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THE SITUATION ROOM

CBS Radio Fires Imus; Suicide Bomber Detonates Himself in Baghdad's Green Zone

Aired April 12, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: To our viewers, you're in THE SITUATION ROOM.
Happening now, breaking news on Don Imus. Another blow to his career. We'll have details coming up.

Also, a devastating attack aimed at Iraqi leaders in the heavily guarded heart of Baghdad, the so-called green zone.

How did this suicide bomber get into a highly guarded building?

And as the casualties mount and U.S. troops face longer tours of duty, the debate sharpens here at home.

Is victory possible in Iraq or should America pull out?

I'll speak with a powerful Democrat, congressman Charlie Rangel.

And who should pay for Hurricane Katrina damage?

It depends on whether wind or water was to blame.

Did a big insurer, though, twist arms to twist the facts?

I'm Wolf Blitzer and you're in THE SITUATION ROOM.

You're in THE SITUATION ROOM.

Well, we begin once again with that breaking news. The other shoe just dropped for Don Imus. Only minutes ago, CBS announced it will stop broadcasting the "Imus In The Morning" radio program, and that's effective immediately.

Let's go to CNN's Carol Costello.

She's in New York.

You've been covering this story.

What else are you learning -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, you know, Imus himself said this morning if CBS Radio canceled his show, that would really hurt. That's where most of his audience is, around three million or so. That's where he makes the most money. He was on CBS Radio this morning in 61 markets and he bashed NBC for what he called its unethical actions and those who didn't take into account the good he's done.

(BEGIN VIDEO CLIP)

DON IMUS, TALK SHOW HOST: I'm not whining about this, but we wouldn't be here had I not said it....These bastards went after me. They got me. But they didn't catch me asleep.

(END VIDEO CLIP)

COSTELLO: Al Sharpton talked with CBS head honcho, Les Moonves, this morning, vowing to picket until Imus was gone. And by late this afternoon, CBS canned Imus, saying, in part: "In our meetings with concerned groups, there has been much discussion of the effect language like this has on our young people, particularly young women of color trying to make their way in this society."

I'll have much more on this story later -- Wolf.

BLITZER: The whole issue of the advertisers, the big companies that started boycotting his program, that was millions and millions of dollars, and presumably that's a lot of money that CBS is going to lose now.

NBC announcing yesterday it would not simulcast that radio program.

I guess, in the end, as we've been saying over the past couple of days, at least in part, Carol, money really does talk.

COSTELLO: Oh, money does talk. And interestingly enough, some of those advertisers already today said they were thinking of going back.

BLITZER: Going back to MSNBC...

COSTELLO: On...

BLITZER: ... now that Imus is gone from MSNBC?

COSTELLO: Right.

BLITZER: All right, Carol, I know you have more on this story.

We're going to have more on it coming up.

But let's get to another important story we're watching.

Moments of shock and terror inside one of the most tightly guarded places in Baghdad.

Watch and listen to this.

(VIDEO CLIP OF SUICIDE ATTACK IN IRAQI PARLIAMENT BUILDING) BLITZER: A suicide bomber struck today in the cafeteria of Iraq's parliament, as lawmakers were eating lunch. At least two of them were among the eight dead. Many, many more were wounded.

CNN's Arwa Damon is in the Iraqi capital -- Arwa.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Wolf, there has been some optimism amongst a few Iraqis that things perhaps could be turning for the better, following the security crackdown in the capital. But much of that hope overshadowed by the sophistication of today's attacks.

(BEGIN VIDEO TAPE)

DAMON (voice-over): The panic and chaos painfully evident in these images, as the cameraman tries to make his way through the thick smoke and debris. A suicide bomb attack as formidable in its audacity as it was in effectiveness, striking at the very pillar of Iraq's fledgling democracy, its parliament.

Penetrating the often dubbed "Fortress Baghdad," the heavily fortified green zone.

The bomber would have had to sneak past U.S. checkpoints, Iraqi security forces and private Western security companies and avoid detection by bomb sniffing dogs and x-ray machines.

The attack took place at the cafeteria right after the day's session came to an end, where members were convening for lunch. The U.S. military points the finger at al Qaeda, known for its sophistication and ability to constantly defy heavy security.

MAJ. GEN. WILLIAM CALDWELL, SPOKESMAN, MULTINATIONAL FORCE-IRAQ: It is very, very challenging to stop somebody who is willing to give their life to try to take somebody else's life.

DAMON: The insurgency's message clear -- it can infiltrate and strike anywhere.

