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THE FEDERAL ROLE IN FACILITATING RECOVERY

AND LONG-TERM REBUILDING EFFORTS

IN THE GULF COAST REGION

HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 9, 2006

Printed for the use of the Committee on Financial Services

Serial No. 109–76

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice Chairman 

RICHARD H. BAKER, Louisiana 

WALTER B. JONES, JR., North Carolina 

CHRISTOPHER SHAYS, Connecticut 

PATRICK J. TIBERI, Ohio 

GINNY BROWN-WAITE, Florida 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

STEVAN, PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

CAMPBELL, JOHN, California 

MICHAEL G. OXLEY, Ohio 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

BARBARA LEE, California 

MICHAEL E. CAPUANO, Massachusetts 

BERNARD SANDERS, Vermont 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

March 9, 2006 ................................................................................................... 1

Appendix: 

March 9, 2006 ................................................................................................... 41

WITNESSES 

THURSDAY, MARCH 9, 2006

Powell, Donald E., Federal Coordinator, Office for Gulf Coast Rebuilding ........ 13

APPENDIX 

Prepared statements: 

Oxley, Hon. Michael G. .................................................................................... 42

Ney, Hon. Robert .............................................................................................. 44

Waters, Hon. Maxine ........................................................................................ 46

Carson, Hon. Julia ............................................................................................ 48

Powell, Donald E. ............................................................................................. 49

(1)

THE FEDERAL ROLE IN FACILITATING 

RECOVERY AND LONG-TERM REBUILDING 

EFFORTS IN THE GULF COAST REGION 

Thursday, March 9, 2006

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:00 a.m., in room 

2128 Rayburn House Office Building, Hon. Robert W. Ney [chairman of the subcommittee] presiding. 

Present: Representatives Ney, Baker, Pearce, Neugebauer, Waters, Carson, Lee, Scott, Cleaver, and Green. 

Also present: Representatives Oxley, Hensarling, Barrett, Campbell, Frank, Watt, Barrett, and McCarthy. 

Chairman NEY. This morning we are going to hear from Donald 

Powell for the Gulf Coast rebuilding. Welcome, Mr. Powell, to discuss the Federal role in facilitating recovery and long-term rebuilding efforts in the Gulf Coast region in the aftermath of Hurricanes 

Katrina and Rita. 

Today’s hearing will focus on the challenges and opportunities of 

both the intermediate recovery and long-term renewal plans for 

Texas, Louisiana, and Mississippi. I am most interested in learning 

about the Federal role in helping State and local governments establish and implement their plans for a rebuilding process. 

Events surrounding the late August and early September hurricanes in Louisiana, Mississippi, and Texas have certainly captured 

the attention of the American people, including this committee. The 

Housing Subcommittee and the Financial Services Committee have 

been at the forefront of hurricane relief efforts with numerous 

hearings and multiple briefings. We have had approximately 80 

witnesses participating. That is between the Full Committee and 

the subcommittee. In mid-January, the Housing Subcommittee held 

the first post-hurricane Congressional hearings in Louisiana and 

Mississippi. So we were the first committee to actually go down 

there. And we reviewed the housing issues that the Federal Government will need to consider over the next few years. And I want 

to thank Chairman Oxley for supporting that subcommittee hearing and Congressman Barney Frank from Massachusetts and our 

Ranking Member Maxine Waters, and the members who participated in it. It was about 5 or 6 hours. People paid complete attenVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
2

tion and our members were very diligent in listening to the people 

from all backgrounds down in Louisiana and Mississippi. 

In addition, this committee, the Full Committee and subcommittee, has shepherded needed relief legislation to the House 

Floor in the months following the disaster that will affect not only 

families in the immediate hurricane-ravished areas but those families who are forced to suffer the aftermath due to flooding. 

Now, clearly, there are a lot of challenges, as you well know, Mr. 

Powell, and I am sure you will expound on it today, there are challenges ahead. And there are still many that are without permanent 

housing, jobs, and infrastructure. How best to go about the reconstruction of the region and the potential problems facing the mortgage and financial services industry are all issues that have to be 

continued to be addressed. 

I look forward to working with our chairman, who is here today, 

Mike Oxley, and the ranking member, Mr. Frank, Congressman 

Richard Baker, the chairman of the Capital Markets Subcommittee, and our ranking member, of course, Maxine Waters. I 

want to thank her for all that she has done. And the staff on both 

sides of the aisle, working together to do what is good and best in 

the interest of the citizens who have been so ravished and affected 

down in the Gulf area. 

So it is my hope today that the hearing will give Congress a 

unique perspective of how the Administration plans to move forward, what the current needs are, and what regulatory or legislative solutions may be necessary in the immediate future. Today’s 

hearing is an important step in the recovery process, and I look forward to vigorous debate and discussion. 

I would also ask the indulgence of members; I am going to have 

to stick strictly to the 5-minute clock. I think we will give Mr. Powell a little bit more time, he might have some more to say, but we 

have to hold to that 5 minutes. I will just tap the gavel because 

I am afraid we will run out of time and members won’t get a 

chance to ask a round of questions, so I am going to be pretty strict 

with the 5 minutes. 

With that, I want to thank our ranking member again, and yield 

to the gentlelady from California. 

Ms. WATERS. Thank you very much, Mr. Chairman, for holding 

this hearing. I have a statement. Let me just start with this, good 

morning, Mr. Powell. We are delighted that you are here. I am sure 

that you can be helpful to us in shining the light on some activities 

that we are confused about or don’t know about. And hopefully you 

will help us to understand what is being done in the long run to 

rebuild the Gulf Coast region and to assist the victims. 

Indeed, the backdrop of today’s hearing is not a pretty one. As 

of late February, there were still 1,997 persons missing in the Gulf 

Coast region. And to think that nearly 1.2 million people were displaced is simply mind-boggling. Although there are fewer persons 

displaced today than there were immediately following the hurricanes, this number is larger than the populations of many American cities, about 770,000. 

Money is still a major issue, particularly since the total estimate 

of the cost of the damage from the hurricanes is now approaching 

$100 billion. Housing, personal, business, and government property 

3

represent losses of every imaginable kind. Everything and everybody has been permanently affected by the events of August 2005. 

But the statistics do not bear witness to the magnitude of the 

human tragedy that has unfolded in the region. Some of our elderly 

citizens are living without medication, and people looking for housing, when they can find it, are in many cases the victims of discrimination. Members of the Financial Services Committee, as well 

as this Subcommittee on Housing and Community Opportunity, 

continue to hear reports about housing advertisements on the 

Internet that are blatantly racist and discriminatory—Internet advertisements that deny the disabled, families with children, African-Americans, and Hispanics equal opportunity to find decent, 

safe, and affordable housing. And, unfortunately, the FEMA deadline for providing assistance for persons living in hotels is about to 

expire on March 15, 2006. We are wondering what these people are 

going to do, particularly if one considers the number of persons and 

families already evicted from hotels under the FEMA program. At 

one time, there were some 26,000 persons living in hotels. Today, 

the number is one-third of that amount. Where many of these individuals and families have gone is debatable, but your guess is as 

good as mine. We just do not know. No one is tracking the displaced. No one is tracking the homeless. Homelessness is sure to 

be one of the major consequences of this tragedy. Trailers were 

supposed to be a major resource to assist victims during this period. Of course, FEMA estimates that there are more than 80,000 

in place as of February 22, 2006, but trailers do not represent a 

long-term solution to the housing crisis facing the victims, particularly when we are supposed to be focusing on rebuilding the Gulf 

Coast region. 

Now let me say this about the trailers. While we have this number over in Louisiana, in New Orleans, we were told that there 

would be about 80,000 in that area alone; there are only about 

42,000. We understand that the numbers are closer to 30,000 to 

40,000 on the Mississippi side. But still it looks as if half of the 

people who need trailers, and were promised trailers, don’t have 

them as of today’s date. 

We all realize that schools are the glue that holds American communities together. But guess what? Schools, particularly the public 

ones, have all but disappeared in New Orleans. Only three public 

schools and eight charter schools have reopened of the 120 schools 

that operated before Hurricanes Katrina and Rita. Katrina and 

Rita remain a major test for this subcommittee, as well as for the 

House, itself. Today, the Subcommittee on Housing and Community Opportunity will examine a number of critical issues related 

to Katrina and Rita. I believe that this hearing represents another 

opportunity for us to give hope to people who cannot help themselves. The hurricanes were enough for any human to bear. Our obligation to the victims is to understand the long-term effects of the 

hurricanes and to develop the appropriate response to rebuild the 

region. People are unemployed, people are displaced, but most of all 

people are hurting. These are Americans in this region; we owe 

them our best. Therefore, our immediate response should be to continue to provide resources for those unintended victims of Katrina 

and Rita, while we begin to design a comprehensive, measured reVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
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sponse that could restore some semblance of balance to these shattered lives for the future. 

Mr. Chairman, I realize you were with the President yesterday, 

and you toured in the New Orleans area. You were down in the 9th 

Ward, and I am a little bit baffled about the stories that are coming out that the President was blaming Congress for not appropriating money to restore the levees. I am a little bit surprised at 

the fact that the clean up of the debris is being described as being 

‘‘well along,’’ when as a matter of fact, what I think you described 

was the clean up of public debris, and that those houses that have 

collapsed are still untouched in most of the 9th Ward. So, I am a 

little bit worried that on this 10th visit by the President of the 

United States, we are seeing some effort to blame somebody else, 

and I want you to explain that to us. And with that, Mr. Chairman, 

I thank you for your generosity, and I yield back the balance of my 

time. 

Chairman NEY. Thank you, Ranking Member Waters. The gentleman from Ohio, Chairman Oxley. 

