by tomorrow morning.

JIM SPELLMAN, CNN CORRESPONDENT: Yes, indeed, Christine. We've already seen the winds pick up here steadily this morning. The message is clear. Get out or baton down the hatches. U.S. state departments already put out a travel warning for tourists encouraging them to leave. We saw the cruise ships pull out just a few hours ago. And the airport is packed with people trying to make their way out on the last few flights before they shut down around midday.

For the Bahamians who live here, there's about 200,000 people live here on this island, they have a lot fewer options. The whole island is only about 20 miles long. So, they don't really have too many places to go. Government setting up shelters, trying to be sure that people who live in seaside areas like this can have inland place to go. Right now, the scramble is on just like we always see with a big storm, food, water, prescriptions, diapers, things like that.

Stores are packed with the Bahamians here trying to ride out the storm. Most of the hotels for the tourists if they can't get out, feel like they're pretty secure. They have shelters set up. They're built to withstand this, and they feel confident here. They're used to storms, but they know that this is a serious storm not to be taken lightly. And it's a preview of what the United States will see in just a few days -- Christine.

ROMANS: All right. Jim Spellman in Nassau, Bahamas, thank you so much, and stay safe, please.

COSTELLO: Yes. Definitely.

Sixteen young children escape from a school bus that literally went up in flames. Take a look at this video. You will not believe it.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): Wow! Just amazing. You can see the explosion, the bus -- I don't know what happened on the bus, but something bad happened. You can hear the kids screaming. It was a terrifying scene for residents in this Iowa neighborhood. Incredibly, no one was hurt. All thanks to the quick-thinking driver. He noticed smoke coming out from the steering wheel, and he ordered everyone off the bus. A first day of school these kids will never forget.

UNIDENTIFIED KID: Just the bus going up in flames, and it was loud noises and sparks everywhere and --

UNIDENTIFIED MALE: Little scary?

UNIDENTIFIED KID: Very scary.

UNIDENTIFIED KID: All the smoke started coming out more and then caught on fire and like kept popping, like the gas parts or something and the tires were popping. It was horrible.

UNIDENTIFIED KID: People were screaming, like, they all said, we're going to die. We're going to die, but we all came out fine.

COSTELLO: See, those drills that kids have to do? They worked.

ROMANS: But yesterday, there was a bus in Iowa in Council Bluff so they had to get all the kids out because it was in four feet of water, remember?

VELSHI: I remember that. Yes.

ROMANS: What's going on in the middle of the country?

VELSHI: Only see in the movies.

ROMANS: I know.

VELSHI: I didn't think you had actually sounds like that in real life.

COSTELLO: It's so weird. No word on what caused the explosion there. Still investigating.

(END VIDEOTAPE)

VELSHI: Yes. All right. It is 48 minutes after the hour. The morning's top stories straight ahead, including the tourist attraction damaged in yesterday's earthquake.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): Meet Luna, 5'2", happy to take your commands. Luna is a personal robot. Fred Nikgohar says his invention is like an iPad on wheels.

FRED NIKGOHAR, ROBODYNAMICS: I'm now projecting myself to a remote location by simply using my laptop. This is robotic telepresence. It's the ability to be basically in two places at the same time.

TUCHMAN: For inspiration, Nikgohar points to pop culture. To the blockbuster movie, "Avatar," where humans log into biological avatars and interact with indigenous people, except Luna is made of aluminum and plastic. This all sounds too science fiction for you and consider possible real world uses.

NIKGOHAR: If I need to go to China to look at a factory that I work with, I can physically get on an airplane, lose half a day of travel each way, all the costs associated with that, or I can have a robot on the ground in a factory that I can just log into with my mobile phone, laptop computer, and I can instantly transport myself to that remote location.

So, in a way, you can think of it as video conference on wheels. A robot might need to deliver pills to patients every night in a hospital. (INAUDIBLE) would be able to go from room to room and provide the right medication to the right patient every time.

Gary Tuchman, CNN.

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ROMANS: Fifty-one minutes past the hour. Here's what you need to know to start your day.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): This morning, fresh fighting around the Gadhafi compound in Tripoli, but no sign of the Libyan leader. Gadhafi in a new audio message urged residents to cleanse Tripoli, he said, of criminals, traitors, and rats who've overrun the capital. Also, our Matthew Chance reports that clashes are now taking place outside the Rixos Hotel where he and 30-some other journalists are trapped.

All power has been restored to a nuclear power plant in Virginia after that earthquake that shook the east coast yesterday. Generators kicked in, and the plant says no radiation was leaked. The seismic waves felt by millions from Georgia to Northern New England.

The National Park Service says engineers found a crack near the top of the marble in the Washington Monument, this after the quake. It will be closed indefinitely to keep visitors safe.

Hurricane Irene strengthening to a Category 2 storm as it hits the Bahamas. Forecasters say Irene could, could intensify and slam the U.S. by the weekend. Widespread flooding damage is possible from Coastal Carolina all the way up to major cities in the northeast. Emergency preparations are under way right now.

A man fell 4,000 feet to his death while hiking at Yosemite National Park on Monday, although, no word yet on what caused him to fall. It's the 17th fatality this year, making 2011 one of the park's deadliest years in at least a decade.

A minor scare last night at the Reagan Library in California. Former first lady, Nancy Reagan, lost her footing and fell. Luckily, she was caught by Florida senator. Marco Rubio. Reagan's spokesperson says the 90-year-old former first lady is just fine.

Will Smith and his wife, Jada Pinkett Smith, denying a report they're splitting up. "In Touch Weekly" citing an unnamed source saying their 13-year marriage was ending, but in a joint statement, the couples say rumors of their breakup are simply, completely false.

(END VIDEOTAPE)

ROMANS (on-camera): that's the news you need to know to start your day. AMERICAN MORNING back right after this break.

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COSTELLO: We asked you to talk back on one of the big stories of the day, and yes, pretty much to say. We asked you this question. Should perp walks be made public? And here are some of your responses.

This from Caleb, "No, the perps have a right to privacy that they just aren't given here. Few countries overseas do anything like this when they catch a criminal, but in the states, the media always wants to be involved when something happens." Of course we do!

(LAUGHTER)

COSTELLO: This from Benny, "No, they shouldn't be public. Every once in a while, an innocent person will get arrested and after they are cleared of any and all charges, the negative image of that perp walk is all people will remember about that individual."

Keep the comments coming. Tell us on Facebook. That's facebook.com/americanmorning. Why are you laughing?

VELSHI: Because I think that's true in a lot of cases. I think in Dominique Strauss-Kahn's case, nobody denied that two people had sex in that room.

COSTELLO: It's not a crime.

VELSHI: That's true. That's good point. There you go.

COSTELLO: Wow. It's a little early in the morning for me to be having that conversation with you guys.

VELSHI: Perhaps, we'll take a quick break.

Coming back, storming that compound, coming out with guns, some made of gold. Out of this compound, this Gadhafi family compound in Tripoli, but still no Gadhafi which is more valuable than gold to these rebels. The latest on the hunt for the Libyan dictator coming up right after this break.

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