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CNN LIVE AT DAYBREAK

Latest News on Investigation into Last Week's Terrorist Bombings in London; Controversy Over Transit Security in U.S.

Aired July 12, 2005 - 06:00   ET

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


KELLY WALLACE, CNN CORRESPONDENT: It is Tuesday, July 12, and searches are underway right now in England after last week's terror attacks. The search for answers in those coordinated attacks has led Scotland Yard to several homes. We'll go live to London in just a few minutes.
Here in the States, cleaning up after Dennis and worrying about Emily. What will the rest of the week hold?

And we know more this morning about a young Navy SEAL killed in Afghanistan and the amazing story of his fellow SEALS' rescue.

ANNOUNCER: From the Time Warner Center in New York, this is DAYBREAK with Carol Costello and Chad Myers.

WALLACE: Good morning, everyone.

Thanks so much for joining us.

I'm Kelly Wallace in this morning for Carol Costello.

We will have more on those stories in a moment.

Also ahead, how did it happen? Police end a stand-off but a baby girl is dead.

And NASA preparing for a return to space. We'll see how this Shuttle Discovery mission is different than the others, live from the Kennedy Space Center.

But first, these stories now in the news.

Two people were killed and 12 others injured in a car bombing in a Beirut, Lebanon suburb today. Among the wounded, pro-Syrian defense minister Elias al-Murr. It was the latest in a series of bombings since the assassination of former Prime Minister Rafik Hariri in February.

Idaho prosecutors say Joseph Edward Duncan III will be charged with three counts of first degree murder today. Duncan is suspected of killing Shasta Groene's mother, her older brother and her mother's boyfriend before abducting Shasta and her now deceased brother Dylan.

President Bush plays host to a bipartisan breakfast meeting with key Senate leaders today. On the menu, some food for thought on possible nominees to succeed Justice Sandra Day O'Connor. To the Forecast Center now.

Rob Marciano in for Chad -- Rob, how are you doing?

What is it looking like for all of us today?

ROB MARCIANO, CNN METEOROLOGIST: I'm doing well, Kelly.

(WEATHER REPORT)

WALLACE: Turning now to the attacks in London last week. Anti- terror police in Britain launch raids this morning on several homes in northwest England. They say it is part of the investigation into last week's bombings. Fifty-two people were killed in those attacks. But that number, officials say, will likely rise.

For more we are joined now by CNN's Robyn Curnow from Ten Downing Street -- good morning again, Robyn.

Give us a sense of the latest on the investigation.

ROBYN CURNOW, CNN CORRESPONDENT: Hi there, Kelly.

Kelly, well, indeed, there's quite substantial news that police swooped on those five houses in Yorkshire in northwest England. They say no arrests were being made, but that these searches were directly related to those devastating bomb blasts here in central London on Thursday. And they also say that this operation is ongoing. So we'll definitely keep you posted on any more information on that.

But definitely significant that we're seeing some sort of breakthrough more than five days after those attacks.

WALLACE: One thing that we're trying to understand here, too, what about U.S. military forces in England being told to stay away from London? Who's ordering that and why is that in effect?

CURNOW: It's a source of quite a lot of controversy in the British press this morning, Kelly. Apparently that order came from commanders at U.S. Air Force bases. There are two of them here in England housing about 10,000 U.S. troops linked to the U.S. Air Force. They were told to stay away. They were, in fact, banned from coming into central London. That order was instituted on Friday, the day after the attacks. The troops' families have also been urged to stay away from London.

Now, of course, this is controversial because British police have been urging Londoners and tourists that Britain and especially London is open for business. And that's been really the sense that we've been trying to get across over the past few days.

So this U.S. military policy is in direct contravention of that message that the British police have been trying to get across.

Now, the U.S. defense secretary has been trying to defend the U.S. policy. But he does say that they've been in talks with the U.S. Embassy here and it's likely that that policy will be reviewed.

This is John Reid.

(BEGIN VIDEO CLIP)

JOHN REID, U.K. DEFENSE SECRETARY: The United States forces here are standing back from London. Now, I'm trying to explain to people that that decision was taken in the immediate aftermath of the bombs and it was a perfectly reasonable decision when it was taken. Indeed, it was a decision taken by many government departments here in Britain itself.

However, I'm very glad that it's being reviewed because time has moved on and we want everyone to conduct themself on the basis of business as usual. Otherwise, the terrorists tend to win, if we start disrupting our whole life and our whole British system because of the terrorist threat.

(END VIDEO CLIP)

CURNOW: Well, that was the U.K. defense secretary, John Reid. And, of course, Britain and central London here remains on a very high state of alert -- Kelly, back to you.