The CHAIRMAN. Thank you, Mr. Chairman, and I want to just 

make my remarks part of the record and ask unanimous consent 

to do so, but I just wanted to welcome our distinguished witness 

today; all of us remember of course Chairman Powell from FDIC 

days. It has been great to work with you, and you have been handed an enormous responsibility, but clearly the President has a 

great deal of faith in your leadership, and we all do as well. Welcome to you. 

And also to Chairman Ney, I have not had a chance publicly to 

thank him for his leadership, particularly for the hearings down in 

the Gulf that, I think, opened a lot of eyes for the members. Also, 

the recent trip that the Speaker and our leadership, both Democrat 

and Republican, took last weekend down to the Gulf, I think, really 

did bring home to a large degree the problems that we face. But 

the good news is, we have able people, such as Chairman Powell, 

leading that effort. And I just wanted to add my congratulations 

and my pledge for the committee, the entire committee, to work 

closely with you to solve this enormous problem. And I yield back. 

Chairman NEY. The gentleman from Massachusetts, Mr. Frank. 

Mr. FRANK. Thank you, Mr. Chairman. I share the Full Committee chairman’s high regard for Mr. Powell and appreciated the 

work we were able to do together within the FDIC so what I am 

about to say will not be aimed at him personally. But I am embarrassed by the response of the Federal Government, of which I am 

a part, to the terrible tragedy that has befallen the people of the 

Gulf region, New Orleans in particular, but the surrounding areas 

as well. Our response has not come close to being the response that 

a great and wealthy and powerful and compassionate Nation ought 

to be offering to some of its citizens, who through no fault of their 

own, find themselves months after this tragedy in distressed circumstances. 

There are many, many aspects of this that are troubling. There 

were problems obviously with the initial response, but I could have 

said, okay, this is a problem, this is a crisis, you don’t have always 

the capacity in literally the eye of the storm to respond, but there 

is no justification for the slow and inadequate pace of efforts to reVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
5

spond to date and in particular the absence of critical plans for the 

future. 

Now, I saw the President criticizing the Congress. And I must 

say my first response when President Bush criticizes this Republican-controlled Congress is to sit there and cheer on both sides but 

this is far too serious an issue to allow that to be the attitude. In 

fact, I think that the President’s criticism has been unfair in some 

respects. And, in particular, I want to give credit to my colleagues 

on the Appropriations Committee for adding to the program an important element that the President neglected. And Mr. Powell, I 

know, appreciates the importance of this, but in his prepared statement, which is the Administration position, and goes through 

OMB, etc., there is no reference, that I can see, to the need to rebuild housing that is affordable for low- and moderate-income people. As Mr. Powell was discussing before, New Orleans—and we 

are talking about working people here, we are not talking about 

lazy people—we are talking about a population who works in the 

service industry, a major part of the New Orleans economy, people 

who cook and clean and literally clean up after others at all hours 

of the day and night. And they don’t get paid nearly enough to live 

comfortably. These are people who are not going to have decent 

places to live if we simply leave this to the market economy because these are people, who as hard as they work or not, are major 

beneficiaries of the market economy. And so there has got to be a 

commitment of Federal funds to build, rebuild affordable housing, 

including significant rental housing. 

One of the great problems we have in this country are people 

who talk about home ownership as if that were the be all and end 

all of the housing situation. In fact, I was appalled right afterwards, when the President went down and he proposed his housing 

program, and the only thing he had was a homesteading program, 

as if New Orleans today was Kansas in 1870. And the people of 

New Orleans can go chop down some trees and build their own 

houses. The fact is that we will not have decent housing for the 

people of New Orleans; we will have a displacement of the population of New Orleans if we don’t commit some funding to affordable housing. 

Now there are other problems as well in terms of home ownership. That is why I was very proud when this committee late last 

year passed a bill that reflected the combined efforts of our colleague from Louisiana, the senior member of the Louisiana delegation, and our colleague from North Carolina, which would have created an entity, and its still pending, the House could take it up at 

any time, was passed overwhelmingly by this committee a bill that 

provided for the problems of people whose homes have been destroyed. It provides a reasonable way to make sure that we don’t 

have bank failures imposed because of this tragedy. It provides 

funding for the Congressional Black Caucus’ good work for affordable housing. The Administration has zero proposals that I can see 

for affordable housing. And when the $4.2 billion was proposed by 

the Administration, as I understand it, it was originally just for 

mitigation. It was mitigation with nothing to mitigate, at least in 

terms of housing. Certainly housing built should be subject to mitigation but making it only for mitigation was a mistake. 

6

Now, I was therefore very pleased when my staff called to my at- tention that in the appropriation of the $4.2 billion, while there is 

I think a problem because it does not give Louisiana the specificity—and I agree Texas needs some help, I think the people of 

Houston have distinguished themselves, for example, by the decency with which they reached out to people, and we should be 

helping there as well but in addition to, not in subtraction from, 

the money for Louisiana. But this is a point that was added by our 

colleagues in the Appropriations Committee, and I was delighted to 

see it, that $1 billion, at least $1 billion must be spent on affordable rental housing stock. ‘‘Provided that not less than $1 billion,’’ 

it is on page 72, ‘‘from funds made available,’’ this is out of the $4.2 

billion, ‘‘shall be used for repair, rehabilitation, and reconstruction 

of the affordable rental housing stock, including public and other 

HUD-assisted housing in the impacted areas.’’ That is a very good 

thing, it has been absent. 

So as we talk about the problems of the past, the most stunning 

thing missing here is a recognition that we need Federal funding 

for affordable housing. And I’d appreciate just 30 more seconds, 

Mr. Chairman, and that is why I am particularly disappointed that 

this Administration has opposed legislation that passed overwhelmingly in this committee that would take 5 percent of the after-tax 

profits of Fannie Mae and Freddie Mac, not hitting the taxpayers 

at all, and make it available for affordable housing with priority 

given in the first year or two to the Gulf region. So there is this 

great need that remains unaddressed for the future. We have the 

problems currently but there is a great need that remains 

unaddressed in the future. Our colleagues in the Appropriations 

Committee have begun that process but the Baker bill and our 

GSE bill are also important parts of this, and I hope we will hear 

that there is from the first time from the Administration a recognition of this need for addressing the affordable housing situation 

going forward. 

Thank you for your indulgence, Mr. Chairman. 

Chairman NEY. Thank you. And we will move on to the members 

now. I would remind members that all other members have 3 minutes for an opening statement. The gentleman, Mr. Baker, Chairman Baker. 

Mr. BAKER. I thank the chairman for calling this hearing and for 

all his good work in the past. Also, I want to express my appreciation to members for their attendance on the trip to New Orleans 

recently and the Gulf Coast for their kind support of the needs of 

our State, and more specifically to the taxpayers who have been 

generous in helping us try to find our way. 

Mr. Powell, since I am very time constrained, I have got to move 

pretty quickly, and I regret that, but you have the most thankless 

job in the entire government right now. I don’t know where you can 

go to find a smiling face but I hope you do. You have been like the 

Energizer Bunny, you just keeping going and going and going, and 

it has not been lost on us that you are trying. But this is a task 

of extraordinary scope and difficulty to resolve. I have the obligation to explain to this committee that despite the $100 million figure, the $85 billion figure, the $50 billion figure, whatever figure 

you may have heard, as of March 1st, the Disaster Relief Finance 

7

Report, prepared by FEMA, which I have here which has been 

carefully reviewed, I can tell you that the aggregate spent to date 

outside of flood insurance premiums, contractual obligations is $15 

billion. 

Ms. WATERS. How much? 

Mr. BAKER. Fifteen. Now that is not actually spent, that is con- tracted, not necessarily expended. Of the $15 billion, FEMA’s administrative expenses amount to 24.9 percent. Now if you did that 

in any corporation in the country, you would be in the dismiss category. When you look at the cruise ship/FEMA trailer program, 

which I can tell you Louisianans have not suggested nor been in 

favor of this approach, that is about $9 billion. When you take out 

in excess of $3 billion administrative, that gets you back to about 

a $3 billion figure, which most members of this committee would 

consider to be emergency relief in nature, emergency medical. The 

things that you would think of when you see the disaster and what 

people are going to do. 

I just want to make clear that this is not a Louisiana-led recovery. We are working with the Federal Government in response to 

programs designed at the Federal level, and we are appreciative of 

it and I would never want to leave this city or this hearing and 

have the people of this country that we are not appreciative. We 

are, very much. In fact, we would like to see it work slightly differently, more efficiently, and perhaps—I hate to say it—with even 

less overall money spent to get a more effective outcome for the 

people whom we represent. 

I appreciate very much the gentleman’s comments from Massachusetts, relative to H.R. 4100. And, as I have discussed with Mr. 

Powell and Mr. Hubbard over many months now, I think I have 

come to an understanding the principal reason for objecting to the 

bill was the view that it is not a Federal role to acquire, manage, 

and dispose of real estate which is within a State’s jurisdiction. 

And that it would be preferable for that activity to be conducted 

by the State of Louisiana if State officials chose to proceed in that 

manner. 

Given my time constraints, and I am out already, I want to explore when my opportunity comes perhaps an alternative to what 

has been posed to date that would give us the same resolution conducted at the State level and perhaps curtail the necessity of a 

longstanding Federal presence in our State. Right now, I am very, 

very troubled about our potential outcomes; none of them seem 

very positive for us at this moment, economically or in restoration 

of housing. And I do want to continue to work with you, Mr. Powell, in any way possible to come to what I know you want as well: 

the most efficient resolution in the quickest manner possible. And 

I am very appreciative. 

Chairman NEY. Time has expired. The gentlelady from Indiana, 

Ms. Carson. 

Ms. CARSON. Thank you very much, Mr. Chairman. I would like 

to ask first and foremost that the balance of my remarks—that the 

majority of my remarks be inserted in the record. 

Chairman NEY. Without objection. 