UNIDENTIFIED MALE (THROUGH TRANSLATOR): The news we heard today, in fact, it does not shake us or the people in the street, but it makes us laugh. The attack is now in the most critical places -- the parliament -- which represents the people. It is a violated place.

DAMON: In fact, the second to be violated on Thursday. Earlier, a suicide truck bomber strategically detonated, collapsing one of northern Baghdad's major bridges, sending vehicles toppling into the Tigris River. Divers searched the waters for survivors.

(END VIDEO TAPE)

DAMON: Iraqis we spoke to following today's attacks said that they were simply frustrated and saddened. One woman saying that this was just proof that no one was safe and a clear indication that a government that is powerless to save itself is powerless to save its people -- Wolf. BLITZER: Arwa, thank you.

Arwa Damon in Baghdad, a very, very dangerous place right now.

Baghdad's green zone is known as the ultimate gated community -- dotted with armed checkpoints, it features coils of razor wire and chain linked fences. It's surrounded by what are known as T-walls, or these blast-proof concrete barriers.

Attackers also have to contend with armored vehicles and machine guns. And there are literally thousands upon thousands of Americans who live and work in the green zone. That's where the U.S. embassy is, the civilian workers, the contractors and a lot of U.S. military personnel, as well.

Is the U.S. Army at the breaking point right now?

That question is being raised as the Pentagon has decided to extend combat tours for active duty soldiers to 15 months from a year.

Let's turn to our senior Pentagon correspondent, Jamie McIntyre.

He's been looking into this.

How healthy, Jamie, is the Army right now?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, it's an issue that's been debated almost since the beginning of the war -- how far can you bend the U.S. Army before it breaks?

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): No one in the Pentagon disputes that lengthening combat tours in Iraq and Afghanistan will put more stress on already war weary soldiers and their long suffering families. But critics, including many Democrats in Congress, fear the breaking point is near.

SEN. JOHN WARNER (R-VA), ARMED SERVICES COMMITTEE: I think there are limits to -- to human endurance. And there are limits to what families can -- can put up with.

MCINTYRE: The Army likes to point to the latest recruiting and retention numbers, which show both the active duty and National Guard are exceeding goals.

GEN. JAMS LOVELACE, U.S. ARMY DEPUTY CHIEF OF STAFF: That's an overall great picture for the health of the force.

MCINTYRE: But there are other, more ominous trends. Take the number of West Point graduates who are voting with their feet after their five year commitment is up. Forty-six percent from the class of 2001 decided to get out and 54 percent from the class of 2000. That's up significantly from the average of 10 to 30 percent.

And it amounts to a brain drain of captains, many who have served multiple combat tours and may have burned out.

GEN. GEORGE CASEY, U.S. ARMY CHIEF OF STAFF: Clearly, it will be something that we'll have to keep a very close eye on. I've watched units be extended for 90 to 120 days. It has not had an adverse effect on -- a noticeable effect on a unit.

MCINTYRE: But even strong supporters of the all volunteer force are worried. Senator John Warner issued a warning about the longer tours, saying: "We must carefully monitor the possible risks to that system that these extensions may generate."

(END VIDEO TAPE)

MCINTYRE: The Army's long-term solution to the problem is to simply get bigger, which it's doing by "recruiting more people and retaining more people," despite the fact they know they'll go directly into deadly combat.

One fix that is not under consideration is any return to the draft -- Wolf.

BLITZER: I'm going to get to that with Charlie Rangel when I speak with him later. He's been a big proponent of reinstituting the draft, as you know, Jamie.

But this issue of these junior officers, the U.S. Army, they spend a lot of money training these guys and gals. They work their way up. But at a certain point, a lot of them are not reupping themselves.

What are they doing about this, because this is a critical problem, the fact that these junior officers are not staying in the Army?

MCINTYRE: Well, you know, the Army began to notice this trend even before the war, partly because these are people who are very employable in the civilian economy and they were getting pretty good job offers at that point.

So they -- what they've done is put in a series of incentives and bonuses where the officers can pick their home base, where they can be guaranteed to go to graduate school. And the Army says they're seeing -- already beginning to see a turnaround in that trend because of those incentives to hold onto the key junior officers.

BLITZER: All right, Jamie, we'll watch this story, a very disturbing story, for us and for all of our viewers.

Let's go to Jack Cafferty in New York for The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: You want disturbing, I've got disturbing for you. The White House may have lost up to thousands of e-mails -- thousands. And they're not just any e-mails. Twenty-two White House officials, including Karl Rove, may have been using outside e-mail accounts that belong to the Republican National Committee, to conduct Bush administration business, including discussions about the dismissals of those U.S. attorneys.

