Catching up with the news. Barney Frank threatens the NFIP with the nuclear option. Slabbed provides the analysis.

Representative Barney Frank is one of those Democrats that has been demonized by right wing ideologues for years so it is not surprising the man is so roundly hated in the Gulf South. One of the first openly gay members of Congress, Representative Frank has been a convenient target for the social-tolerance challenged souls that make up the right-wing of the GOP. He has also gone out of his way trying to help the people of the Gulf Coast by tirelessly championing Gene Taylor’s multiperil bill HR 1264 in the US House of Representatives. From our perspective here at Slabbed he is also his own man, one of a group of congressmen that is not owned by special interests and despite the importance of the committee Frank chairs to the Wall Street crowd he stands in stark contrast to soon to be former $enator ¢hris Dodd who is wholly owned by Wall Street interests. It is from that perspective that I write this post which includes some insight from our sources in the capitol along with some conjecture from the Slabbed editorial board. Let’s begin with this Arthur Postal report from the National Underwriter:

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, wants another House committee to take jurisdiction over the troubled and controversial National Flood Insurance Program.

A spokesman for the National Association of Professional Insurance Agents (PIA) voiced “skepticism” over Mr. Frank’s comments, saying he doesn’t see how “switching committee jurisdictions will adequately address the underlying problem, which is that Congress needs to set for itself a reasonable schedule to consider a comprehensive NFIP reform bill that includes a five-year reauthorization.”

Mr. Frank made his comments yesterday to a lobby group, saying he will seek another short-term reauthorization of the National Flood Insurance Program before it expires at the end of this month, and wants to kick oversight of the troubled—but critical—program to the House Transportation and Infrastructure Committee.

National Underwriter obtained a summary of what was discussed at the meeting, a breakfast gathering of the Democratic Congressional Campaign Committee held with its Business Council unit, which consists of Washington-based lobbyists and lawyers.

While I’ve expressed respect for Sam Friedman while simultaneously ripping him there is no questioning the fact Sam has good taste when it comes to his reporters. The NU has dutifully chronicled the insurance industry’s displeasure with the short-term NFIP extensions but their belly aching appears to be falling on deaf ears in the House as we continue:

Another renewal is being delayed because of disagreements between the House and Senate over whether wind damage coverage should be added to the program, whether the program’s current $20 billion deficit should be paid off by the government, and how the program should be reformed and modernized.

But, at the same time, Rep. Frank told representatives of the business community that he is seeking to “engineer” a jurisdictional trade with the Transportation Committee.

He is proposing that committee take responsibility for the flood program, and the Department of Housing and Urban Development, whose jurisdiction rests with the Finance Committee, would take responsibility for housing after a natural disaster.

Ted Besesparis, a spokesman for the National Association of Professional Insurance Agents, said in response to Rep. Frank’s comments that, from a practical standpoint, another extension of the flood program was “predictable because the previous extensions have been too short to allow for consideration of comprehensive reform.”

But, he said, dealing with reauthorization “can’t be accomplished by repeatedly kicking the can down the road for just a few weeks at a time, which creates repetitive uncertainty in the real estate markets.”

He said comprehensive reform should also address forgiveness of the program’s debt, which was incurred due to extraordinary storms such as Hurricane Katrina.

“At first blush, we don’t see how involving HUD [Housing and Urban Development] in natural disaster response related to emergency housing would be an improvement because HUD is not charged with responding to disasters, while FEMA is,” Mr. Besesparis said. “However, we’d be interested in hearing more about Chairman Frank’s rationale,” he added.

I would never presume to speak for any member of Congress let alone Representative Frank but it appears to me the stakes were just raised. You see we’ve well reported all the various GAO reports on the NFIP which detailed the gross mismanagement of the program by FEMA, itself an agency so broken that it may be better to disband it and start over from scratch. The general public may not know it but we also might as well come clean and begin referring to the National Flood Insurance Program as NFIP Inc. because it is an federal program in name only. In reality the NFIP is simply an open government checkbook that is divvyed up and controlled by private concerns like URS Corporation which is currently advertising for Region X NFIP Regional Supervisor. That’s right boys and girls, the fox not only is in the hen house but actually runs it.

I’ll educate Mr. Besesparis with a bit of history. Back in the day, way before private, for profit businesses hijacked the NFIP it was housed in HUD at its inception back in 1968. It also makes sense to move the program over to HUD as it was HUD money that funded all the disaster programs that made homeowners whole after their private wind insurers dumped their claims on the NFIP after Katrina. The NFIP as it is currently setup has nothing to do with disaster response, rather it has everything to do with insurers using it as a private, taxpayer funded piggy bank where their losses are socialized and dumped on the taxpayers. Finally, as Nowdy pointed out to me via email the Department of Transportation also contains the Maritime Administration which certainly has the expertise to properly manage the flood program.  In short, the logic is very straightforward.

Finally I’ll note that the congressman to the Slabbed, Gene Taylor sits on the Committee on Transportation and Infrastructure. I am certain Rep Taylor would love to explain everything to these special interest trade groups and their shills like Mr. Besesparis as if they don’t already know. As far as the NFIP deficit goes I’m certain the taxpayers will be able to recoup a significant portion once the Katrina related NFIP False Claims Act cases are resolved. Mr Besesparis you have any other questions?

sop

3 thoughts on “Catching up with the news. Barney Frank threatens the NFIP with the nuclear option. Slabbed provides the analysis.”

  1. This would upset the insurance industry because they have given millions of dollars to members of the Financial Services Committee but haven’t been giving to T&I members.

    T&I already has jurisdiction over the Stafford Act disaster response programs and the Hazard Mitigation Grant Program in FEMA and the Corps of Engineers’ levee and flood control programs. NFIP need to be better coordinated with those programs.

    And HUD does need to take over longer term housing recovery after a major disaster. The Stafford Act is okay when there is repairable damage in a relatively localized area but for a community that has to be rebuilt, we need technical assistance, planning guidance, finacing options, and other help that HUD should be able to do but are far beyond FEMA’s competence.

  2. Unfortunately, this would not solve the bigger problem that is the NFIP jurisdiction of the Senate Banking Committee that has been stacked and seeded with industry defenders. Those guys have never even had a hearing about NFIP and Katrina. They didn’t see a need for any inquiry because insurance lobbyists assured them that the victims were at fault.

  3. Makes sense Brian. Thanks for the additional background.

    As $enator Chri$ Dodd found out, being seeded by Wall Street and monied financial interests is not a political positive in today’s post financial system implosion world.

    sop

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