Ms. CARSON. To the chairman, and certainly to the Full Committee chairman, thank you all for calling this very important 

8

hearing. I would like to thank Mr. Powell for being here today. It 

has been almost 7 months since Hurricanes Katrina and Rita devastated our Gulf Coast. It is estimated that the hurricanes destroyed or damaged over 300,000 housing units, killed about 1,400 

people, and caused roughly $90 billion in damage. Since the storm 

hit, we have had hearing after hearing, yet we are very slow to 

move for a resolution and to get things done to help this region and 

the people who have been so devastatingly affected. We passed legislation with bipartisan support that would begin the process of rebuilding and reviving the Gulf Coast but the Administration turned 

it down. Not only did they turn down the proposal but they have 

failed to come up with an alternative plan. Representative Watt 

proposed another piece of legislation that would also start the rebuilding. People in this room were willing to take action, while the 

Federal Government is reluctant to step up to the plate. 

I am not about to criticize you, Mr. Powell, for having this delay 

occur that has affected so many vulnerable people in the South. 

But I would hope that your leadership would lead us in the right 

direction so that we can expedite some relief for these poor people 

who are just left stranded out in the wilderness, if you will. 

I will yield back the balance of my time, Mr. Chairman. If you 

don’t want it back, I will keep talking. 

[Laughter.] 

Chairman NEY. I thank the gentlelady. Mr. Neugebauer. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. In the interest of 

hearing from our witness, I will enter any remarks I have into the 

record. But I do want to welcome my friend, Mr. Powell, this morning. And just for a little bit of information, he has a constituency 

in my district which he is very fond of, and we are glad to have 

him here this morning. 

Chairman NEY. The gentlelady from California. I would also note 

we are expecting the first set of votes from 11:05 to 11:20 today. 

Ms. LEE. Thank you, Mr. Chairman. Let me also thank you and 

our ranking member for putting together this very important hearing but also for conducting the hearing in New Orleans and in 

Gulfport. It was quite devastating, what we saw during the hearings, and quite unbelievable what we heard from people who, of 

course, were left to fend for themselves by our government, who 

then even in the disaster following with their transition to temporary housing were left to fend for themselves. And now it appears in the rebuilding effort, that they are being left to fend for 

themselves. And the entire world witnessed the Administration’s 

failure in planning for and responding to Hurricane Katrina. Now 

the entire world is witnessing the failure to respond once again in 

terms of a real rebuilding effort so people can return home and return home quickly. 

For the life of me, I don’t understand why the Administration 

wouldn’t support the Baker bill, won’t support the Congressional 

Caucus’ bill. These road maps to rebuilding, Mr. Powell. And it is 

not a good sign that the Administration continues to talk the talk 

but not walk the walk. 

So, I hope the people of New Orleans and the Gulf Coast hear 

something from you today that gives them hope because, quite 

frankly, and I have talked to many members who were there last 

9

week, what they saw just last week during the hearings and what 

we saw a month, month-and-a-half ago is just about the same. And 

there is very little progress taking place. People who didn’t have 

money, who didn’t have the resources to evacuate once again were 

left unfortunately on roof tops and in areas of New Orleans that 

had been subject to neglect because of the warning going unheeded 

about the levees. They were living in areas which we had turned 

our back to those communities for years and years and then we 

turned our backs again on them. 

And so thank you, Mr. Powell, for being here. I hope I can ask 

unanimous consent for my statement to be placed into the record. 

Mr. Chairman, I look forward to your testimony. 

Chairman NEY. Without objection. 

The gentleman from Texas, Mr. Hensarling. 

Mr. HENSARLING. Thank you, Mr. Chairman. And I would like to 

add my welcome to Chairman Powell, and I want to thank him for 

taking on what I think Chairman Baker just described as the most 

thankless job in the Federal Government. It is clearly a testament 

to either the gentleman’s patriotism or lack of commonsense that 

he would take this on. Knowing him as I do, I know it is a testament to his patriotism. 

I will attempt to be brief. I was fortunate enough to be invited 

to be a part of the congressional delegation that recently traveled 

to the Gulf Coast to witness the devastation and indeed the camera 

lens cannot do justice to the amount of devastation and human suffering that has taken place along there. It has certainly made impressions on me that I will not soon forget. 

But I also remember meeting with many local and State officials 

along the Gulf Coast, many of whom, not all, but many of whom 

seemingly took very little responsibility for the actions of their government and all of whom are looking for large checks to be written 

by the Federal taxpayer over and above the roughly $100 billion 

the Federal taxpayer has already handed out in relief and tax incentives. 

The questions many of us have, and certainly many of us are 

willing to write out even more checks drawn on the account of the 

Federal taxpayer, but we are curious as to where is the plan? 

Where is the accountability? What is the proper Federal role here? 

And what is the contribution, for example, of the City of New Orleans, the State of Louisiana, and able-bodied individuals under the 

age of 65; what are they doing to help themselves and their families? And, finally, where are the reforms so that, for example, the 

guy who works at the bottling plant at Pepsi Co. in Mesquite, 

Texas, in my district, who works very hard for his paycheck and 

wants to help out his fellow man, but when he says, ‘‘Congressman, 

tell me I am not going to have to write out this check again in 5 

years.’’ What are the reforms that we will undertake to ensure that 

people are not put needlessly in harm’s way and that factory workers don’t have to do that. 

So I appreciate your testimony. I look forward to hopefully getting some insight into these questions. 

Thank you. 

Chairman NEY. The gentleman from Georgia, Mr. Scott. 

10

Mr. SCOTT. Thank you very much, Mr. Ney. It is indeed a pleasure to have us with you today, Mr. Powell. Welcome to the committee. First of all, I think we do need to respond to the President. 

I think the President ought to be ashamed of himself. It is his failure, it is his watch, it is his Administration. Everybody in America 

knows this. And for him to go down to New Orleans and point a 

finger of blame at the Congress is the height of hypocrisy. And it 

points out really what is wrong. Here is a man whose clear responsibility it is to execute the policies. Congress’ responsibilities are to 

appropriate the money and do the oversight. We have done that. 

And it is a shameful example of gross neglect, mismanagement, 

and bad leadership on the part of President Bush. And for him to 

go down into New Orleans, in that belly of despair and hopelessness, and not say, ‘‘Folks, we blew it. We are sorry. This is my 

watch. And here is what we are going to do to solve this problem.’’ 

We have given him the money. And let me tell you something else, 

Mr. Powell, for the President to point a finger at Congress when 

he did everything in his power to stop a bill that was being pushed 

by the Congressman who represents Louisiana to deal with the 

problem. It was the Bush Administration who stopped the Baker 

bill. It was the Baker bill that had incorporated in it the hard work 

of the Congressional Black Caucus under the leadership of our 

chairman, Mr. Watt. We know that there is no body of people up 

here who are more sensitive and who understand the situation of 

the plight of the majority of those people affected in New Orleans 

than the Congressional Black Caucus. But the President of this 

United States would not even meet with us. So for him to go down 

there and point a finger of blame at the Congressional Black Caucus, this Republican-controlled Congress is the height of hypocrisy. 

And I am convinced that the American people see right through 

this. This is not just a low point in America’s history. It is a low 

point in the effectiveness of the Executive Branch of Government. 

What a failure. And for him to go down and not do the responsible 

thing but to point fingers. 

I represent Georgia. We are second only to Houston, Texas, in 

terms of being a recipient of these evacuees. And I can tell you we, 

in Georgia, have done a remarkable job. And I can tell you this—

I am a Democrat but I can tell you this that there have been Republicans in this body who have worked very hard. 

Chairman NEY. Time has expired. 

Mr. SCOTT. And if I was a Republican in this body, I would be 

very, very disturbed and angry with this President for saying this 

Republican-led Congress did nothing on Katrina. 

Chairman NEY. Time has expired. The gentleman, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. Let me thank you 

again for your leadership, as well as Ranking Member Waters, and 

all of the members who have been conscientious on this subject. I 

know that you, Mr. Powell, are in a difficult position, to say the 

least. I am sure your hair was completely black when you took this 

assignment. And I hope that we can turn it back shortly. 

My issues are pretty much those that have been addressed by 

others, that I was disturbed as everyone else by this front page 

story today with the blame coming to Congress. And, of course, Mr. 

Baker’s bill is one that most of us embraced with some significant 

11

parts from the CBC’s comprehensive Katrina bill, H.R. 4197. The 

issue that I wanted to raise, and I won’t take up my entire 3 minutes, and I will hopefully get into some—maybe we can dialogue 

later to try to get your perspective, but I don’t understand what is 

going on. There has been a lot of tripping but there has not been 

much helping. 

And I don’t know if this is something that the Government of the 

United States wants to raise a white flag on and say we surrender, 

we cannot do anything, or if we are going to keep a lot of these 

people still roaming around the country in cultures and climates of 

which they are not familiar. And I wish people could see—in addition to the people in New Orleans, I substituted in a speech for 

Ranking Member Waters up in Cambridge, Massachusetts, and a 

couple came to this forum where I spoke and told of what happened 

with them. They were put on an airplane and not told where they 

were going. The guy never—he and his wife and three children had 

never been out of New Orleans in their lives, in their entire lives, 

and there they were landing in Massachusetts. He thought it was 

Florida. And he got there and when they started talking about 

snow and cold weather, he panicked. But more than that, he wants 

to go home. And I was the only Member of Congress there and so 

he just kept asking me, ‘‘When can I go home? When I am going 

to be able to go home?’’ In fact, as he spoke, people began to weep 

out in the audience. This is a human tragedy, and I think our government is putting on display for the world our inability to help 

our own people. And it is painful to me and hopefully to people all 

over the country. 

Thank you, Mr. Chairman. 

Chairman NEY. The gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. And I also thank Ranking Member Waters. I would like to thank the ranking member of 

the committee, Mr. Frank. And thank you, Mr. Powell, for being 

with us today. I am very interested in what you have to say. 

