National Flood Insurance Program Enhanced Borrowing Authority Act of 2006

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I want to reinforce what the gentleman from Ohio, the chairman of the subcommittee, said. In the Committee on Financial Services, on a bipartisan basis, we marked up a bill that would authorize increased funding, but accompanied that with some reform. Let me go back to a couple of years ago, when, at the initiative of a bipartisan pairing of Members, our former colleague, Mr. Bereuter of Nebraska and our continuing colleague, the gentleman from Oregon (Mr. Blumenauer) took up the cause of reforming the flood insurance program.

We began that process. Frankly, I find it a little ironic. Some of those who have been critical recently of the flood insurance program were some of those who resisted our efforts to make tougher reforms back then. But at the insistence of those two Members who I mentioned, the chairman of the full committee, the gentleman from Ohio (Mr. Oxley); the chairman of the subcommittee Mr. Ney and I and others worked hard. We did insist on some reforms. We didn't get everything we wanted.

This year, as the gentleman from Ohio pointed out, or last year, in this Congress, we again had a very serious markup in our full committee. It was controversial. One or two items that some of us supported were defeated, but we worked this out, and we had a bill to come to the floor that would have increased borrowing authority, but would also have further reformed the program, and this is a case, by the way, where environmentalism and protecting the taxpayers go together. It is not in anybody's interest to have buildings put into places inappropriately.

Unfortunately, the Senate did not show any interest in doing the same, and we have heard some comments from some Members of the Senate about reform, but their preference for reform seems very abstract. It does not often make its way into legislation.

The Senate sent us a bill, which, as I understand it, they intended to keep going until July. Frankly, that troubled me, because if we were to extend this program until July, given this being the even year of the session, with all that implies, the likelihood of our getting to the reforms would have diminished. What I like about this bill, and I hope it is a reassurance to some of those who want reforms, our understanding is you can't be precise if you don't know exactly how the spendout is going to be, but this should run out in May. That means that we have got to pass legislation again on this subject, as the gentleman from Ohio said.

I want to serve notice now, and I think I speak for the Members on my side, and I know this is something that both the subcommittee chairman and the full committee chairman agree with in desirability, we need to do further reforms. We are not talking about depriving people of the benefit of this program, we are talking about improving it from an environmental and efficiency standpoint.

By the way you do people no favor if you encourage them to build where they are then going to be the victims of a diaster. I know the chairmen of the full and subcommittee feel strongly about this.

Let me speak for myself. I will support this bill. I will not support a further grant of increased borrowing authority unless we have had a chance to deal with the reforms. If some of the changes that I support are voted on, and I am defeated, I accept that.

But to be confronted with a situation where the Senate sends us legislation that simply extends the money without any consideration of reform will be unacceptable to me. I don't want to victimize the people who are there, but it is simply does not comply with our duties to the taxpayers, to the environment, and elsewhere, to the public interest, to simply continue to put more money into this program without further reforms.

As I said, we did begin the process. So I will support this now. I am pleased that the chairman of our committee has noted we have a bill which was marked up in our committee, which has some reform. I hope we will bring our further bill to the floor with those reforms and let Members work their will on it and send it to the Senate.

But I again want to stress, I agree with those who say we need more reforms. I congratulate the leadership of the committee who have scaled this back in terms of how long it will last, so that we will not get an extension that makes it unlikely that we will be able to do some further reform.

I do not plan to support a further increase in funding to keep this program going until both Houses have dealt seriously with the need for reform.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from Oregon (Mr. Blumenauer), who has been one of the two leading Members of Congress in recent years to try to improve this program.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, I understand there probably has been some confusion about how long things are going to go. I will say I am now convinced that the problem is FEMA has no idea of what the spend-out rate is, and this is a further indication.

While we are on the subject, since we are talking about FEMA, I do have to say it is not on a related subject, it is not related, but the decision by FEMA to evict people who have lost their homes, who are living in hotels because some of them did not fill out the right forms, is the single cruelest most senseless public policy I have seen. It serves no purpose. It is an infliction of further misery on people who have already been beset. And it is an example of incompetence and callousness compounding each other.

