Wet Bank Guide

This is a letter to the editor I am sending to my area newspapers around Fargo, N.D.

Imagine this: A fully loaded KC-135 tanker crashes after takeoff in the city of Grand Forks, N.D. The ensuring massive fireball leads to a wind driven firestorm that levels much of the city, leaving it a black and smoking ruin. Thousands are dead.

Now, imagine the federal government informing these people that they are not entitled to any direct compensation from the federal government, because they chose to live there, and should have carried homeowners insurance to address this issue.

Just for fun, imagine that the private insurance companies have all ruled this to be an Act of War (since we're at war), and decided they don’t have to pay a penny out to anyone.

You have lost everything but the clothes on your back. You owe the full balance of your mortgage and will receive no insurance. For good measure, you have also lost your job as a direct result of this tragedy.

So, should the federal government bear any responsibility, or is it your own fault for choosing to live next to an airbase? That is precisely the position Louisiana is confronted with.

New Orleans wasn't destroyed by Hurricane Katrina. It was destroyed by the failure of the federal levee system due to bad engineering on several levels. I won’t go into the details here for space reasons, but you can visit http://www.levees.org/ for the details.

In spite of the clear culpability of the federal government, particularly the U.S. Army Corps of Engineers, the Bush Administration argues the feds have no real responsibility to directly compensate the residents of the city.

Most of the post hurricane “aid” paid out so far has gone FEMA expenses, with a couple of thousands dollars in immediate aid to each displaced family. Some have received temporary housing assistance as well, and tiny camper/trailers are being provided to some (at $75,000 each) to live in while they gut their ruined homes and try to rebuild.

The $85 billion figure cited by the White House is inflated by counting money twice and by including flood insurance payments, for which people paid premiums and which the government is obligated to pay out.

The rest is in Community Development Block Grants that will largely go into infrastructure repair, and money spent on federal facilities, such as Keesler A.F.B. All of that is welcome relief, but it doesn’t address the losses of the 200,000 families whose homes were damaged or destroyed by the Corps’ neglect.

Some people have flood insurance, but in New Orleans—like much of the rest of the country—the $250,000 cap isn’t enough to replace even a modest home. Many, many people did not have flood insurance, because the federal flood insurance maps told them they didn’t need it. And because they trusted the Corps of Engineers levees to protect them.

Others had homeonwers policies with hurricane riders, but are not being paid becuase the insurance companies say "flood" and walk away from all other responsibility, even roofs clearly damaged by wind. They won't even pay Additional Living Expense riders, leaving people to accept housing assistance from FEMA even though they've paid premiums to protect themselves from being out of their houses.

Many of these people face bankruptcy, a group nearly the size of the population of North Dakota, all of whom bought all the insurance they were told they needed, all of whom trusted their government to protect them.

To address those 200,000 homes without flood insurance, U.S. Rep. Richard Baker (R-Baton Rouge) has proposed a plan that offers to sell government bonds to finance a 60% settlement. Homeowners would receive a 60% payout of homeowner equity, deducting payments received from flood or other insurance.

Mortgage holders would have to accept 60% payout of the remaining balance of the mortgage as payment in full. The properties bought up would be taken out of development or bundled and sold to developers for redevelopment to pay off the bonds.

If the above plane crash scenario played out, would you think 60% a fair payout for your losses? How about zero percent, which is the counter proposal from the White House? Please ask your Representative and Senators to not only support Rep. Baker's compensation plan, but to insist that it be raised to 100% of equity for homeowners.

Mark Folse
Fargo, N.D.

Tags: Katrina NOLA New Orleans Hurricane Katrina Think New Orleans Louisiana FEMA levee flooding Corps of Engineers Grand Forks North Dakota insurance Baker Bill