I do want to mention voting rights. I firmly believe that we are 

about to witness a great injustice upon the folks from Louisiana, 

New Orleans in particular, in terms of their right to vote. We have 

scattered them across the length and breadth of this country. And 

we have the technology, the means and methodologies by which we 

can afford them the right to vote such that it will not be circumvented by process. We can do satellite voting. I think the Federal Government has to step in and make sure that every one of 

those citizens who wants to vote has the right to vote. If the right 

to vote is denied by virtue of process, Mr. Powell, we are going to 

see a great change in the politics and the political body, the body 

politic in Louisiana. We ought not let a natural disaster and process prevent people from having their legitimate right to vote. We 

have got the technology, we can do it. 

We also have not heard a firm commitment as to what standard 

we will use reconstruct the levees. We have heard a lot of talk, but 

not a commitment as to what standard the levees will be reconstructed to. As of late, it has been indicated that some inferior 

work has been done with the levees. If businesses are to come back 

and make meaningful investments, they must be assured that we 

are going to have levees in place to the highest standard. I have 

12

consistently supported Category 5 standards. We ought to rebuild 

the levees to the highest standard. We are the country that built 

Hoover Dam. We constructed the Golden Gate Bridge. We can rebuild those levees to standards such that people, as well as businesses, will be safe. 

And, finally, Mr. Powell, sir, we cannot continue to explain away 

FEMA’s inability to put trailers on lots. We cannot continue to expect people to believe that we are faithful to our duties and our responsibilities by explaining this away. 

Chairman NEY. Time has expired. 

Mr. GREEN. We put a man on the moon, FEMA can put a trailer 

on a lot. 

I thank you, Mr. Chairman. 

Chairman NEY. Thank you. And, again, I just want to remind 

members that between 11:05 and 11:20 today, there will be a vote. 

The gentleman, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman, for your courage today. I 

am not a member of the committee so I didn’t come to speak but 

my name has been mentioned a few times. I came to hear what 

Chairman Powell has to say because if there is one thing that has 

been consistent, it is that the members of the Congressional Black 

Caucus, which I am honored to chair, have worked across party 

lines, across philosophical lines to try to find some solutions and 

responses that are appropriate for the Gulf region. And it has been 

because of the face that was projected on this disaster following the 

hurricane. It was disproportionately black because it was disproportionately poor, and so we have been at the heart of that. So 

any constructive, positive things that you can suggest to us today, 

we will be looking forward to hearing and working on and joining 

with our colleagues of whatever party or philosophy to try to implement. 

Thank you, sir. 

Chairman NEY. Thank you. The gentlelady from New York will 

be the last statement. Any other member arriving can submit for 

the record. The gentlelady from New York. 

Ms. MCCARTHY. Thank you, Mr. Chairman. And I thank you for 

having this hearing, and I, too, am not on the subcommittee, but 

I am on the Financial Services Committee. Mr. Powell, when we 

met with you, I believe is on Friday morning, or maybe it was 

Thursday night, those days kind of blur together, and you were 

very positive meeting with the businesspeople and all the different 

States that have come together with their brightest and their best 

as you have said in your testimony. They have a lot of answers, in 

my opinion, on how do we go ahead and start to rebuild. The one 

thing that was brought up constantly, and it didn’t matter what 

State we were in as we toured the Gulf Coast, was the response 

of the private insurance companies and it is something that this 

committee is going to have look at. Gene Taylor from Mississippi 

said so far not one claim has been put out. Now, I live on Long Island and many of us who live in areas that could be affected from 

hurricanes, what we saw, we want to try to make sure it doesn’t 

happen in our areas. Or if it does happen, certainly that we are 

going to be looking at things differently, so that other States might 

not have to go through what we see going on right now. 

13

I guess what I want you to think about, and I will bring that 

question up during the question and answer period, is looking at 

a natural disaster plan instead of just having flood insurance because the insurance companies are saying it was water, not wind. 

Houses were blown away. But the bottom line is if you listen to the 

Governors, they have a lot of good ideas but it is also the flexibility 

of the laws that we have in place, especially with FEMA. What I 

am concerned about, June is right around the corner. That is hurricane season. And FEMA is not allowed to have people into mobile 

homes during a hurricane season. So here we are setting people up, 

and what are we going to do at that time if another hurricane 

comes in? One of the Governors had suggested that the mobile 

homes that could be anchored down and built stronger and also 

from his research, cheaper. And yet they can be picked up and 

moved on to other areas if need be. 

So I am looking forward to your testimony. All of us have an 

awful lot of questions. Mr. Baker certainly has been a leader on 

this, and mainly because those of us who have been there, we don’t 

want the American people to forget what is going on down there. 

Yesterday, CNN, who has done a great job, said New Orleans is 

back. Well, New Orleans is kind of back. All of the hotels have cut 

back drastically. The businesspeople that have lost their homes 

can’t reopen. They have no place to live. And these are all things 

that we need to look at and learn by our mistakes but let’s go forward and correct those mistakes. Let’s be prepared, we need to 

help these people. I know it is hard but it is 6 months, and we 

should have been doing a better job and we are capable of doing 

it. 

With that I yield back the balance of my time. 

Chairman NEY. I want to thank the gentlelady. And we will welcome again, Mr. Powell. 

STATEMENT OF DONALD E. POWELL, FEDERAL 

COORDINATOR, OFFICE FOR GULF COAST REBUILDING 

Mr. POWELL. Thank you. Good morning, Chairman Ney, Ranking 

Member Waters, and members of the subcommittee. I am pleased 

to appear before you today as the Federal Coordinator for the Gulf 

Coast rebuilding to discuss the progress we have made in the Gulf 

Coast region and the challenges and opportunities we face in recovery and long-term rebuilding efforts. 

As a former banker in west Texas, and more recently as the 

Chairman of the FDIC, I commend and appreciate the work done 

by this committee. Yours is a position of great importance to American financial security. 

A little more than 6 months ago, Hurricane Katrina tore through 

an area of the Gulf Coast equivalent to the size of Great Britain. 

A few weeks later, Hurricane Rita followed Katrina’s path into the 

Gulf of Mexico, and then made landfall on the coast of Texas and 

Louisiana. In the aftermath of Hurricane Katrina, President Bush 

created the Office of the Federal Coordinator for Gulf Coast Rebuilding by Executive Order 13390 to be housed under DHS and 

the Secretary. And I was charged by the President with coordinating Federal support to the long-term building efforts. 

14

Let me begin by telling you it is a great honor to have been appointed by this President to this very important post. He is committed to doing whatever it takes to support the recovery and rebuilding efforts in the areas affected by this hurricane: Alabama, 

Florida, Louisiana, Mississippi, and Texas. Whole communities 

have been ravaged by Katrina and Rita, but I am confident that 

by working together, we will see a better and brighter tomorrow for 

our fellow Americans in these affected areas. 

My job is to work closely with the people on the ground to identify and prioritize the needs for the long-term rebuilding. I communicate those realities to the decisionmakers in Washington and advise the President and his leadership team, including Secretary 

Chertoff, of the most effective, integrated, and fiscally-responsible 

strategies for a full and vibrant recovery. The President has laid 

out clear guidelines which emphasizes that the vision and plans for 

rebuilding the Gulf Coast should come from the local and State 

leadership, not Washington, D.C. Rebuilding should not become an 

exercise in centralized planning. If Federal bureaucracies determine the path of rebuilding, local inside initiatives will be overrun 

and the local needs overlooked. 

In that spirit, each affected State has brought together their best 

and brightest minds to create a plan that meets their respective 

needs. Louisiana has formed the Louisiana Recovery Authority and 

Mississippi has formed the Mississippi Development Authority to 

formulate strategies to move forward. 

As the States develop their plans, we also encourage them to 

focus on the future. That can be difficult given the extraordinary 

immediate needs but there must be a long-term vision of where 

each State wants to be 5, 10 or 20 years from now and a path must 

be drawn. I will tell you that based on our planning meetings, I 

have every confidence that the Gulf Coast region will regain its 

economic and social vibrancy and be an important part of America’s 

economic base. 

The President also emphasized the importance of being good 

stewards of the substantial amount of taxpayer money that has 

been, and will continue to be, spent on this effort. To date, the Federal Government has already committed more than $87 billion for 

the recovery effort. And the President has submitted a request for 

an additional $19.8 billion in the 2006 supplemental package, 

which would bring the total to well over $100 billion. That figure 

does not include the tax relief of the Gulf Opportunity Zone legislation, which will be approximately $8 billion. Of the money that has 

been set aside, approximately $53 billion has been obligated to 

date. In order to ensure that this money is well spent, responsible 

financial management practices and enhanced audit and investigative resources for the inspectors general of every Federal agency 

has been put in place to safeguard Federal spending. 

We also called on the oversight and accountability mechanisms 

of Congress to assist the fiduciary protection of the American taxpayer. Together, we must demand the highest standards of governance and accountability in the administration of the Federal investment. If Americans see their tax dollars being ill spent, their support, which is critical, will wane. It is my duty to ensure that any 

15

plans or strategies for rebuilding are conducive to the prudent, effective, and appropriate investment of the taxpayers’ dollars. 

One of the tools we have established to leverage the expertise 

and resources of the Federal Government is a system of working 

groups. These working groups are staffed with policy and programmatic experts drawn from across the agencies and departments of the Federal Government. 

In our office, we often speak of the ‘‘Triangle of Recovery.’’ Its 

three sides are comprised of security, community, and economy. 

These working groups concentrate on subject areas that are central 

to completing this triangle. These eight groups are environmental 

management, public safety, housing, health care, education, critical 

infrastructure, community and faith-based organizations, and economic development. 

When I made my first trip to the southeast Louisiana region, I 

asked everyone I visited, ‘‘What are the three most important 

issues you face?’’ The answer time and time again was levees, levees, levees. The President has stated that public safety is the most 

critical part of long-term rebuilding in the area. People must feel 

that there is adequate hurricane protection before they can make 

their decisions to return, whether as a resident, a business owner, 

or both. 