WALLACE: Robyn, thanks for bringing us the latest.

Robyn Curnow from Ten Downing Street.

We also want you all to know that the British foreign secretary, Jack Straw, is expected to do a news conference at the half hour. He will be speaking from the European parliament in Brussels and we are expecting to bring those remarks to you live.

Now to the American side of the London terror attacks.

New York native Mike Matsushita is the first American to be identified as missing and feared dead after the terror bombings last Thursday. The death toll now stands at 52 victims killed.

As for the two Tennessee sisters injured in those bombings, they are said to be in stable condition this morning. Doctors say Emily and Katie Benton suffered shrapnel wounds to their feet.

(BEGIN VIDEO CLIP)

DR. GREG GEORGIADE, RECONSTRUCTIVE SURGEON: Obviously, if you get in the dark and somebody blows you up, it's not a real good day. Katie made the point that she wasn't really sure why everybody was so interested in them. They were alive. They were going to get well. There were a lot of people around them -- the lady sitting next to them was dead.

(END VIDEO CLIP)

WALLACE: And you can hear more about their surgery in the 7:00 hour of AMERICAN MORNING. A Duke University doctor will talk about the case.

London's terror attack has increased -- has Americans reconsidering the chances of another act of impending terror here in the United States. The latest CNN/"USA Today"/Gallup poll shows a 20 percent spike in respondents who feel another attack is likely.

And now for our CNN "Security Watch."

Some traffic tunnels in New York City remain out of touch for cell phone users this morning. Service in the tunnels was shut down after the attacks in London. Officials fear that cell phones could be used to detonate remote explosives. Some service has been restored but service remains out for tunnels into Manhattan.

Subway tunnels are also coming under greater scrutiny in the wake of the London attacks. But security measures for mass transit may be suffering from a lack of money.

More now from CNN Congressional correspondent Ed Henry.

(BEGIN VIDEO TAPE)

ED HENRY, CNN CORRESPONDENT (voice-over): As you stand in an airport security line, think of this. America's rail and subway systems carry 16 times more passengers than the airlines do. But since 9/11, $20 billion has been spent on aviation security and only $250 million to protect mass transit.

RICHARD FALKENRATH, CNN SECURITY ANALYST: The reason is we suffered an attack using the air system on 9/11, and that's what we responded to. There really hasn't been much effort for mass transit security.

HENRY: Last month, in fact, the Republican-led Senate actually slashed the transit security budget by $50 million.

UNIDENTIFIED MALE: Please start moving down. This is for your safety.

HENRY: In the wake of the London attacks, that has sparked outrage.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: Instead of building on what we need to be doing to ensure the safety and security of our transit and transportation systems, we're going backwards.

HENRY: Russell Square say they'll restore the money this week. But Democrats are now demanding millions more.

SEN. HARRY REID (D-NV), MINORITY LEADER: With what happened in London, maybe we can finally get the majority to agree with some of the basic needs of this country as it relates to first responders.

HENRY: Some frustrated Republicans worry new funds will be wasted after hundreds of reports chronicling government mismanagement. SEN. JUDD GREGG (R), NEW HAMPSHIRE: If you take this pile there, which I probably can't even pick up, and this pile here and put it on top here, you end up with -- it'll all fall over, unfortunately. You end up with almost three feet, nine inches of reports about things that are not going that well at the homeland security department.

HENRY: The president's homeland security chief insists the administration has already beefed up transit security.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We've done a lot of vulnerability assessments. We've worked to have additional canine resources, dogs, explosive dogs, additional detection equipment out in the field. We've done a lot with respect to biodetection. Some of this is not visible and shouldn't be visible to the ordinary commuter.

HENRY: Even those sounding the alarm acknowledge the transit systems are relatively safe.

FALKENRATH: You have a much greater risk of slipping in the bathtub or being struck by a car crossing the street than you do of suffering a terrorist attack in the subway tonight.

HENRY: A likelihood all too worrisome in the wake of the London attacks.

Ed Henry, CNN, Capitol Hill.

(END VIDEO TAPE)

WALLACE: And, of course, be sure to stay tuned to CNN day and night for the most reliable news about your security.

Well, we now know that President Bush's top political adviser, Karl Rove, was the secret source for "Time" magazine reporter Matthew Cooper in a story that talked about a covert CIA agent. Copper was about to go to jail for not revealing his source, but says that source released him from promises of confidentiality.

The question now is whether any laws were broken. It is a federal crime to knowingly blow a CIA agent's cover. But Rove's lawyer insists his client never identified agent Valerie Plame by name, nor did he know she was a covert operative.

