The Flooding Didn't Destroy Enough Houses

EN ROUTE TO NEW ORLEANS--Along with other New Orleanians, I've been amazed at the lack of alacrity with which both Republicans and Democrats have approached the problem of a federally caused flood that destroyed or damaged hundreds of thousands of homes, wrecking whole neighborhoods and communities, and spinning half a city's population into involuntary, semi-permanent exile. Now the answer becomes clear: the post-Katrina flooding just didn't destroy enough houses.

Latest estimate, in today's Times-Picayune, 105,000 residential buildings severely damaged in the City of New Orleans alone, a $14 billion loss. Apparently, judging by the turtle-like response, just not enough.

This becomes clear when you consider the heart-pounding race to come up with a plan to cushion the "legions of" subprime borrowers from the consequences of their gullibility, as their low "teaser " interest rates expire (note: they're called teaser rates for a reason).

"Legions," in NYT-speak, may mean millions, but, more importantly, these folks probably live in more than one state. So nationally prominent Democrats, like Hillary Clinton and Barney Frank (Congressman, have you yet been to post-K New Orleans ?) are falling all over themselves to "rescue" people who just couldn't bother to read fine print, who just chose to believe TV commercials about their incredible luck in qualifying for home loans, despite, in many cases, lack of income, jobs or assets (those loans even have an industry codeword--NINJA). For them, home loans became less a subject of sober and prudent financial judgment than an adjunct to Powerball.

According to today's NYT, the "big wave of defaults" "would be crashing during the primary and general election campaigns next year". So, New Orleans, if you want real help, please schedule your next failure of the federal levees during an even-numbered year.

Comments

[mimsnpips]

I wish Mr. Shearer was more expansive in his coverage of NO. Even dedicating this column only to the 2 year anniversary of Katrina. Linking it to other big and important stories is fine, clever, yet detracts from the rotting homes not yet rebuilt.

[raker]

I seems that New Orleans is serving a perverse purpose just as it is, abandoned and ignored, as a backdrop for politicians, newsmen and talk show hosts to demonstrate how much they really, really care, as though New Orleans's problems were insurmountable, unsolvable.

[Noelle]

I am curious... Can Louisiana boot out the American Oil Companies from their waters in the gulf and bring in foreign companies or sell the oil to other countries for an actual profit that they get screwed out of now?

Seems to me with oil on their land and in their water they SHOULD be one of the wealthiest states in the US.

This is where I blame the local and state government. New Orleans is one of the most important port cities in the world and has oil. I think they should start playing a little hardball with the Federal Government and demand their fair share of oil revenue.

[apogee2perogee]

Louisiana has a severance tax on oil at rates varying from 3.125% to 12.5% Louisiana has a severance tax on gas that varies from $0.013 per MCF to $0.269 per MCF. I would suspect they can not charge this for production in US waters, but don't know for sure. According to NPR, Louisiana reportedly received $40 million from 2006 offshore production. Blanco was seeking a bigger share for Louisiana last year.

http://www.npr.org/templates/story/story.php?storyId=5205346

[apogee2perogee]

http://dnr.louisiana.gov/sec/execdiv/techasmt/policy/oilandgas/Testimony_PortFourchon_20050813.pdf


This is a scholarly 2005 piece from the Louisiana DNR about O&G production in the state and offshore. This piece makes it clear that Louisiana deserves a dominant share of the Federal taxes from offshore production because Louisiana's offshore waters produce the lion's share of such production. Based on 2004 data, Louisiana produced 91% of all oil produced from the Outer Continental Shelf, US waters, 3 miles or more from shore. 75% of natural gas with the same qualifiers.

Also, in the 90's Louisiana tried to create a tax on O&G processing and pipeline to capture revenue from those offshore producing areas. It is the act of bringing that production ashore and logistical supply that has carved up the barrier wetlands.

Also, Blanco's stated purpose for seeking a bigger share of the Federal billions in taxes received from offshore production is to spend that money repairing the wetlands and infrastructure.

Finally, the Federal government taxed the oil companies $5 Billion dollars in 2006 for production from offshore Louisiana only! But how much does Louisiana receive? $40 million, or less than 1 percent.