We continue to work with House and Senate appropriators to get 

more funding for the Army Corps of Engineers to add flood gates 

and pumping stations to internal canals, selective armoring of levees, the initiation of wetlands restoration projects, and additional 

storm-proofing pumping stations. 

I receive regular updates from the Army Corps of their progress, 

and I recently walked the levees with General Strock. And I have 

confidence that the Corps is on the track to meet their deadline for 

pre-Katrina strength before the beginning of the next hurricane 

season. 

It will come as no surprise to this Housing and Community Opportunity Subcommittee that after the Administration made its 

commitment to rebuild the levees stronger and better, the next 

issue on the minds of the people of the Gulf Coast was housing. As 

I learn more about the unique flood issues of Louisiana, I learned 

that safety is not just about the levees and coastline, but also about 

homes. As we build the hurricane protection system stronger and 

better, we must also help the States to rebuild their housing stock 

in a safer and smarter manner, protecting the lives and assets of 

the people of southern Louisiana. That is why in the President’s recent supplemental request he asked for $4.2 billion in community 

development block grants funds for States like Louisiana to address his plans for future flood mitigation measures to protect 

housing and critical infrastructure. 

The President, along with Congress, is also mindful of the renewal of the region’s economy. There is a role for the Federal Government in helping to restore traditional industries of the region—

tourism, seafood, and energy—as well as attracting new industries. 

At the end of 2005, the President signed into law the Go Zones Act. 

This legislation providing approximately $8 billion in tax relief over 

5 years will help revitalize the region’s economy by encouraging 

16

businesses to create new jobs and restore old ones. Simply put, this 

law renews businesses, rebuilds homes, and restores community. 

Furthermore, the SBA has adapted and wrapped up this capacity 

in order to provide loans and working capital to small businesses 

and families in the affected area. SBA disaster loans provide vital, 

low-cost funds to homeowners, renters, and businesses to cover uninsured disaster recovery costs, as well as loans for working capital 

needs of businesses affected by this disaster. 

Of particular interest to the House Financial Services Committee 

is that the financial services sector in the region is also doing its 

part to provide capital. When Hurricane Katrina and Rita hit the 

Gulf Coast, they impacted the operations of at least 280 financial 

institutions, including over 5,000 branches, with 120 of these institutions headquartered in the 49 counties and parishes in Alabama, 

Louisiana, and Mississippi designated by FEMA as eligible for individual and public assistance. Just like other sectors of the Gulf 

Coast economy, financial institutions’ facilities and employees experienced damage and disruption. While financial results to date do 

not yet provide a clear picture of the full effects of the storms, recent data suggests that institutions may be reacting and adjusting 

to the effects of the hurricanes. All institutions remain well-capitalized or adequately capitalized and liquidity for most of these institutions also remain strong. While the prospects for the financial institutions most affected will depend in large measure on the revitalization of the communities these institutions serve, local bankers 

remain cautiously optimistic and are not predicting any bank failures. 

A big part of long-term economic security is workforce development. We want to help create as many jobs as possible in the Gulf 

Coast and prepare its residents to fill those jobs. To do this, we 

have set an ambitious goal that we are committed to achieving. 

This public/private initiative will train 20,000 new workers for careers in construction and skill trades by the end of 2009. We will 

continue to work to make the Gulf Coast a great place to invest, 

to do business, and to live. 

In conclusion, I want to assure each of you that President Bush 

is committed to rebuilding the Gulf Coast. The Federal Government will continue to facilitate and help strengthen, but not replace, State and local government or private initiatives. And we 

will help our fellow citizens meet the challenges of reconstruction 

and rebuild their lives and communities for years to come. The 

residents of this area and the President can agree on this: Failure 

is not an option. A tremendous amount of work is still ahead for 

us but we are encouraged by the progress made. We are proud of 

the work that has been accomplished today on both the State and 

Federal level. We look forward to working with the leaders in Alabama, Florida, Louisiana, Mississippi, and Texas in the days, 

weeks, and months ahead to assist in implementation of their respective visions while also serving as a good steward of the taxpayers’ dollars that the distinguished members of this panel, along 

with your colleagues, have helped secure. With diligence and 

thoughtfulness, we will continue to work on behalf of all Americans 

to the further progress of building safety and security, restoring 

17

communities, and reviving economic development in the Gulf region. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Powell can be found on page 49 

of the appendix.] 

Chairman NEY. Thank you, Mr. Powell. The committee will be in 

recess until the bang of the gavel. I think we have one vote. 

[Recess] 

Chairman NEY. We will reconvene the subcommittee. The question I have is on the $4.2 billion because it has been talked about 

today, about percentages and how much money, of course, is spent 

by the government to implement money that is appropriated by the 

government. Do you have any ideas or would you want to give a 

guesstimate of what percentage you think would be good out of the 

$4.2 billion for administrative overhead, in other words, a cap. 

Mr. POWELL. Mr. Chairman, part of our discussion with the folks 

from the LARA, Louisiana Recovery Authority, and from the people 

in Mississippi, was about the administrative costs capped at 5 percent. Part of that the marketplace will determine; some of that because they are going to outsource some of those administrative duties, but we think that it should not exceed 5 percent. 

Chairman NEY. Because, as you know, in States, State-administered programs usually 5 percent is the magic number, sometimes 

7 to 10. 

Mr. POWELL. Right. 

Chairman NEY. So you would think 5 percent and that way if 

you do the calculations on $4.2 billion, the money would force the 

people administrating this to get the money directly to the people. 

Mr. POWELL. Right. 

Chairman NEY. Just to make sure members have the opportunity 

to ask questions, I am going to go on to our ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. Chairman 

Powell, it appears that your responsibility is more long term than 

immediate. And so some of the issues that we are raising today relative to the siting of the trailers and other kinds of issues, these 

are not the issues that you are wrestling with. You are more concerned about long term development, business development, etc., 

okay, all right. I will try and direct my concerns in those areas. Let 

me deal with this discussion about labor and jobs and job development. If this is one of your areas, and one of your long term goals 

is to get workers trained and get them into jobs, how are you going 

to get people back who want to come back but who were basically 

given one-way tickets out? Many people want to return but they 

have no place to live. And the fact that not only do you not have 

the temporary housing but then you don’t have rental units available or, as I mentioned, there is this discrimination against many 

of the people in the New Orleans area, so who are you going to 

train? When I was in New Orleans this last time, I was in a hotel 

and the hotel was full. It was full of FEMA workers. It was full 

of contractors. And the people who wanted jobs could not be there; 

they could not afford the cost of the hotel to stay there. They 

couldn’t even get back. So what is this business about training 

workers? How are you going to do this? What is your plan? 

18

Mr. POWELL. The President assembled a group of individuals 

about 60 days ago to speak to that issue. It is very important to 

the President and it is important to our office that we have a 

skilled labor force that can meet the demands of rebuilding in the 

Gulf Coast area. The people who met with the President came from 

an array of various entities, the private sector, labor, some former 

elected officials, the NAACP, the Business Roundtable, community 

colleges, educators, and that group is being coordinated with our office. We have talked about specifically how we train those people. 

As you know, the community college is a great vehicle to train an 

unskilled workforce. As I mentioned in my testimony, it is our goal 

to have 20,000 workers trained by the end of 2009. There is a pilot 

program that will commence— 

Ms. WATERS. Who are you training, Chairman? Are you training 

the people who want to come back home and work or are they coming in from other places; who are you training? 

Mr. POWELL. We are training the people who want to come back. 

We are training people who are there now who do not have skills. 

We are training people who are on the ground and then those people who have been disbursed for one reason or another, or other 

people who want to come into the area and have jobs. The people 

are working very diligently in coming up with that specific plan of 

how to treat those people— 

Ms. WATERS. Mr. Chairman, I hate to keep interrupting you but 

I want to kind of get at it real fast because I only have so much 

time. 

Mr. POWELL. All right. 

Ms. WATERS. One of the things we are very concerned about is 

that you had contractors—many of these contractors were that first 

group of no-bid contractors, the Halliburtons, the Shaw groups, the 

Bechtel’s, etc.—and we discovered that they were bringing in undocumented workers from Guatemala who were working jobs for 

less than the minimum wage. In one particular case, they were 

sleeping on the ground and even some of the contractors worked 

them and didn’t pay them. Now they are doing the work with these 

contractors. These contractors are using American taxpayer money 

to do these jobs. How do you get to these problems? What do you 

do about contractors who hire undocumented workers for less than 

the minimum wage? And who is doing all of this training? SUNO, 

the college, the university there is laying off teachers and cutting 

back on classes. They have been devastated by all of this. So you 

have to unfold this for me and help me to understand, first of all, 

how you strengthen these educational institutions that should be 

a part of any training and development program for getting people? 

How do you stop contractors from hiring undocumented workers at 

less than the minimum wage? Who is doing this training? What is 

this grandiose plan? 

Mr. POWELL. Well, first of all, the community colleges are committed. I have visited with them personally about their ability to 

train these people, and they have assured me that they can be part 

of training the workforce. And as it relates to the undocumented 

workers and paying them less than the minimum wage, we have 

in place, obviously, components of the Federal Government that 

look over those particular issues, and they are engaged in that 

19

process. Also, I would point out to you that the levee construction, 

there is something like $700 million that has been to date, 85 percent of those workers are from local people, local people who are 

receiving pay. 

Chairman NEY. The time has expired, but please go ahead and 

wrap up your comments. 

Mr. POWELL. Yes, that is fine. I am done. 

Chairman NEY. The gentleman from Louisiana, Mr. Baker. 

