I lost power steering once, and that was very scary. Ran over a puddle of water, no way around it, and the steering wheel suddenly locked and my brakes didn't work. Car came to a crawl right in the middle of an intersection. I had to get out and push while a couple people waited (it was 2am so traffic was very light). This was an 83 caravan. To this day, I have no clue what happened.
BTW, your sister made up the story because she was shaken up. Not a great excuse for lying though...