Let me get back to this. Here I sympathize with my friends on the majority who have the responsibility of trying to make sense out of what they are hearing. We do not want to cut off the people who need help. I appreciate what the gentleman said. Let me say we have put a bill out. I hope we will see that bill on the floor soon, that we will get to vote on it, that we will send it to the Senate. And until and unless we get Senate consideration on the kinds of things we are talking about, I will vote for this one, but for no further ones.

I think, given the calendar, we should do it as quickly as possible.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the Senate bill (S. 2275) to temporarily increase the borrowing authority of the Federal Emergency Management Agency for carrying out the national flood insurance program, as amended.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, it is a pleasure to be here with my colleague from Massachusetts on an important bill. It is designed, of course, to increase the borrowing authority of the National Flood Insurance Program.

In the immediate aftermath of Hurricane Katrina, I introduced H.R. 3669, the National Flood Insurance Program Enhanced Borrowing Authority Act of 2005. That piece of legislation increased insurance by $2 billion, which went a long way in helping the Department's flood insurance response.

The bill before us today would provide a total of about $20.775 billion in borrowing authority to help ensure that the NFIP have sufficient funding on a cash basis in the short-term. This bill would allow FEMA to continue paying claims resulting from Hurricanes Katrina, Rita and Wilma, while the administration further evaluates the extent of the damage and the most appropriate means to cover all potential future claims.

These claims from those whose homes and businesses have been damaged or destroyed by Hurricanes Katrina, Rita and Wilma are not a new obligation. They are the result of a legal promise we made to these homeowners and business owners, a commitment we made when Congress passed the National Flood Insurance Act of 1968 and subsequent revisions.

Homeowners and business owners across the country agreed to pay premiums, communities agreed to adopt building codes to mitigate flood dangers, and the Federal Government agreed to provide insurance coverage to policyholders after a disaster. Every single one of these claims represents someone who has taken the responsible course of action by purchasing flood insurance and paying premiums to the government.

We not only have a legal obligation to honor our commitments, we have a moral obligation to provide the coverage we promised to provide to these people. I think the thrust of this bill is so important for people. I understand the argument some of my colleagues are making about the need to have further reforms for the National Flood Insurance Program.

I note the Committee on Financial Services held a markup in November of 2005 that addressed several reform initiatives to enhance accountability and ensure 2004 reforms are implemented. We had the support of Chairman Oxley and our ranking member Mr. Frank of Massachusetts on a bipartisan basis.

Mr. Speaker, I just want to make it clear, we had reforms. This is not going to be the last of these bills that we are going to see, and we will work towards having some reforms.

In addition, the Subcommittee on Housing and Community Opportunity held four hearings on this important program last year, including an August field hearing in rural Ohio, in my district. The Housing subcommittee will have continuous oversight of this important program, NFIP and look for all possible legislative solutions that will make this program as efficient and responsive as it can be.

Floods have been and continue to be one of the most destructive and costly natural hazards to our Nation. Early last year, there have been three major floods in the district that I represent, all three of these incidents qualify for Federal relief granted by the President, and this flooding event, in January of last year, resulted in historic levels of damage in several communities.

Now, we have a major disaster of the likes of which we haven't seen before down in the gulf, and the national flood insurance is a valuable tool in addressing the losses incurred throughout the country due to these floods. I urge the support of this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 4 minutes to the gentlewoman from Michigan (Mrs. Miller).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I do not have any additional speakers. I want to thank the gentleman from Oregon, and I also want to point out just a few things.

We had the Bunning-Bereuter-Blumenauer provisions in our bill to have FEMA enforce the 2004 that the gentleman from Oregon had mentioned was in there, also increased insurance coverage. We had raising the penalties on lenders who do not enforce the regs. So there were a lot of the reforms that we had in there.