It could be against the law, boys and girls. In 1978, The Presidential Records Act was passed as a result of the corrupt Nixon presidency. This law requires all presidential papers and communications be preserved for historical purposes.

Now, the White House insists there's no effort to keep these e- mails hidden and they're doing everything they can to recover them. They say these outside e-mail accounts exist to comply with something called The Hatch Act, which prohibits officials from doing political business with government resources.

Think about that -- are they then acknowledging that discussing the firing of federal prosecutors is political business?

Interesting.

Senate Judiciary Committee Chairman Patrick Leahy says the president's aides are lying about the e-mails. He's vowing to subpoena them if the White House doesn't come forward with them. Leahy also compared the situation to those missing 18-and-a-half minutes in one of the Nixon Watergate tapes.

Remember?

Here's the question -- what does it mean if the White House lost up to thousands of e-mails sent on a private e-mail system?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile. Use any system you want, just talk to me.

BLITZER: All right, Jack, thank you.

CAFFERTY: Wolf.

BLITZER: Jack Cafferty watching this story for us.

Up ahead, Democratic Congressman Charlie Rangel says one way to deal with Iraq is to bring back the draft. I'll ask him about this idea. Some are calling it an indecent proposal.

Also, after Hurricane Katrina, was a top insurance company pressuring engineers to change their damage assessments so that the company could get out of paying for damages?

And we'll have more on the breaking news that we've been following -- Don Imus fired, not only by NBC, now by CBS.

So what might be next for him?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: As Iraqi leaders are attacked in the heart of Baghdad's heavily guarded green zone and U.S. troops face even longer tours of duty in the war zone, the battle lines are drawn here at home.

Should America seek victory if possible or should the U.S. simply withdraw?

And joining us now from New York, the powerful chairman of the House Ways and Means Committee, Charlie Rangel.

He's the author of an important new book entitled, "And I Haven't Had A Bad Day Since: From the Streets of Harlem To the Halls of Congress."

Congressman Rangel, thanks for coming in.

REP. CHARLES RANGEL (D-NY), CHAIRMAN, WAYS AND MEANS COMMITTEE: Good to be with you, always, Wolf.

BLITZER: I want you to respond to Senator John McCain. He had some strong words against what the Democrats are trying to do in the House and the Senate.

Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Democrats who deny our soldiers the means to prevent an American defeat have chosen another road. It may appear to be the easier course of action, but it is a much more reckless one and it does no credit, even if it gives them an advantage in the next election.

(END VIDEO CLIP)

BLITZER: He's saying also that what you're trying to do is, in effect, undermine the troops and their ability to win this war in Iraq.

RANGEL: Well, I have the deepest respect for Senator McCain. But like most Americans, I have no idea as to what he's talking about with a victory.

I think he and the president are the only ones that believe that our fighting men and women can make any contribution toward the dispute and the fights that these Arabs have had over a 1,000 years.

I would seem to me that some of our neighboring friends in Egypt and Saudi Arabia and Jordan would do better than we can at resolving these serious problems.

BLITZER: Bottom line -- you simply want the United States to start withdrawing?

RANGEL: I think the American people already mandated that there's no victory for us there. I don't know what the senator is talking about.

The way I put it, Wolf, if we knew that the enemy was going to surrender tomorrow, to whom would we bring the surrender papers?

And there's not -- no one has the slightest idea what victory means.

BLITZER: Yesterday, the defense secretary, Robert Gates, said he -- he has no choice but to extend the tours of duty for U.S. military personnel, soldiers, Army soldiers, from 12 to 15 months, in Iraq and Afghanistan, given the strain, the enormous strain, that the military is under right now.

What's your reaction?

RANGEL: And it's sad and it's close to immoral. If we had the children of affluent Americans, those from the Pentagon, the White House and the children of CEOs, this would not happen. In the first place, they wouldn't be over there.

But to take the National Guard, the Reservists, these people who are catching hell back home on their jobs, with their family, and to take volunteers that have had one, two, three, four tours is a cruel thing to do.

And we never hear them make an appeal to able-bodied Americans to volunteer and to join in this fight for freedom for whoever.

BLITZER: Here's what the ranking member of the Senate Armed Services Committee, the former chairman, John Warner, of Virginia, said yesterday: "Having served as secretary of the Navy when the concept of the all volunteer force was being developed and having observed in the ensuing years the extraordinary success of that system in providing for America's security, I feel strongly that we must carefully monitor the possible risks to that system that these extensions may generate."

Some have interpreted that as suggesting he's worried this all volunteer system is broken, it's not necessarily going to work, and it might force us to revive the draft, something you and John Murtha, a handful of others, have been talking about for some time.