Mr. BAKER. Thank you, Mr. Chairman. Before I return to the 

idea of an alternate structure for resolution, I just again need to 

emphasize the difference between what is available ultimately, between an allocation, an obligation, and then actually expended. Allocation, as I understand it, is into a category that is available for 

use. Once a contract is entered into in that allocation, it becomes 

an obligation. And when you write the check, that is actually the 

expenditure sort of steps. What I am talking about is only the allocation portion of the budget. And to date, Katrina-wide, this is not 

just Louisiana, I want to make clear, there is a total of about $25 

billion total allocation. In administrative costs, it is $6.3 billion. In 

operational costs, which has to be broken down, part of it is things 

like ice and water, and the other part is more administrative in nature, in my opinion. Then we have several hundred million dollar 

categories in expenditures. The most important thing is that in the 

category of manufactured housing, which is where a lot of our people are looking for help, through this report, it has $5.3 billion allocated in manufactured housing, with actually $2.8 billion having 

been spent. That is the thing that I think our people need to understand. There are a lot more resources available that have currently 

been deployed and not only are the resources available, they have 

been approved by the Congress. They are in a category. They are 

in the agency. And we are working through it. 

To get to the complexity of using those resources, there is another chart—well, I can’t find that quickly—that talks about the 

number of pads that are available for occupancy, the number of 

units deployed that are on pads, and I assume that means ready 

to go, and then another number which shows the number actually 

occupied. And as best as I can recall, this is an approximate number; there was a difference of those on pads, ready to go, and those 

occupied of somewhere in the range of 10,000. So we have assets 

on the ground which administratively have not yet been cleared for 

occupancy by someone. So there are resources available to people, 

and we are trying to work through it. 

Not that people in Louisiana don’t have a sense of humor, I don’t 

know this to be a true story, I was listening to one of our talk radio 

shows and a guy called in and said that he had called FEMA about 

a trailer and she said, ‘‘Give me your name and number.’’ And he 

did and the lady said, ‘‘Well, you are not eligible for a trailer.’’ And 

he said, ‘‘Well, that is amazing. I came home from work today and 

there was a trailer in my driveway but it is locked.’’ And she said, 

‘‘Well, you are not entitled to the trailer. How did that trailer get 

there?’’ And he said, ‘‘Ma’am, I don’t know. The trailer is locked 

and it looks like it is ready for occupancy.’’ And she said, ‘‘We are 

going to have to make an inquiry into this. Obviously, there has 

been some error here.’’ He said, ‘‘Well, wait a minute, my wife and 

20

I have asked for a trailer.’’ And he said, ‘‘Can you check in my 

wife’s name?’’ And she said, ‘‘Yes, sir, that is correct. Your wife is 

entitled to a trailer.’’ He said, ‘‘Great, can I send my wife to get 

her keys to her trailer?’’ To which the response was, ‘‘Well, I am 

sorry, sir, let me check.’’ She said, ‘‘I thought I was right. We 

haven’t delivered her trailer yet.’’ And he said, ‘‘Well, ma’am, I 

have a trailer in the driveway.’’ And she said, ‘‘Well, that is not 

your trailer. I am going to have to do a little inquiry on this.’’ He 

said, ‘‘But I cannot even get in it, it doesn’t have steps. The door 

is locked.’’ So he hung up the phone and was a little worried about 

it. He said 2 days later he came home and there were steps to the 

trailer and it was still locked and still sitting there. So that is the 

kind of frustration. And the discussion was in a lighthearted manner; we understand the difficulty. But people need to know more 

clearly that there are sufficient resources. There is help coming. 

And maybe if we can hang in there, it will get done. 

More importantly for me though, is what you referenced in your 

opening remarks about a long-term resolution. I am very troubled 

today that with—I won’t call it a plan, with the steps now being 

taken, we are 6 months into the recovery. We have people who perhaps have not paid their mortgage obligations. Although banks appear to be solvent in the region, most of the mortgages held are 

held by national organizations. And at some point foreclosures have 

to occur. When we get that effect of mortgage owners taking possession of disparate lots here and there, there is no market for that 

lot because they are surrounded by desolation of other landowners 

who haven’t made a decision to rebuild because they don’t know 

what their neighbor is doing. At some point, the bank decides to 

cut its losses and sell that off to some speculator who is hoping 

that a decade from now, this stuff is going to be worth something. 

But that is a very slow and costly spiral down. And how do we get 

back out at that point because at least at this moment the government’s response is to do the trailers as a temporary and let the 

market work. There is no market. There is only a market for speculators to take foreclosed property at the end of this cycle. Even if 

one has his own assets and can rebuild his house on his lot, why 

would you do it when there is no value around you to support what 

you are going to spend in recovery? 

That gets me back to 4100 but a 4100-like proposal. I understand 

the objection to—well, I will rephrase that. I don’t understand it 

but I know there is an objection to 4100 at the Federal level. If we 

were to construct a 4100-like box, with all the described powers 

and authorities in the previous proposal, at the State level, and I 

also understand the concerns about a State-administered program. 

This would have to be a free-standing, State-authorized corporation, run by free enterprise, accountable individuals, subject to all 

the public disclosures and transparency required, to acquire title, 

clean up property, and sell it back into the market. I still believe, 

I have not diminished my belief in the view that this is a plan that 

gets the markets back, gives people an opportunity to rebuild in an 

environment where they perhaps have a job and have decent 

homes that otherwise might not reoccur. 

The last point is if we do in fact decide to take property out of 

commerce and not allow people to rebuild their residences, I think 

21

it highly advisable to have some flexibility to allow alternate uses 

for that property besides wetland. Wetland may be the highest and 

best use but why can’t a government entity utilize that for a public 

meeting space or a church, which only gets used a couple of days 

a week or whatever the local community thinks is okay, as long as 

that use is free of any claim on the Federal Government for any 

action that might occur if you do have another hurricane. But let’s 

not lose half of the State to wetlands. The original Administration 

proposal to capture that $4.2 with hazard mitigation language 

added to the real hazard mitigation money equaled half of the entire $12 billion pot. That was making at the Federal level the decision to take half of the State that was damaged out of commerce. 

Just as a free market guy, I would love to be able to have the flexibility to decide how do we use that property? If it is not for residential use, aren’t there are alternative uses that could be made and 

let the corporation administer those projects? At the end of this 

process, and I have now visited with a number of smart people 

from Wall Street elsewhere where I can find people to talk to me 

about capitalizing this corporation and doing it the right way, their 

private market interest in seeing this kind of approach move forward, you may not be able to commit today, I have been down this 

road, but I would like to know if this is a non-starter, if this is just 

something that let’s save ourselves another 5 months and go think 

of something else? 

Mr. POWELL. Congressman, you talked about three or four issues, 

let me speak first of all to the mortgage issues and potential foreclosure. Our office has had a meeting in Mississippi, and we are 

scheduled to have one in Louisiana where we have asked the largest lenders in the marketplace to come and visit. And while the private sector has to do what the private sector has to do, and they 

have certain restraints, their shareholders’ demands, etc., and so 

forth, we have pointed out to those lenders that there is some 

CDBG money that will be coming in, we hope, a very short period 

of time that will be in the hands of these people that will enable 

them to satisfy some mortgage obligations that they may not be 

otherwise able to do. 

The second issue is an issue that I believe is in the hands of the 

local people. The local people, I am sure, would be interested in 

your thoughts, I know they would be interested in your thoughts, 

I am interested in your thoughts about the private entity to administer the property. But that is a decision for the local people to 

make. I am happy to listen to your thoughts in more detail and understand it as we go forward but, again, that is a decision of the 

local folks. 

The mitigation issue—that, too, is a decision that the local people 

will be planning. In our negotiations with specifically the LRA, the 

$4.2 billion that is asked for in the supplemental has mitigation 

needs, we think legitimate mitigation needs that will be met. What 

happens to that so-called ‘‘green space’’ is a decision for the local 

people to decide. 

Mr. BAKER. But under the terms of the Stafford Act, if you use 

hazard mitigation-like remedies, and you acquire title as a State to 

that property, there is no option. It must be taken out of commerce. 

Mr. POWELL. Yes. 

22

Mr. BAKER. If we were to develop a plan, which contrary to the 

statute, and we were to recommend to the Administration using 

that property for what is the highest purpose, not only taking it out 

of commerce, but highest purpose and safe purpose, and it was a 

State-constructed plan, can I get you to the point where that would 

be something the Administration would likely accept, not knowing 

all the details, but State-driven, flexibility on mitigation, and some 

sort of rebuild to get ownership of property. That is a State responsibility, not a Federal Government responsibility. 

Mr. POWELL. And no recourse to the Federal Government. 

Chairman NEY. Mr. Powell, I am sorry, if could note the time has 

expired but you can answer the gentleman’s question. And also 

frankly extra time should be allotted— 

Mr. BAKER. I will wait another round. Mr. Chairman, I appreciate your courtesy and I have been way over my time, I will wait 

until the next round. 

Chairman NEY. But, Mr. Powell, why don’t you answer the question. 

Mr. POWELL. Yes. 

Chairman NEY. Thank you. 

Mr. POWELL. The outline that you just described, I would add 

one thing to, with no recourse to the Federal Government. I think 

I would be happy to sit down and learn more about that in detail, 

again working with the State to see if there was a satisfactory plan 

that we could support as it relates to that mitigation. 

Chairman NEY. The gentlelady from California? 

Ms. LEE. Thank you very much. Let me ask you a couple of questions following up on the contract issue. First of all, when we were 

down conducting our hearings, I was really quite appalled to learn 

that, for instance, for debris removal, the prime contractor is paid 

about $43 per cubit foot. By the time it gets down to the person 

who actually does the work, they were down to about $7 a cubit 

foot. Now, you said that—and I understand now that contracts over 

$1 million must be approved in Washington, D.C. You indicated to 

Congresswoman Waters that you all are looking over the issues 

with regard to paying less than the minimum wage and contractors 

hiring undocumented workers for less than the minimum wage. If 

you all are reviewing this, you said you are looking at the issues 

and are engaged in it, but what are you doing? How in the world 

does a worker get $7 a cubit foot from $43? So that is the first 

question. 