I am going to tell you today, we have a commitment, of course, and I know the gentleman from Oregon understands that and we all do here today, we have a commitment to these people that paid in and we need to pay back to these people because they paid their money; but we need to have the reforms.

The other thing is if anybody stands here today and says this is going to last us, we will be okay until August, I want to tell you we will not be okay until August. This will not take us through to August. I predict to you today FEMA can say what it wants, it can communicate what it wants. This will not last maybe 2 months or more. I predict we will be back. We have to do the reforms. I personally commit to work with you on it.

I yield to the gentleman from Massachusetts.

Reclaiming my time, I predict we will be back here within 60 days, 60 or 90 days, I will bet that we will be back here, so we will have to work towards the reforms. Also, our subcommittee was the first committee of the House to go down to New Orleans and to Gulfport, Mississippi. We went down with our ranking member, the gentlewoman from California (Ms. Waters). Some Democrats and Republicans on the staff went down there and they did a fine job. They saw what we saw. This is going to be a long, long process.

I will tell you we will be back here within 90 days again because they can say it will last, but it will not last.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I would like to insert the following letter into the Record of the debate on S. 2275, National Flood Insurance Program Enhanced Borrowing Authority.

Washington, DC,

February 14, 2006.

Hon. Dennis Hastert,

Speaker of the House, The Capitol, Washington, DC.

Hon. John Boehner,

Majority Leader, The Capitol, Washington, DC.

Dear Speaker Hastert and Majority Leader Boehner: As you

know, the President's Fiscal Year 2007 budget requests a $5.6

billion increase in FEMA's borrowing authority because its

flood insurance program, the National Flood Insurance Program

(NFIP), is unable to cover current claims against it from the

unprecedented losses resulting from Hurricane Katrina.

Since 1968, the NFIP has offered property owners in coastal

and river areas federally subsidized flood insurance. It

currently insures approximately 4.7 million homeowners,

renters and other policyholders, who pay premiums for

coverage. Total insured assets are above $800 billion with

some 20,100 communities participating. In heavy loss years,

when losses exceed its premiums, FEMA is authorized to borrow

from the U.S. Treasury up to $1.5 billion. This borrowing has

historically been repaid with interest within very short time

periods from NFIP premiums and fees.

However, the catastrophic damage and losses resulting from

the 2005 Gulf Coast hurricanes is far exceeding the available

resources in the National Flood Insurance Fund. Consequently,

Congress last year eventually raised FEMA's borrowing

authority to $18.5 billion. But despite this, flood damage

claims from the 2005 hurricanes are now estimated to be in

excess of $20 billion and growing, surpassing all combined

payments in the program's history. This will again

necessitate Congress raising the limit on FEMA's borrowing

authority to pay these claims. And, if additional flooding

occurs in 2006, these costs will only grow higher.

Unfortunately, this new borrowing will likely never be

repaid by the beneficiaries. According to CBO, it ``is highly

unlikely that the program will be able to repay that amount

of borrowing out of its income from premiums and fees.'' It

is estimated that the interest expenses alone from these

loans would consume a large portion of the program's annual

revenues for the foreseeable future. It would take decades to

repay these costs, assuming no other flooding--undoubtedly,

these payouts will be forgiven at some point.

Lacking this ability to repay within a reasonable period,

we view deficit-financed spending from any additional FEMA

borrowing above its current $18.5 billion level to be

essentially identical to those of a conventional federal

spending program. Therefore, spending flowing from additional

federal borrowing authority should be fully paid for by

spending reductions elsewhere in the federal budget.

In addition, any long-term extension must include

comprehensive structural reforms to the program. The

hurricanes of 2004 and 2005 have made it clear that

legislative action is urgently needed to make the NFIP

actuarially sound and able to build sufficient cash reserves

to cover higher than expected losses. For instance,

comprehensive reform would better align premium rates with

the policyholder's associated risk while reducing direct

subsidies of over $1.3 billion annually, starting with the

elimination of all subsidies for vacation homes, and address

the repetitive loss problem, where subsidies flow to homes to

be rebuilt over and over after multiple flood losses, while

ensuring proper flood mitigation measures and mapping are in

place, enforced and used to reduce losses from future floods.