The White House, for its part, isn't talking.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE SPOKESMAN: Again, David, this is a question relating to an ongoing investigation and you have my response related to the investigation. And I don't think you should read anything into it other than we're going to continue not to comment on it while it's ongoing.

(END VIDEO CLIP)

WALLACE: And the man who broke the story, "Newsweek" correspondent Michael Isikoff, joins us live later this hour.

Life after hurricane Dennis -- it is going to be miserable for a lot of people for a long time. People in Pensacola and other cities along Florida's Gulf Coast are returning to homes destroyed or damaged by Dennis. Four deaths are blamed on the storm in Florida.

In Alabama, at last check, about 75,000 people were still without power. It is estimated Dennis caused $1 billion to $2.5 billion in insured damage along the Gulf Coast.

Some say compared to Ivan, though, things could have been much worse.

(BEGIN VIDEO CLIP)

MICHAEL BROWN, FEMA DIRECTOR: I keep hearing reports about hurricane Dennis being not quite as bad as hurricane Ivan. And that may be true in terms of the geographical span of it, where it made landfall. But if you're the individual whose home or business has been destroyed, it's just as bad as any other hurricane. And we're out doing our damage estimates right now.

(END VIDEO CLIP)

WALLACE: And look at these pictures from Six Flags Over Georgia Amusement Park. Tropical storm Dennis dumped a deluge of nearly 10 inches of rain onto the theme park near Atlanta. Take a look there. That roller coaster almost underwater.

Hurricane season began June 1 and ends November 30.

Also still to come this hour, who would want the home where the man named BTK once lived? Details on an auction in Kansas just ahead.

And one man's children arrive at his home with an incredible story of what they had to survive just to get there.

And later, prepared for lift-off -- a look at the security going into tomorrow's launch of Discovery.

We're live at the Kennedy Space Center.

But first, here is a look at what else is making news this Tuesday morning.

(COMMERCIAL BREAK)

WALLACE: And welcome back.

Your news, money, weather and sports.

It's about 16 minutes after the hour and here's what is all new this morning.

British anti-terror police raided five homes this morning in connection with last week's terror attacks. The homes are in West Yorkshire, about 200 miles north of London. The confirmed death toll in Thursday's bombings stands at 53. In about 15 minutes, British Foreign Secretary Jack Straw speaks to the European Parliament about the attacks.

In money, another jump in the price of gas. In fact, prices went up more than $0.10 over the past week. That's another new record. The average price for a gallon of unleaded stands at $2.33.

In culture, the new Harry Potter books are arriving at stores all over the country, but don't even think about getting your hands on one yet. Booksellers have been warned not to release them until midnight Friday.

In sports, the All Star home run derby turned into the Bobby Abreu show. The Philadelphia Phillies outfielder broke all previous records for the event. He hit 24 homers in the first round and ended up with 41 for the whole thing. The All Star game is tonight -- Rob, that is amazing, still.

MARCIANO: It is.

WALLACE: I don't know how he does it.

MARCIANO: Nothing like the log bog. That is fun to watch.

WALLACE: It is fun.

(WEATHER REPORT)

WALLACE: Still to come here on DAYBREAK, so you want to buy a car? Willing to drop 30 grand online? That's the only way to have one hot new set of wheels. Carrie Lee will explain.

DAYBREAK is back right after this.

Don't go away.

(COMMERCIAL BREAK)

WALLACE: Time now for a little "Business Buzz."

Makers of an ephedra-based weight loss product will pay New Jersey nearly a million dollars. The settlement stems from claims that Nutriquest exaggerated the benefits and understated the risks of some products. Nutriquest is the successor of a company that made an ephedra-based product that was found to have contributed to the death of Baltimore pitcher Steve Bechler.

Shareholders are scheduled to vote on the merger of Procter & Gamble and Gillette Companies today. They're upbeat that the deal will boost earnings and stock prices. The merger would create a consumer products giant with some $60 billion in annual sales.

Well, Ford is trying a hybrid approach to selling its hybrid vehicle.

Carrie Lee joins us now to explain.

What's going on -- Carrie?

CARRIE LEE, CNN CORRESPONDENT: Well, they're selling a new hybrid and they're selling it in a different way, Kelly. So they're trying to appeal to younger, more Internet savvy people. Ford wants you to shop for the new Mercury Mariner Hybrid online and only go to a dealership to sign the papers and pick it up.

This is a big change from the way cars are normally sold, of course, as most dealers won't even have the Mariners for sale on their lots.