The second question is now it is my understanding, Mr. Chairman, that over 900 individuals are still missing and cannot be located. And so I want to find out what you are doing to help the 

families locate these people. It has got to be a desperate, traumatic 

situation to have 900-some people still missing. 

Thirdly, when we were down there, and I had to write President 

Bush’s letter and I think we gave you a copy, but there were so 

many unanswered questions that I had, for example, with regard 

to price gouging in the rental housing market and how in the world 

are we helping to address that issue? 

Also, with regard to food stamps, to ensure food stamp eligibility 

is unaffected by those accepting housing assistance through FEMA, 

expanding outreach efforts to the homeless to publicize the availVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
23

ability of Katrina-related assistance. I will give you a copy if you 

don’t have this letter, but we outlined to the President these questions which surfaced during the hearing. And so I would just like 

for you to answer some of these questions now and then hopefully 

you will be able to respond, or the President will, in writing. 

Mr. POWELL. Congresswoman Lee, as you know, I am sympathetic to all of those issues, especially the misplaced persons or the 

missing people and the price gouging of rental units. That doesn’t 

come under our office. When I mentioned a moment ago— 

Ms. LEE. Well, it may not—you know what, I have to say every 

time it is like passing the buck, and we have heard that a lot. Well, 

the locals say it is the State’s responsibility. The State says it is 

national. The Federal says it is locals. So it may not come under 

your office but what are you doing to help whomever should be responding to this? 

Mr. POWELL. When I hear issues like this, what I do is that I 

call the appropriate party and tell them of the issues that I have 

heard about. I interact with people at FEMA. I interact with HUD. 

I interact with Justice. We interact with all those offices. So we 

take the thoughts that you have just expressed and the concerns 

you just expressed, and we convey those to the appropriate party. 

I know, for instance, that— 

Ms. LEE. And do you demand that they respond within 24 hours? 

Mr. POWELL. I don’t think I demand that they respond within 24 

hours, I tell them that if I hear from you that there is a great deal 

of a sense of urgency as it relates to the specific issue, I know that 

Secretary Jackson has a team of people, because I have heard him 

in his testimony, I have heard him talk about the rental issue, the 

price gouging, looking at that, and I know that he doesn’t tolerate 

that. 

Ms. LEE. But there has to be some accountability because it is 

continuing. 

Mr. POWELL. Well, I think they accept accountability, and I think 

they understand it. But I am happy to convey your thoughts, and 

I will convey your thoughts to the appropriate party. 

Ms. LEE. You are the top person, Mr. Powell, if conveying my 

thoughts, conveying this committee’s thoughts, but it is what are 

you doing to make sure that the rebuilding effort and that the people who were traumatized by this catastrophe are made whole and 

are allowed to come back. And during the interim, benefit from 

these jobs that are coming down the pike and have the transitional 

housing that they need, have the medications. You know there are 

2,100 displaced now with HIV and AIDs. What are you doing to 

make sure that the States are coordinating those efforts to make 

sure that they receive the medications? I am asking what you are 

doing, not conveying thoughts. 

Mr. POWELL. As I mentioned, we have eight working groups and 

we are in contact with every component of government to meet the 

needs of the people in the Gulf Coast area. But our primary focus 

is on long-term rebuilding issues, safety, housing, education, and 

health care—the private sector’s role in those issues. But I am 

happy to convey your concerns to the appropriate parties. 

Ms. LEE. Mr. Powell, long-term rebuilding is fine but you have 

to have a short-term plan so people can survive. 

24

Mr. POWELL. Yes, and that is the reason we spoke to the number 

one issue in the Gulf Coast, specifically Louisiana, safety, safety, 

safety. And that is the reason the President committed in the middle of December to rebuild and repair the levee system. 

Ms. LEE. And so yet the President is saying it is Congress’ fault? 

This is unbelievable. 

Chairman NEY. The gentlelady’s time has expired but if you 

choose to make any further comments. Mr. Neugebauer. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. I think when we 

have allocated, appropriated, whatever term you want to use, the 

$80 billion and people are saying, ‘‘Nobody is helping us,’’ we have 

a problem. And I want to talk about the problem. We can talk 

about what happened in the past, and I think we have but it 

doesn’t do anything for the people to play the blame game. 

Mr. Chairman, if I understand one of the proposals out there is this $150,000 buy-out program, and so I want to just kind of walk 

through a scenario and have a little dialogue with you here. But 

if I understand that, if I lived in Louisiana and I decide to take 

the buy out, you are going to give me $150,000 less whatever you 

have given me in other benefits, is that correct? 

Mr. POWELL. Well, first of all, let me be sure that the plan is developed by the local people. This plan is originated and developed 

by the local people. We have had constant contact with the local 

people about specific issues, such as the number of houses that 

were damaged. So it depends upon where your house may be. This 

last $4.2 billion, there are some areas that for one reason or another, and they will be dictated by the flood plain and dictated by 

the certification of the levee system, that it is unsafe, that it is unsafe to build back. And so you will be reimbursed up to a maximum 

of $150,000 to your pre-Katrina value less any insurance or any 

FEMA money that you may have had as it relates to your housing 

needs. 

Mr. NEUGEBAUER. So if my side is unsafe and it is determined, 

then I am eligible for the buy out if I have a slab left there and 

it is determined that it is not in the flood plain and I can build 

back, I can get some assistance but it is not— 

Mr. POWELL. Yes, sir. The other issue is that it may be okay for 

you to rebuild but you will have to rebuild under the existing building code and under more stringent building conditions. So part of 

the money will be allocated to assist you in that mitigation part 

that will cost you marginally more money to rebuild because of the 

new building code. So some of that is also allocated. 

Mr. NEUGEBAUER. Now, let’s assume that I am one of those people who has an unsafe building site, and I am going to be eligible 

then for the $150,000. Is there any requirement on that money that 

I have to build back in New Orleans, or in Louisiana, or can I take 

that $150,000 and leave town? 

Mr. POWELL. The plans in Mississippi and Louisiana, again that 

is the people’s plan. In Louisiana, you can take the $150,000 and 

build where you may desire. 

Mr. NEUGEBAUER. I think one of the things that I want to encourage you here is that if we are going to spend these kinds of 

Federal dollars to move New Orleans or Louisiana and all of those 

States away from a process of entitlement into empowerment, that 

25

we have to set some parameters on those funds so that those are 

reinvested in those communities because if you take let’s say $10 

billion, and $5 billion of that leaves the State or leaves the area, 

basically what you have done is, as the previous speaker said, you 

are going to have areas here that are going to have no taxable 

value. Those resources have left the State. And the very nature of 

CBG money is to rebuild areas or to maintain communities. And 

so I don’t know if this plan is in concrete, but I think it would be—

those people who sit on that board and that are overlooking those 

funds would be well served to look at controlling that investment 

and making sure it is going to help rebuild the community and not 

just enrich the folks. 

Mr. POWELL. Yes, there is a penalty in Louisiana if you choose 

to rebuild outside. I think it is 30 percent, but I will pass on your 

thoughts. 

Chairman NEY. If the gentleman would yield for just a minute? 

Mr. NEUGEBAUER. Yes, I would. 

Chairman NEY. Just to add further, there is also a penalty if you 

are in the flood plain and you had no insurance, it is 30 percent 

off the top of the $150,000 so you go down to $105,000, less any 

FEMA reimbursements, then less the penalty that is the disincentive if you cut and run. And it has no relationship to the value of 

the property nor the debt owed. So if you had a person who owned 

his house outright, you can get cash and you can run at this point. 

But it is limited. 

Mr. POWELL. Well, there is a disincentive, as you said, if in fact 

you were in a flood plain and you did not have flood insurance or 

that if you are going to build outside. 

Mr. NEUGEBAUER. Well, I think the private sector would work 

with you there, and the gentleman was talking about the private 

sector, and there may be some areas that don’t get redeveloped and 

that is okay. The good news is there are other opportunities within 

the New Orleans City limits. The City could annex some additional 

areas for rebuilding programs and stuff. But I think if you are 

going to try to restore order and an economic base to that community, you cannot have a policy in place that encourages folks to 

leave the area because when I hear the mayor and the Governor 

get on the national TV and after they have bashed the President 

for a good number of minutes, they do mention they would like for 

people to hang around. I think we ought to focus on policy that 

does help them accomplish that if they are in fact serious about 

that. 

And I appreciate the gentleman’s comments. 

Chairman NEY. The gentleman’s time has expired. Mr. Scott. 

Mr. SCOTT. Thank you very much, Mr. Chairman. A couple of 

questions, first of all, I want to get one thing squared away on the 

levees repair work. There have been some independent experts who 

criticized this levee work saying that it is being done with substandard materials and designs. Are you familiar with that? 

Mr. POWELL. Yes, sir. 

Mr. SCOTT. What do say you about that; is that true? If it is not 

true, explain otherwise. 

Mr. POWELL. We are briefed by the Corps of Engineers on a periodic basis, usually about once every 10 days or once every 2 weeks. 

26

I was in New Orleans last week with General Strock and some of 

his associates at the levee breaches. I asked him that specific question. He was very adamant that the soil they are using is tested 

properly, and they believe that the designs and plans for rebuilding 

the levee system are adequate. 

Mr. SCOTT. Well, let me ask you, where is the criticism coming 

from? 

Mr. POWELL. I think it is coming from various parts, some professors, some people— 

Mr. SCOTT. Some what? 

Mr. POWELL. Professors. 

Mr. SCOTT. Professors. 

