In this second installment regarding the lengthy hearing by the Senate Banking Committee's Subcommittee on Economic Policy, chaired by the Sen. Jeff Merkley, D-Ore., senators challenged the Administrator of the Federal Emergency Management Agency (FEMA), William Craig Fugate, directly over the manner in which the agency is implementing reforms of the National Flood Insurance Program (NFIP) under the Biggert-Waters Flood Insurance Act of 2012.
The feisty Fugate insisted that there is nothing he can do under the Act to delay the sudden imposition today of onerous, unaffordable premiums on hundreds of thousands of property and small business owners throughout the country, without further action by Congress.
Fugate has served in this capacity since 2009, and senators were profuse in their praise of his work in response to the severe storms that have afflicted the country during his tenure.
However, once the pleasantries were dispensed with, they leveled harsh criticism on FEMA and the administration for proceeding to implement the Act without laying the necessary groundwork required under the same legislation.
As I wrote in yesterday's column
, the tone of the complaints sounded remarkably similar to the impassioned protests by Republicans against the imposition of Obamacare upon reluctant and even resistant states, companies and individuals.
In his prepared statement, Fugate recited the history of the flood insurance program going back to the 1940s, leading to the adoption of flood mapping as the means to establishing appropriate premiums based on the degree of risk, so that communities and property owners would have incentives to mitigate risk by elevating their properties and not building in flood zones. Last year's legislation provided for the elimination of the most egregious subsidies — for vacation homes and for properties that have experienced repeated flooding.
Fugate told the senators bluntly, "I've found little leeway to address the affordability issue under the current provisions of the law as enacted." However, he agreed that the issue of affordability needs to be considered to determine "how we can mitigate risk and not grow our risk while not putting people out of their homes because flood insurance is prohibitively expensive."
Chairman Merkley began the questioning by asking why FEMA is going ahead with implementing the reforms without having completed the affordability study mandated by the Act, which was to have been delivered last April. Fugate responded that FEMA consulted the National Academy of Sciences and was told it could not do the study with the funds provided within the allotted time, and it would take a couple more years.
Sen. David Vitter, R-La., then posed his questions to Fugate. First, "Is FEMA willing to delay implementing the Act for at least a year? The answer I've heard is no. There was supposed to have been an affordability study by April 6. Isn't it ironic that you can delay the study but not the implementation that was to be based on it?"
Fugate responded, "I don't see in the legislation any way to do it; I need help."
Vitter then asked when FEMA would make changes or offer administrative proposals to address the issue of affordability.
Fugate replied that he could not answer the question without the benefit of the study, and in response to Vitter's follow up question, he confirmed that this will be "no time soon."
When the turn of Sen. Mary Landrieu, D-La., came, she picked up where Vitter left off, charging, "This statute was passed without the data to use either compassion or common sense, and it affects millions of homeowners and businesses, banks, real estate companies. It must be delayed, fixed or modified."
She insisted, "There's got to be an overriding constitutional principle that you can't implement a law if you can't implement it." (Many readers would no doubt think that these principles must also apply to Obamacare, which coincidentally also takes effect on Oct. 1 and has engendered widespread protest and resistance in many states.)
Sen. Chuck Schumer, D-N.Y., a member of the Senate Democratic Leadership, accused FEMA of mixing up the flood maps for two counties in the New York City area and taking years to straighten this out, and, showing a latent libertarian streak, he sought to impress Fugate with the prospect that vast numbers of policyholders would simply withdraw from the program and exacerbate its insolvency.
But Fugate was ready. He reminded Schumer that it isn't easy for policyholders to withdraw, because mortgage companies are empowered to impose force-placed insurance and bill property owners for it, as long as the mortgage is federally guaranteed, which almost all would be in middle-class neighborhoods.
Sen. Robert Menendez, D-N.J., recalled that when the Act was under consideration, he offered an amendment to take affordability into account, but the affordability study was adopted instead. He worked his way into a virtual tantrum as he decried the consequences of the Act for property holders who have built up equity over many years or decades that would be put at risk by what he called a "man-made disaster."
Menendez admonished the other senators that he would put them to the test by sponsoring another affordability amendment and requiring them to vote. He demanded that FEMA provide the needed language, and Fugate responded that his office would provide technical assistance to any senators who need it.
Vitter shot back, "What we're asking for isn't drafting assistance, but leadership in fixing this issue."
Thus, the opportunity presents itself, front and center, with Menendez needing votes and the Senate Leadership's interest implicated, for Vitter to work with senior Republicans to put together an offer of support for a delay in implementation of the flood insurance reforms until the needed studies and data are provided, in return for analogous delays for Obamacare.
Anyone viewing this hearing, which readers can do by following the link below, is bound to be struck by the irony that Democrats who have zealously foisted Obamacare on the nation are berating their own administration with equal passion over the looming flood insurance reforms.
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