RANGEL: It might cause them to think about doing it. But when America believes that the draft is going to put their children in harm's way, we'll be pulling out of Iraq before they support a draft.

BLITZER: The Iraq issue clearly dominated the voting on moveon.org. They had a town hall -- a virtual town hall meeting and a lot of their voters -- a lot of their members voted.

The results sort of surprising. Obama came in with 28 percent; Edwards, 25 percent; Kucinich, 17 percent; Bill Richardson, 12 percent. Look at this, Hillary Clinton, the candidate you favor, only 11 percent. And a lot of people are interpreting that as a result of her support -- initial support for the war and her refusal, in effect, to apologize for that vote ever since.

What's your interpretation? RANGEL: I think you're right in interpretation. But I can't see for the life of me -- if we had an opportunity to elect a qualified, superior candidate, assuming people felt that way, what the devil would an apology have to do with anything?

I voted against the war and I didn't sleep that night thinking the president might have known something, that maybe the country was in more danger. I didn't know that all of the things that he said was untrue.

But suppose I did and I could be more angry in saying that he misled me and I want the troops to come out?

I think that's Senator Clinton's position and I don't see how an apology can help us to get out any sooner.

BLITZER: You're a New Yorker. The Don Imus uproar -- it's been a huge controversy. He's been suspended by CBS Radio, effectively fired by NBC. They're no longer simulcasting his radio program on MSNBC.

What do you think should happen next?

RANGEL: And don't forget that many of his major sponsors are moving away from him.

I think this sends a sign to the wannabes that being arrogant just because you're in power, whether you're in the private life or the public life, that no one should have the right to be prejudiced, racist, anti-Semitic without paying some price.

And I think he is paying it and I hope the sponsors continue to ignore him, to serve as a lesson to him and those who would want to be like him, Wolf.

BLITZER: Do you think CBS should dump his radio show?

RANGEL: Well, I don't -- I hope that the sponsors don't have to put that up with CBS. After all, we don't have to boycott CBS. But there are a lot of products out there that should be very vulnerable as it relates to their sales if they support a guy like Imus.

BLITZER: All right, I'll take that to mean you hope CBS doesn't -- after this two week suspension -- doesn't put him back on the air.

RANGEL: Exactly.

BLITZER: Congressman Rangel, thanks very much for coming in.

Let me remind our viewers, the book is entitled "And I Haven't Had A Bad Day Since: From the Streets of Harlem To the Halls of Congress."

Thank you very much for coming in from the streets of New York to THE SITUATION ROOM.

RANGEL: You're terrific, Wolf.

BLITZER: And we spoke just before CBS announced it was dumping the "Don Imus Radio Show." Clearly, Charlie Rangel was -- is going to be very pleased about that, because that's exactly what he recommended.

Coming up, a day after all the charges against them were dropped, the Duke University lacrosse players get a written apology from a key figure in the sexual assault case.

And did a big insurance company use pressure tactics to avoid paying claims on Hurricane Katrina damage?

We're going to show you the e-mail.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Our Carol Costello is monitoring stories incoming into THE SITUATION ROOM right now -- Carol, what do you have?

COSTELLO: Well, let's start in Tennessee.

Contrasting pictures today at the murder trial of the wife of slain Tennessee preacher Matthew Winkler. Mary Winkler is accused of shooting her husband in the back with a shotgun while he slept. Her attorney told the court that she was abused by her husband and she didn't mean to shoot him. But prosecutors say she told police that he was a "mighty fine man" and they say it's not possible that the gun went off accidentally.

The district attorney in Durham, North Carolina is now apologizing to three former Duke University lacrosse players whom he charged with rape. North Carolina's attorney general said yesterday that charges were being dropped. In a statement released just within the last few hours, D.A. Mike Nifong says he made incorrect judgments and that the students were wrongly accused.

The North Carolina bar has accused Nifong of withholding evidence and lying to the court.

In news affecting small businesses, this spring may put a chill on the nation's retailers. Analysts are warning today that rising gas prices and the prospect of higher interest rates could lead shoppers to spend less in the coming months. And that's overshadowing better than expected sales last month at many of the nation's biggest retailers.

And another story affecting small businesses as well as consumers. You may not have to deal with those pesky little stickers used to label your apples and tomatoes much longer. The Associated Press is reporting that a Georgia company is seeking federal approval for a laser that etches edible labels directly onto your produce. The company says the new technology is cheaper -- cheaper than stickers, anyway -- and allows for easier tracking. But regulators want to know how it affects the fruits and vegetables themselves.

Back to you -- Wolf.

BLITZER: Carol, thank you for that.