We believe these and other reforms are critical to reducing

the taxpayers' risk exposure while strengthening and

improving the flood insurance program.

This week, Congress is scheduled to extend FEMA's borrowing

authority through April. While this spending should be

offset, we appreciate your work with House conservatives to

ensure this a short-term extension that will allow

substantial time for a vigorous and comprehensive reform of

the flood insurance program over the coming months. If this

imperative reform effort falters, we will oppose any future

increases to FEMA's borrowing authority that are not fully

offset.

We look forward to working with you and committee

leadership to ensure that this component of federal

assistance is both timely and fiscally responsible, and that

any package of reforms continues to meet core federal

responsibilities.

Sincerely,

Mike Pence,

Member of Congress.

Jeb Hensarling,

Member of Congress.

Mr. Speaker, I appreciate the gentleman's courtesy in permitting me to speak on this measure and I appreciate the leadership that has been exhibited by Mr. Frank of Massachusetts, Mr. Oxley, and Mr. Ney. The Committee on Financial Services is trying to get this right. It provides a back drop as the story of Katrina continues to unfold.

Our Republican colleagues are going to put together a critique that is somewhat hard hitting. But the real failure is not just limited to the administration's response and problems with FEMA. The real failure is a much greater policy failure.

Over a long period of time, a variety of circumstances have put people at risk. The tragedy is that we are not better equipped today. There will be another catastrophic natural disaster before we have actually finished the job with Katrina. God forbid that there be a terrorist act on top of it.

Now, this bill provides an opportunity for a simple mid-course correction that would be a longer-term reform of the flood insurance program. As Mr. Frank of Massachusetts mentioned, I have been working on this for the last 6 years officially with some limited success. I understand some of the difficulties and the reluctance, I am pleased that we are making some progress, but it is long past time to be timid. We know what to do. We face a disaster zone from the California coast to the tip of Florida. Drought, flames, storms, a whole mixture of issues are what we are going to be facing. We should be having something on the floor soon like the bill offered by our colleague from Louisiana, Mr. Baker. And for heaven's sake, we need to be trying to look in a comprehensive form to be sure that we do not end up making the same sort of mistakes.

Today we are going to vote on increasing the borrowing authority. It is appropriate. I will vote for it. There is no way that we can have the rate payers absorb these catastrophic events. But I am extremely disappointed that somehow the bill we have before us does not have the measures to include more people to participate in the program, spread the financial risk, make people safer, and make participation mandatory.

In the hearings that took place in the other body this month, there was near unanimous support from groups as wide ranging as the National Taxpayers Union, the Association of Floodplain Managers, the National Wildlife Federation, the Consumer Federation, on and on. They know that we want to reduce or eliminate subsidies for people living in the most hazardous areas and for second homes.

We need to expand the mandatory purchase requirements for people who live behind levees and experience residual risk. We need to fully support FEMA's efforts to update flood plain maps and include areas beyond the hundred-year flood plain.

We finally have implemented the reforms made in the Flood Insurance Act of 2004. I appreciate the hard work that the Financial Services Committee did in putting the spotlight on FEMA and working with our friends in other committees. But we need now for FEMA to promulgate the regulations to implement it, otherwise the reform is meaningless.

We cannot overstate the importance of mitigation. FEMA and the Multi- hazard Mitigation Council just released a report on the benefits of mitigation, which found that for every dollar spent, our government saves an average of $4. The insane system we have here now, however, is that mitigation costs Mr. Obey and costs Mr. Lewis of California hard dollars. If it is in a supplemental, billions of dollars come in and they are off budget and that is easier. We have got to change that as well.