[mcostello]

Subprime loans put buyers in position to buy out of their pricerange.
It is often a thought out position betting on the market rising 10% for 2-3 years, and then the buyer gets a better loan.
Been going on with no problem for years.
Now the market is dropping, and these loans are going south.
Anyone in the industy would predict this even 6 months ago; market goes down, these loans mostly default.
Nothing preditory about that.

[mcostello]

I am ashamed of the government's response to Katrina, but yet, it needs to be said to Mr. Shearrer;
This was not a Federally caused disaster, the Feds kept NOLA dry for most of the last century, and who besides those residents benefitted?;
Oil companies?, Inport/export companies?, ect,ect,
Was it in the country's best interest to spend that much money to keep that port open?

[whirly]

While I understand that sub prime lenders preyed on the people who were most likely to bring them the most income, I just cannot agree with anyone who says "How many of us really read rental agreements or the fine print?". Personally, I try to read it every time. Yes, it makes me a nerd, but if I rent a car or buy a home, it is with the understanding that I have certain responsibilities so I should make myself aware of what they are so I don't get screwed out of my money. Also, when you are buying a house, you are asking to borrow a HUGE amount of money. Why does it not worry you enough to read the fine print or ask questions, or read books to educate yourself on the topic? When we bought our house, we bought a book and learned about mortgages and contracts and the language of real estate. It didn't take much time and what I found out from that experience is that I was a hell of a lot smarter than my agent. Hence when a lot of money is involved, there are all sorts of people trying to take advantage of you. The federal government and the insurance companies have screwed the people of NO, and on a small scale all I can do is sympathize, but beyond that, if you walk through life expecting for anyone to look after your interests beyond your immediate family you are a fool. So start reading the fine print and asking questions about your money and your future. Educate yourself before making a big purchase because who knows when the next disaster will hit, and if you are a victim, ask yourself how will I survive?

[marysandra]

My daughter's inlaws live in Gulfport area, things not much better there either.
Why do I have this sneaky feeling that somewhere, someone, is waiting for these displaced folks to give up, and suddenly high end townhouses will start arising out of the mess? Maybe I've lived in south Florida too long.
Thanks for keeping this in front of people.
m.s.

[oogabooga]

How come a little teeny country like Holland can come up with an ingenious, elaborate system of levies to control floods, and the "greatest nation on earth," the USA, cannot?

[ghostsofamerica]

I placed a poem I wrote about Bush and Hurricaine Katrina during 2005 on my profile page.

(Huffpo has a blogger contest for those who get the most "fans". I would like to have a blog article for a month to share with other poets, and prose writers on huffpo. Creative works often express the heart of the matter, not just the head.)

[GJKBEAR]

ghostsofamerica
I read your poem. It was chilling and it was real. Keep writing.
I worked for awhile at a 501(c)3 - a small non-profit that helped people in certain city council districts get money to repair their homes and also did new home construction. The one thing that I am the most proud of is the fact that we actually did credit counseling and that we would not loan people money if we knew that they would not be able to pay it back. We would work with these people to help them pay off their debts and to insure that they would know how to handle money.
We saw it all. Elderly people taken advantage of by fly by night contractors. People who mainly had massive medical bills and we had people who we helped who later re-financed to some of these "people" who promised that they could re-finance, lower their mortgage and have lots of money left over for other things. They did so, and lost the home that we had fixed.
Do not tell me about personal responsibility. Many of these people did not even have a bank account when we first got them as clients. Many of them owned their home outright - but they were poor, they were uneducated and they did were in the habit of believing what people told them. There was one couple who owned their home outright and in the guise of "helping them" a company let their home be sold out from under them on the courthouse steps, bought it and they now pay rent to him.
WE should not be paying any bail out money to these slimy toads! They will just move on to the next deal anyway. The real victims are those who have lost their homes - who will help them?

[chrisfletcher]

For a great Katrina song go to:
www.myspace.com/thesubwaysun
and listen to the New York band, The Subway Sun perform, "Katrina and the Man."

[gvincent]

It destroyed too many houses. Look at how enthralled we are with the story of the 6 miners in Utah. Then, compare that to how the public responded to the 100+ miners trapped in China. Those dead in the Peru earthquake. The Genocide in Darfur. If it had been one house, we would have done something.

http://www.crookedinc.com

[kaplan88]

Years ago I worked for subprime lender in the auto industry. My job was to verify the employment/income information provided by people looking for a loan. There were times something seemed a little fishy but dealerships and or coworkers would "grease the wheels" to get deals through. I asked some reps at our company about giving loans to people with no previous history of being financially aware and was told that we are not responsible for decisions other people make. I worked for this company for about 8 months before I found another job.