Coming up, those missing White House e-mails -- are they lost or hidden?

A new wrinkle in the fired federal prosecutors scandal as Democrats fire up the rhetoric.

And Hillary Clinton jumping into the Don Imus controversy. We have some new details for you on that, as well.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, there is death, discord and disaster. But things are better than they seem in Iraq.

Are they?

That's what two Republican senators tell President Bush. Senator Lindsey Graham and presidential candidate John McCain briefed the president on their recent visit to Iraq at a meeting earlier today.

Another female is quitting her membership in the Congressional Hispanic Caucus. Democrat Linda Sanchez of California is leaving over opposition to the group's male leader. Her sister, also a California congressman, quit the Caucus in January, saying the leader called her a sexually explicit name. But Democrat Joe Baca of California is denying that.

And one health official says giving Merck Pharmaceutical what it wants could cause a public health disaster. A federal health adviser is warning the FDA against approving a new Merck drug as a successor to Vioxx. That painkiller was pulled in 2004 for possible health hazards. Now officials warning the FDA its replacement might not be any better.

I'm Wolf Blitzer and you're in THE SITUATION ROOM.

The White House says it "screwed up". It involved missing e-mail and the ensuing congressional outrage over them.

Our national correspondent, Bob Franken, is here, and he's standing by to tell us what this is all about -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, there just might, Wolf, be a tiny bit of politics involved here, and if someone accuses the debaters of living in the past, well, that's not all together untrue.

(BEGIN VIDEOTAPE)

FRANKEN (voice over): It's not a new game. It's been played ever since President Richard Nixon was driven from the White House. And from 1974 on, the politicians have tried to quote the scandal of the day with reminders of Watergate.

The current e-mail controversy? That's easy.

SEN. PATRICK LEAHY (D), VERMONT: It's like the famous 18-minute gap of the Nixon White House tapes. They say they have been erased or misplaced. They're there.

FRANKEN: That wasn't even subtle. Sometimes, the politicians are a little less direct. Sometimes, which ever party is out of the White House just happens to use some catch phrase that hearkens back to Watergate. Who can forget the words form then-senator Howard Baker?

HOWARD BAKER, FMR. U.S. SENATOR: What did the president know and when did he know it?

FRANKEN: Senator Baker was a Republican, asking that penetrating question almost 34 years ago about the Republican president. These days, it's Democrats traipsing down memory lane to also dump on a Republican president.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: One, what did he know and when did he know it?

FRANKEN: Democrats look for each and every opportunity to paint Bush with the brush of Nixon.

SEN. HARRY REID (D-NV), MAJORITY LEADER: The president is as isolated, I believe, on the Iraq issue as Richard Nixon was when he was hunkered down in the White House.

FRANKEN: And as for the missing e-mails...

DANA PERINO, DEPUTY WHITE HOUSE PRESS SECRETARY: We are trying to understand to the best of our ability the universe of the e-mails that were potentially lost, and we are taking steps to make sure that we use the forensics that are available to retrieve any of those that are lost.

(END VIDEOTAPE)

FRANKEN: And for the record, forensic experts never were able to recover the 18-and-a-half-minute gap in the White House tapes.

And Wolf, Richard Nixon continues to be a presence, six presidencies later.

BLITZER: Bob, how long has this been going on?

FRANKEN: Oh, just about since 1974. Ever since Richard Nixon and his helicopter lifted off from the White House. He's been part of the debate.

BLITZER: Bob Franken reporting for us.

Thank you, Bob.

There's also a new twist today in the bitter fight over who should pay for damage from Hurricane Katrina. And some say it may involve arm-twisting by at least one major insurance company.

CNN's Kathleen Koch is joining us. She's learning some important new details.

What are you learning, Kathleen?

KATHLEEN KOCH, CNN CORRESPONDENT: Wolf, after Hurricane Katrina struck, many homeowners were told by engineers who examined their homes, yes, you did have wind damage, but they were still denied coverage by their insurance companies, who had, voila, new reports blaming the damage on water. Well, now a series of e-mails show what may have happened.

(BEGIN VIDEOTAPE)

KOCH (voice over): Less than two months after Katrina, State Farm called and threatened to fire an engineering firm it had hired to evaluate damaged homes because several reports cited wind instead of water damage, meaning State Farm would have to pay up.

E-mails obtained by CNN show a debate between company executives over what they have to do to keep the contract. "I managed to get us back on the (rolls) with State Farm, but we need to have a very frank conversation with the boys down south..."

