Red County, California

This piece of legislation was spawned by Hurricane Katrina and given a boost by Hurricane Rita. It mainly creates a new federal bureau to purchase flood-ruined properties from their flood-insurance-free owners, package the properties, and resell the properties to developers.

Presumably, the idea is to get some value out of the ruined property to the owners while not impoverishing taxpayers nor unduly enriching the developers. This sort of middle-man dance is always risky, if your aim is to lose as little of somebody else’s money (i.e., the taxpayers’) as possible. Usually it devolves into a name-calling brawl, with the original owners claiming they were short-changed, the developers accused of rapaciousness, and the taxpayers unhappily footing an “unforeseen” balloon payment.

Beyond the humanitarian ideal, this legislation is of interest to residents of Red County for two reasons: earthquakes and floods. Most people know of the earthquake danger, and most people don’t have earthquake insurance for the reasons my own family doesn’t: the deductible is so high, the insurance is worthless. Most people don’t realize the flooding danger though, since the sun shines so much around here.

Every so often, though, we have a “hundred-year storm” that tests the levees built by the U.S. Army Corps of Engineers on the Santa Ana River. FEMA has floodplain maps. Your insurance is affected by FEMA’s maps whether you know about them or not, because your insurance company most definitely knows about them.

Given the history of the levee failures in New Orleans, some enterprising person might think about checking the Santa Ana levees before our next hundred-year storm, or we might find big chunks of Garden Grove in Newport Beach.

Back in Washington, D.C.: after an inital rush, H.R. 4100 now seems stalled. The White House is signalling a weakening in its initial support. So the financial industry may face a huge number of mortgage defaults in the Gulf Coast area, as people simply walk away from their mortgages. Then the financial industry may find itself acting willy-nilly as an ad hoc Louisiana recovery corporation.