We do ourselves no favors by lowering our sights, tempering our expectations, and failing to do what we know how to do in the best interests of the taxpayer and the people who are in harm's way. Delay will simply mean more lives lost, more property damage. It will cost the taxpayer more money, not under the limits that the Appropriations Committee operates under; but it will be taxpayer money nonetheless.

We continue the cycle of responding after the fact to disasters instead of doing everything beforehand to fulfill our obligations and to act in the best interests of our constituents everywhere.

I echo the words of Mr. Frank of Massachusetts: I hope this is the last time we have legislation of this nature before us. I appreciate the subcommittee's hard work, and I for one will support it today; but I add my voice as someone who will fight like the devil one more suboptimal effort.

I appreciate the gentleman yielding.

Mr. Speaker, today this Congress is being asked to raise the amount of money that the FEMA flood insurance program is allowed to borrow from $18.5 billion to $21.2 billion.

Now, obviously, we all understand that the disaster of Katrina was unprecedented in the history of our Nation. And our Nation responded by appropriating unprecedented funds to deal with this catastrophe. But at some point enough is enough, and today I rise to express my concerns about the fairness of this program.

I have a very difficult time allocating any additional funds to the FEMA flood insurance program because of the way that program is treating the people of Michigan. FEMA is currently going about a remapping of communities in my State that will bring thousands more of my constituents and perhaps tens of thousands across the State of Michigan into the flood plain. This will force those with federally guaranteed mortgages to purchase FEMA flood insurance.

Mr. Speaker, let me share a few numbers with you and ask you to determine for yourself whether or not Michigan needs to pay more into this insurance pool.

Since 1978, that was the year Michigan actually opted into the program, the people of Michigan have paid premiums totaling over $138 million; and in that same time, FEMA has paid outside claims totaling less than $38 million. So since 1978, as you can see through this chart, Michigan has subsidized this program to the tune of over $100 million. And the people of FEMA seem to agree.

In fact, there was an article I think last week in the Detroit Free Press which quoted FEMA spokesperson Eugene Kinerney saying this about Michigan's participation in the program. He said, ``You guys subsidize other policies in other parts of the country, absolutely.'' That is what FEMA said. So in what appears to me to be a grab for even more of our money, along comes FEMA saying, even though you have never had a flood, you live in a flood plain and you need to purchase insurance, even though the Great Lakes are at historically low levels; even though my State of Michigan has only had claims totaling 27 percent of what we have paid into the program; even though only eight other States received a lower percentage in their premiums than Michigan.

If a private insurance company tried to do this same thing, they would be hauled in front of our State insurance commissioner and have to beg to keep their license. I refuse to support any more legislation that enables this type of irresponsible management that seems to be the norm in the FEMA flood insurance program. In fact, one of my constituents who is a township supervisor in a township called Clay Township, this is a community on St. Clair River going in to Lake Huron; this is a community that is going to be hit very hard by this remap, I asked him, what do you think about FEMA remapping our area? He said, why would FEMA want to come here and raise the elevations when our water levels are at low levels? Well, they are broke, are they not?

I know this: my district is along the shore of Lake St. Clair, the St. Clair River and Lake Huron. We also have many rivers and tributaries, and they occasionally flood, but not as often as the amount of these claims paid shows.

We also look down at the water, not up like they do in places like New Orleans. We do not need any more of my constituents forced into this program, and we do not need others across the State of Michigan forced into it either.

In Michigan we are struggling economically. We have been hit by an economic hurricane of higher energy costs, low-cost foreign- manufactured goods, and competition from lower-wage States, many of which are recipients of the subsidy that the people of Michigan provide to the FEMA flood program. We have the highest unemployment in the entire Nation, and our citizens can absolutely not afford to continue to pay higher costs for insurance that they do not even use. Yet once again we are being asked to subsidize the insurance payouts to people in other States.

Before we allow this to happen, FEMA must show the methodology behind this program and show how it makes sense. I think this is an issue of basic fairness; and until that time, I will not support any expansion of the program; and I urge my colleagues to do the same.