The firm's Mississippi engineer says CEO Bob Kochan are seen by a female State Farm manager as "too emotionally involved," and are all working very hard to find justifications to call it wind damage. Vice president Randy Down of Jets (ph), "I really question the ethics of someone who wants to fire us simply because our conclusions don't match hers. What about the obvious fact that State Farm would love to see every report come through as water damage so that they can make the minimum settlement?

CNN has obtained a report the company did on one home before the e-mails that found "interior damage" primarily due to wind. After the e-mails, the engineer responsible was pulled from doing State Farm work. And the firm did a new report, finding, "The damage predominantly caused by storm surge and waves."

Mississippi attorney general Jim Hood says the e-mail shows State Farm was pressuring the engineering firm to change its reports.

JIM HOOD, MISSISSIPPI ATTORNEY GENERAL: I think this document clearly shows what they were up to, that they were coercing their engineers, they were colluding in an attempt to not properly pay claims. KOCH: State Farm denies that. In an e-mailed response, saying its employees are "... committed to conducting themselves in an ethical and appropriate manner. Any suggestions to the contrary are simply wrong."

Kochan, in a phone interview, also denied his company was coerced.

BOB KOCHAN, CEO, FORENSIC ANALYSIS & ENGINEERING CORP.: State Farm never specifically asked us to change anything.

(END VIDEOTAPE)

KOCH: Still, Mississippi's attorney general believes that the e- mail document will help thousands of Mississippians who have gone to court or are considering going to court to get State Farm to pay for hurricane damage to their homes -- Wolf.

BLITZER: Kathleen, if the engineering firm insists it wasn't influenced by State Farm, why did they change their report?

KOCH: Well, the firm says that the second engineer who inspected the home reached a different conclusion, not because of pressure from State Farm, but because that engineer was able to get additional information which then led to the resulting conclusion that the damage was from water, not wind. It's important to point out, though, the family that owns that home is suing State Farm -- Wolf.

BLITZER: All right, Kathleen, doing some good reporting for us. Thanks. Stay on top of this story for us.

Up ahead, Arnold Schwarzenegger proposing a makeover for the environmental movement. Mary Snow will report on what is being called the sexy side of being green.

And the other shoe drops on Don Imus. CBS the latest network to pull the plug on the controversial shock-jock. Carol Costello will put the breaking news into perspective for us.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

There are horrifying hostage videos making the rounds on the Internet, scenes of slaughter eerily familiar, yet very different.

CNN's Harris Whitback has our report, and we must warn you, some of the images are quite disturbing.

(BEGIN VIDEOTAPE)

HARRIS WHITBECK, CNN INTERNATIONAL CORRESPONDENT (voice over): It looks like a video from Iraq -- a hostage bound, interrogated, tortured by his captors, who remain off camera. But the language is not Arabic. It is Spanish.

The country is not Iraq. It is Mexico.

And along with the threats scribbled on this hostage's body is a big "Z" which stands for the Zetas, the name of one of Mexico's many drug cartel hit squads. The victim allegedly a member of the Zetas. His captors apparently from a rival gang, seven of whose members were recently killed.

"Are you responsible for killing our people?" the interrogator asks. "Yes," he answers.

Soon after, the beheading takes place. As shocking as its content is the way the video was made public. It was put on YouTube, the U.S.-based Web site that allows anonymous users to post videos. And while YouTube removed the posting after a few hours when it became aware of it, it is only the most recent posting on a variety of sites in what Internet security experts in Mexico say is a trend among the Mexican drug cartels.

GABRIEL CAMPOLI, INTERNET CRIME EXPERT (through translator): It is a message to society, a way of saying that the government's efforts to combat drug trafficking have failed and that the cartels are alive and well.

WHITBECK: Here's another Mexican video that made the rounds on the Internet. The singer is Valentin Elizalde, who is said to have quite a following among drug traffickers. Over images of victims of the drug cartel battles, he sings what's known in Mexico as a narco ballad, "I am singing this song to my enemies" is the lyric.

Several months later, Elizalde himself wound up dead, shot 20 times. And pictures of his autopsy appeared on another Web posting.

Federal prosecutors in Mexico have seen many of these videos, and the chat room messages that they trigger. They say they are investigating them for clues that might lead to their authors.

But experts say Mexican law enforcement is ill-equipped to track criminals in cyberspace.

CAMPOLI (through translator): The problem is one of legislation. Mexican law does not allow the police to dig very deeply into the identities of people in danger. What we really need is a special prosecutor for Internet crime.

WHITBECK (on camera): The Web may be a powerful medium for transmitting drug traffickers' messages, but if properly investigated, it could also be a treasure trove of clues about their whereabouts and identities.