Now, shoppers will place their orders at marinerhybrid.com and then they'll be assigned a personal sales consultant who will help them find a dealer, negotiate a price and schedule a time to come and pick the vehicle up.

The Mariner is Ford's second hybrid vehicle. They already have the Ford Escape, which made its debut last fall. Ford says the hybrid Mariner will get about 50 percent better fuel efficiency in the city than the non-hybrid version. And, Ford plans to make just 2,000 of the 2006 model and 4,000 each year after that.

By the way, Detroit automakers are starting to catch up in the hybrid race, which has been dominated by Japanese companies. One interesting thing, the environmental group the Sierra Club, a long time critic of Ford, says it will market the new Mariner to its members.

So really getting some kudos from traditional critics.

WALLACE: This could be a sign of the future, buying a car, not having to haggle with the salesperson there. Haggling, I guess, online.

LEE: Absolutely.

WALLACE: Or no haggling at all maybe.

LEE: It makes the whole thing simpler and I think a lot of people will really be relieved to perhaps buy a car this way.

And the higher fuel efficiency. You know, I know gas prices are high right now, but it all evens out over time and it could be a good thing.

WALLACE: And give us a sense, how are the futures looking today?

LEE: Futures looking up. And I'll tell you, we've seen two very nice days of gains in a row as oil prices come down below $59 a barrel. So it looks like the buying could continue this morning.

WALLACE: Good news.

LEE: Yes. WALLACE: Carrie Lee, always good to see you.

LEE: You, too.

WALLACE: Thanks so much.

We'll talk to you again shortly.

Other news making "News Across America" this Tuesday.

The former home of Kansas serial killer Dennis Rader, better known as BTK, was sold on the auction block yesterday considerably higher than it was valued. Real estate investor Michelle Borin paid $90,000 for the suburban Wichita home.

Firefighters in southern Colorado are hoping for another day of cooler, calmer weather. They're trying to reign in a wildfire that's already burned nearly 12,000 acres. Five thousand people evacuated because of the flames. But 100 of them have been allowed back after firefighters were able to shore up containment lines.

Arizona police are looking for two small kids after their grandparents, aunt and uncle were found dead. Eighteen-month-old Brian Cervantes and his 3-year-old sister Jennifer may be with their father, Rodrigo Cervantes Zavala. Zavala is a Mexican national that police describe as a person of interest.

Well, coming up in the next half hour of DAYBREAK, three Navy SEALS killed and a fourth rescued after an amazing string of events. Hear how he was rescued, just ahead.

And police fire on a suspect, but the man's daughter is killed in the middle of their stand-off. How did it happen? We'll have some answers after this.

(BEGIN VIDEO CLIP)

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY": Life cycle funds, which are also known as target retirement funds, are basically a portfolio that gives you a premade mix of stocks and bonds that's appropriate for someone your age. And then that mix changes and becomes more conservative as you approach retirement. So, for example, if you're young and you plan to retire 35 years from now, you would pick a fund that has a date of 2040.

Now, that fund would be invested primarily in stocks because you're young and you can tolerate the ups and downs of the market. Now, the neat thing about these life cycle or target funds is that the mix changes over time. You don't have to do anything. It's really kind of the ultimate hands off investment.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WALLACE: Good morning, everyone. Thanks for waking up with us.

I'm Kelly Wallace in today for Carol Costello.

Coming up this half hour, the amazing survival story of one Navy SEAL. We'll hear how he made it out of a hostile zone in Afghanistan with a little help from an unlikely source.

Also, is Karl Rove in trouble? We'll talk with "Newsweek" correspondent Michael Isikoff about Rove's role in a CIA scandal.

But first, these stories now in the news.

British Foreign Secretary Jack Straw is expected to talk about last week's London bombings at a meeting of the foreign affairs committee of the European Parliament. That's expected any minute now. We'll take you there when it happens.

Secretary of State Condoleezza Rice says the success of nuclear reduction talks depend on Kim Jong Il's willingness to give up his weapons. The secretary made the comments earlier in Tokyo, before her stop in Seoul, South Korea this morning.

Court hearings in Aruba today in the Natalee Holloway case. Suspect Joran van der Sloot is appealing a court order that extended his detention. Also, prosecutors are appealing a judge's order releasing two other youths in the case. Meantime, there's been a lack of leads in the search for the missing American teen. And that has a search group from Texas weighing whether to give up. They're expected to decide today.

And Amtrak's Acela Express resumes some service today for the first time since April. The trains had been pulled from the fleet due to problems with their brake systems. Service has only been restored between New York and Washington.

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