I agree with previous posters re: personal reponsiblity but I think that argument goes both ways. Yes people should read the fineprint and ask questions when they do anything with regards to money but isn't there also a responsibilty by the people giving these loans to say ... look I really don't think you should do this?

I went to buy some jeans last year and spent some time with the salesperson trying to find some that I liked. When I decided on some 501s she said to me "if you wait till saturday they will be 25% off". In providing me with that little bit of information she saved me some bucks and lost out on a commission but I appreciated what she did.

I understand about making money and as someone previously posted there is nothing wrong with enjoying the success that hard work brings but what lengths are we willing to go to "make a profit"?

I know my post seems off topic but i think the issues raised about what happened to NO before/after Katrina and how the federal government has modified legislation to the detriment of ordinary citizens speaks to an erosion of a simple principle of "looking out for the other guy."

[NoMoFearNoMoHate]

Not off-topic at all - I'm feelin' you.

But, it can't be legislated - it has got to start with each of us. At home, in our neighborhoods. Our communities. In our towns and our cities. Let's get back to treating each other as countrymen should. Let no one divide us for any reason. And once we have embraced each other as countrymen and women then we turn to the world and embrace each and every person as a cousin in humanity. There will be difficulties but the truth of our unity will overcome those who propose to persecute any segment of our humanity.

[lokywoky]

Your sentiments are beautiful and they work well for individuals, but as we all know "corporations" are not people and they do not respond to love, caring and compassion. They exist for one reason only, profit. So there is and must be a place for the government to make sure that the playing field is level - a corporation has all the power and the individual very little. Governmental regulation is not "evil", nor is it detrimental to the "free market" since the market is not free in any true sense of the word. The "regulations" that exist now protect corporations rather than individuals - the only difference between the "regulations" we have now and the ones we used to have is who benefits from them.

We also need to remember that the "government" is us - become informed, and VOTE. And don't vote for who the media tells you is the person "most likely" to win - vote for the person who best exemplifies the values and ideas you believe in. If everyone actually did that - we could turn the politics in this country on its head and really make our country great again.

[Beatitudes]

When the victims become the cause of the problem; that is exactly what is happening. The victims of the massive neglect of one of America's great cities are becoming the fall guys. I am sick to death of the news implicating the citizens of New Orleans as poor, uneducated, and they just don't understand how the "system" works. Well, neither did the politicians who are now spewing platitudes like the vomit from exorcised satans. The news reports today highlight the problem, tell stories of individual and group endurance to rebuild despite government inaction, but still, still there is that underlying sense that there may be nothing they can do. Oh, lord help us as we help ourselves. But...we will endure, we will survive (a la Faulkner)
Lyn LeJeune - The Beatitudes Network - Rebuilding the public Libraries of New Orleans at www.beatitudesinneworleans.blogspot.com

[NotMyPrez]

politicians spew platitudes- that's their job- it's our job to make sure they stay on track, because so far their track record on this issue sucks- it's ADHD at it's absolute worse...

when it boils down to it, neighbors will help neighbors long after the pols get back in their RV's and head back to Wash. DC- in any neighborhood- from Des Plaines ( not "Dez PLaines", as I actually heard a reporter say on TV. ) to NOLA to Minnesota.

GOA needs a watchdog group, or they are severely overwhelmed.
This sitrep has become a sitcom that is a repeat of a repeat....

[NotMyPrez]

Let's not blame the victims, let's not blame the lenders- let's blame those who were asleep at their posts- how many times has it been post-tragedy where they find that it could have been averted if people practiced due diligence. Instead, our friends and neighbors are running around in the Iraqi desert when they could be swingin' hammers....or how about the truckloads of ice that were driven through bureacratic hoops until said ice became unusable and was later dumped.
George Bush doesn't really care, still after 2 years. Ironic for a man who is mostly concerned with how history will portray him. He would rather throw our money into the cess pit of Iraq where warring factions can get guns and ammo easier than they can get food and water.

[ndifference]

You'd like to think that in America we can take care of NOLA and imperiled sub-primers at the same time. Where the hell is all our money going, anyway? Oh yeah...that's right. Iraq.