(voice over): In fact, at the end of that beheading video, a message scrolls on the screen that serves as both a clue for police and a warning to a rival drug lord. Citing the drug lord by name, the message says, "You're next."

Harris Whitbeck, CNN, Mexico City.

(END VIDEOTAPE)

BLITZER: A very disturbing story. We're going to stay on top of that story as well.

Other news we are following, including this one on a very, very different note. The California governor, Arnold Schwarzenegger, trying to get environmentalists to spruce up their image by making them sexy.

CNN's Mary Snow is joining us. She's got some details.

Can it work, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, environmentalists say, you know what? Whatever it takes. California's governor has gone green, is trying to convert the country. But he's also trying to ditch the tree hugger image.

(BEGIN VIDEOTAPE)

SNOW (voice over): He's on a mission to save the planet. But first, Republican governor Arnold Schwarzenegger is trying to pump some sex appeal into environmentalists.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We have to make it mainstream, we have to make it sexy. We have to make it attractive so that everyone wants to participate.

SNOW: Schwarzenegger says he's familiar with polishing images, and he says environmentalists could take a lesson from bodybuilders.

SCHWARZENEGGER: Like bodybuilders, environmentalists were also thought of being kind of weird and strange and fanatics, and they're the kind of serious tree huggers, as you know. Environmentalists were no fun.

SNOW: And Schwarzenegger is trying to make them cool and edgy. He says just like his 1977 movie "Pumping Iron" made bodybuilding mainstream, the same can be done with environmentalists, but without sacrificing for the cause.

SCHWARZENEGGER: We don't have to take away the cars from the people, the SUV, the Hummers, and the muscle cars. No. That formula is a formula for failure.

SCHWARZENEGGER: His solution, drive environmentally-friendly Hummers, like his, that run on biofuel and hydrogen fuel. Before his Hummers went green, he was the target of protests for driving gas- guzzlers. One environmental group in California gives him a mixed record. The California League of Conservation Voters did not endorse him last year in his election bid, but says Schwarzenegger is evolving.

RICO MASTRODONATO, CALIF. LEAGUE OF CONSERVATION VOTERS: We're excited, and I think the environmental movement across the country, more or less, in the state of California is grateful that he's taking this issue on and being so visible about it.

(END VIDEOTAPE)

SNOW: But some environmentalists say one concern they do have about Schwarzenegger's message is that it isn't stressing sacrifice. They say, yes, changing technology will go a long way, but consumers will also have to change some of their habits -- Wolf.

BLITZER: Thank you for that report.

Mary Snow, in New York.

2008 presidential candidates are trying to harness the growing power of YouTube. Now YouTube is giving the candidates a chance to take their messages directly to YouTube users.

Let's bring in our Internet reporter, Abbi Tatton.

Abbi, which candidate is taking some advantage of this, almost right away?

ABBI TATTON, CNN INTERNET REPORTER: Right away, it's Mitt Romney. He's first up, asking YouTube users to post a video response to this question he posed yesterday: "What do believe is America's single greatest challenge?" And already, the responses are beginning to trickle in.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hey, Mitt, I'm Ian (ph).

(END VIDEO CLIP)

TATTON: That's Ian (ph), a frequent poster to YouTube. And his long post here, four and a half minutes, he's concerned with various things -- prisons, schools.

There's another poster here going by the name Evil Mongrel Monkey. He says that education is the number one problem.

And another here, Steven (ph), whose previous posts a few months ago were UFO-related. He says it's illegal immigration that is the number one problem that we are facing.

Now, there's many more concerns and issues, and -- posted in the comments section of this. Mitt Romney is saying that he's going to look through as many of these as possible and he'll be responding online -- Wolf.

BLITZER: Thank you, Abbi, for that. A lot of activity going to be happening on YouTube.

Up ahead, we're going to have more on the breaking news we've been following over the past hour or so, the firing of Don Imus by CBS. What might be next for him? Our Carol Costello is watching developments.

And possibly lost, White House e-mail sent on a private system. If that's true, what would it mean to you?

Jack Cafferty with your e-mail when we come back. All that.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: It appears the outrage was too great. Let's get some more on the Don Imus story.

Just a short while ago, CBS fired Imus from his radio show after his racially-charged comments. It comes on the same day that Imus said, he had "apologized enough".

Our Carol Costello is in New York, she's been covering this story.

So, what's might be next, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, at least for now, Wolf, it's over. At least the firing part.

CBS Radio has canned Imus. His show is gone from MSNBC. But the debate this controversy started is far from over.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): MSNBC wasted no time. Not only has "Imus in the Morning" been canceled, it's already been replaced.

UNIDENTIFIED FEMALE: We begin this morning with Imus getting axed.

COSTELLO: But Imus was to live on for just a few more hours on CBS Radio, and took turns bashing NBC for what he called its unethical actions and thinking like a businessman.

DON IMUS, RADIO HOST: I'm not whining about this, but we wouldn't be here had I not said it. These bastards, they went after me. They got me. They didn't catch me asleep.

COSTELLO: But Al Sharpton wasn't finished with Imus yet. He held a press conference, along with the father of one of the Rutgers players, right before meeting with CBS, to try to convince Imus to fire Imus, too.

But Sharpton wasn't feeling the love, accused of racism himself by a reporter claimed Sharpton had said nasty things about the Duke lacrosse players now cleared of rape charges.

AL SHARPTON, CIVIL RIGHTS ACTIVIST: What did I say? I said we need to investigate and we need to see -- that's nasty? You said that about Michael Jackson. Did you speak about nasty things about Michael? Did you speak nasty things about O.J. Simpson?

COSTELLO: It's an exchange that exposes how confusing this controversy has become. In the "Kansas City Star," an African- American columnist, Jason Whitlock, wrote, "Thank you, Don Imus. We can once again wallow in victimhood and delude ourselves into believing that fixing your hatred is more necessary. The bigots win again."

But for the targets of Imus's racial slur, it's a different story. They appeared on "Oprah," emotional, strong.

C. VIVIAN STRINGER, RUTGERS WOMEN'S BASKETBALL COACH: ... by the cancellation of MSNBC of the Imus show, it shows that we do have a moral fiber.

COSTELLO: But Al Sharpton sees it as more than that, raising the issue to an historical level.

SHARPTON: When the civil rights movement started by protesting the arrest of Rosa Parks, dealing with justice for her was addressing the broader issue. Dealing with Imus is addressing the broader issue.

(END VIDEOTAPE)

COSTELLO: Again, CBS Radio has fired Don Imus. But as far as I know, Imus will still meet with the Rutgers players at a secret time and a secret location.

Back to you, Wolf.

BLITZER: Thanks for that, Carol. We'll stay on top of this story.

Somebody else is going to meet with those Rutgers University players as well. Senator Hillary Rodham Clinton is going to be doing that. She's going to be following up on the Imus firestorm.

The Democratic presidential candidate will visit Rutgers University on Monday. This, after she used her Web site to blast Imus's racially and sexually-charged comments about that Rutgers women's basketball team.

Up next, missing White House e-mail. Jack Cafferty wants to know how it happened and what it means.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's go right to Jack in New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: What does it mean if the White House lost thousands of e-mails sent on a private e-mail system? Boy, did we get e-mail.

Gilbert in Illinois, "It means something's really rotten in Denmark. The similarities to Nixon are astounding. The only thing missing is Martha Mitchell."

Gordon in Salt Lake City, I'm an e-mail administration and I know it's entirely possible to lose whole server drives filled with e-mail. But that's why I keep a backup."

Bruce in Rochester Hills, Michigan, "Jack, it means it's time for Nancy Pelosi to put impeachment back on the table."

Bobby in Jacksonville, "It doesn't mean anything, you idiot. It's private. Next you'll want to read all my e-mails."

No, Bobby, that one was plenty.

George in New York, "It means they are outright liars, Jack. E- mails can never be completely erased. There always exists a record that can be retrieved. I bet if subpoenaed, these e-mails will mysteriously reappear."

"I bet there are a bunch of smoking guns hidden in their sewer system. Leahy and his bunch must know that they're on to something now."

Eric in Kentucky, "I could care less about the e-mails lost at the White House. Also, I could care less about the Imus story. What I care about is I'm paying $2.85 a gallon at the pump and neither the news media, nor Congress, nor anyone else seems to care. Why don't you report on something important?"

Jeff in Ohio, "I think they ought to look in Sandy Berger's socks for the lost e-mails."

R.J. in Missouri, "Mr. Cafferty, nothing new. The White House has been lost for six years. Maybe Bush will look for an e-mail czar now."

And Eric in Des Moines, "Lost e-mails? Misplaced tape recordings? It's been over 30 years, but it looks like we're in for another round of the old Nixon Two Step."

If you didn't see your e-mail here, go to cnn.com/caffertyfile, where we post more of them, along with video clips of "The Cafferty File" -- Wolf.

BLITZER: I have the answer to the first question, Jack, you asked me, whether I understand Arnold Schwarzenegger.

CAFFERTY: Which is?

BLITZER: Yes. That's my answer.

CAFFERTY: Good. You guys are probably from the same country.

BLITZER: We're close pals.

Thanks very much.

Let's go to Lou in New York.

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