Mr. POWELL. Yes, and some engineers. But when the question is 

asked of those people where the soil test was gathered, I don’t 

think they have answered that question. I know the Corps has 

asked that question. Look, the Corps and all of us want to get it 

right. It is very important that we get it right. So where the soil, 

the tests they were talking about; we need that source. 

Mr. SCOTT. Are you familiar with the terms ‘‘sandy soil?’’ 

Mr. POWELL. Yes, sir. 

Mr. SCOTT. Are they being built on sandy soil? 

Mr. POWELL. The Corps has assured me that they are using the 

appropriate soil and standards and plans to reconstruct these levees to the safest that engineering has designed. 

Mr. SCOTT. Okay, all right, I will leave that there. We just have 

to make sure that they are being built solidly. 

Mr. POWELL. I agree with you, sir. 

Mr. SCOTT. We are 3 months, let’s see, March, April, May, June, 

4 months away from the next hurricane season, are we ready? 

Mr. POWELL. Congressman, one of the questions, the first question I always ask when I am briefed, are we on time? And I always 

have to ask this as a banker, are we within budget? I ask those 

two questions. And I talk a lot about the whole safety issues. I 

mention in my testimony one of the first things when I had been 

down there a week that everything flows from safety, housing, jobs, 

infrastructure, community flows, if you don’t feel safe, you don’t 

feel like coming back. Business will not come. We had lots of discussion about that issue. The President was informed about that 

issue. He acted very quickly and asked for the $3 billion from Congress to restore, rebuild the breaches, and do some other enhancement work. 

I am not an engineer but I have four grandchildren who are precious to me. And I remember at one meeting listening to all the 

technical experts talk about I-walls, T-walls, armoring, pumping 

stations, wetlands, and all the things that we talk about when we 

talk about hurricanes protection, and I said, ‘‘If my son called me 

today and said we are moving to New Orleans, should I be concerned about my grandchildren’s safety?’’ And the answer of the 

five people that were there said, ‘‘No, no, no, no, and no.’’ 

Mr. SCOTT. Okay. 

Mr. POWELL. Then they said, ‘‘There will be flooding, could be 

flooding but it would be manageable flooding. And that is the reason the evacuation program is essential.’’ 

27

Mr. SCOTT. Here is the rub on that question, we are 4 months 

out from the hurricane season hitting again. 

Mr. POWELL. Yes, sir. 

Mr. SCOTT. All of our global warming, all of our geological forecasting says we are in store for more of the same or even worse, 

with the warming of the Gulf waters, and especially the warming 

of those waters coming off of the western shore of Africa that feed 

into these storms. So if you got that, we are 4 months out, these 

storms hit in September, August, September, which is 5 months 

down the road, and we are nowhere. It is devastation down there 

and we get hit again. That is what is very alarming to an awful 

lot of people. Not only have we not taken care of that hurricane, 

we have moved so slow, but here is the next season right on us and 

with all the forecasts coming, we are going to have more Category 

3, 4, and 5 storms coming. I think that that puts even a higher 

sense of urgency or what we have got to do, and yet we are just 

grappling with it. 

My time is short but I did want to make that point. My other 

point is that Georgia—whom I represent—is second only to Houston, Texas, as far as evacuees coming to our State. In my District 

especially, I represent the growth counties in and around Atlanta. 

Chairman NEY. Can you start to wrap up, Mr. Scott? 

Mr. SCOTT. Yes, I will. My point is that we need to—could you 

give me some indication of what more we in Congress can do to 

help you? There has been a lot of criticism bandied about, the 

President blaming Congress, Congress blaming the President, what 

say you here now that we in Congress can do to help you get this 

problem moving, resolved? 

Mr. POWELL. I think it is terribly important that the $1.4 billion 

of hurricane protection that is in this supplemental be approved, as 

well as the $4.2 billion that is asked for in this supplemental for 

the people of Louisiana to be approved. I think it is essential, I 

think it is very, very important for hurricane protection and for 

housing mitigation in Louisiana. 

In reference to your earlier point, Congressman, we all have the 

same interest, I assure you that the President is committed to safety, and I assure you that the Corps is doing everything possible to 

complete the work order by June 1st. It is terribly important to the 

people there and to the American people and to this Administration 

and our office, that the Corps be done with that work prior to hurricane season. We are doing everything we can to make sure that 

the work is done. There are a lot of people, a lot of energy directed 

toward that area. As I mentioned, I meet with them every so often, 

as often as we can, and I always ask that first question, ‘‘Are we 

on time?’’ The Corps speaks as it relates that H100, H90 days, 

whatever, of the June 1st start. 

Chairman NEY. I am sorry, the gentleman’s time has expired. 

Mr. SCOTT. Well, I know I speak for all of Congress that we in 

Congress will get you everything you need— 

Chairman NEY. Mr. Scott? Mr. Scott? 

Mr. POWELL. Thank you, sir. 

Chairman NEY. Thank you, Mr. Scott. Your time is long expired. 

Mr. Barrett? 

28

Mr. BARRETT. Thank you, Mr. Powell, for being here today. First 

let me say, I want to just echo Chairman Baker’s comments. I am 

in a group called the Republican Study Committee and it is the 

rock-solid fiscal conservatives of this House, and I am not saying 

I speak for every one of them, but we have some major concerns 

about how we are spending our money. And we feel, there are a 

lot of us who feel, that the only way we are going to get this area 

recovered is to do a public/private partnership. So please take that 

back. This is coming from a lot more Members than are represented here today, so please take that back and make sure that 

is known. If we took a battle plan of the Gulf Coast area, percentage wise, how much of the area has been cleared or cleaned up, 10 

percent, 5 percent, 20 percent? 

Mr. POWELL. In Mississippi, it is well over a half and in Louisiana it is about half. Mississippi should be done with the public 

debris removal by some time in the middle of June and 80, 85 percent of the private debris will be removed then. Louisiana is more 

complex, it is much more complex, Congressman, in that you have 

certain areas because of court orders or because of this issue or 

that issue, it has not been done, plus the city was flooded for about 

8 days. Also, in Mississippi, there was total destruction of some 

things. So Louisiana, it will take some time but I would say the 

public debris removal will be done some time in the middle to late 

summer, and at least 60, maybe two-thirds of the private. 

Mr. BARRETT. I have heard horror stories, and I don’t want you 

to respond to this, but I have heard a lot of people say that part 

of the reason the clean up is going so slow is because middle level 

managers don’t have the authority to say, yes, do this or, yes, do 

that. If you could submit me something to tell me what is going 

on. I have got feedback that people in the government area are 

afraid to make a decision. That is the wrong answer. We need people to make a decision. 

Let’s go to expense, overhead. Wilma, 19.1 percent overhead. 

Rita, 28.9 percent overhead. Katrina, 24.9 percent overhead. Mr. 

Powell, you come from the private sector, I was a small businessman. My daddy and I operated that store for 50-something years. 

We would operate it less than 1 year if we operated it like that. 

What are you doing, what is your plan to make sure that we get 

our administrative costs in line with what is actually going on on 

the ground down there? 

Mr. POWELL. Well, for a long-term rebuilding, specifically housing and some other infrastructure rebuilding, one of the first things 

we always talk about is overhead, administrative cost. And the 

chairman had asked me that question, the very first question, 

about what did I believe that the top number should be as it relates to administrative overhead, and I said 5 percent. Clearly, we 

can do things better. There are some things that we can do that 

would be much better. One of the things is the administrative costs 

in all areas of the government. But I would say, Congressman, that 

Katrina/Rita was a complex, very complex hurricane that we 

haven’t seen before. And, as I mentioned, we can do a lot of things 

a lot better but our office, when we are talking about long-term rebuilding plans, and we are working with the States and the counVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
29

ties and the parishes, one of the things we always focus on is administrative overhead. 

Mr. BARRETT. And I hear you loud and clear, Mr. Powell. We 

have never experienced anything like that in our time but 5 times 

the cost. And I think that reinforces our position with Chairman 

Baker, that to have some public/private partnerships, some folks 

who are actually trying to make some money on this thing and 

using their head. 

Last question, the President in New Orleans yesterday, I think, 

was quoted as saying that he wanted to give up to $150,000 to each 

homeowner who lost their residence to Katrina. That is about $4.2 

billion. Correct me if I am wrong, we have got travel trailers to the 

tune of $92,278 already. That is about $43,076 per trailer. In South 

Carolina, Mr. Powell, that is a permanent home. And I am not 

being facetious and I am not trying to be ugly. We are going to give 

$150,000 and we are going to give these trailers. I see the papers, 

you see them to, I get the phone calls, ‘‘What in the name of God’s 

green earth are you doing? These things are sitting off somewhere 

and they are not being used.’’ What is the rationale behind this? 

Tell me there is a plan and tell me what the thinking is? 

Mr. POWELL. First of all, on the $150,000, that is a maximum. 

It is pre-Katrina value for a home that has been 100 percent destroyed up to $150,000. So some people will get $60,000, some people will get $50,000, some people will get $75,000. So that is the 

maximum. And I might add there are some homes that far exceed 

the $150,000 but that is capped at the $150,000. 

The other issue of mobile homes and trailer homes and etc., and 

so forth, I know because we interact with the folks at FEMA and 

we interact with other members of the government, that there is 

a lot of work directed toward that particular issue you talked about 

and they do have a plan, they do have a plan that will speak to 

those things. But, again, our office we are more directed toward 

long-term recovery of the region. 

Mr. BARRETT. One follow-up question, Mr. Chairman, because I 

know I am out of time, so if you said $150,000 was the cap, if that 

family got one of these trailers as a permanent residence with the 

underpinning and the whole 9 yards, that would count as a portion 

of their $150,000 or is this in addition? 

Mr. POWELL. No, no, that is an intermediate RA, intermediate 

need. It would be $150,000 less any insurance proceeds that you 

may have, not the trailer. 

Mr. BARRETT. Okay. 

Mr. POWELL. The trailer goes back to the government. 

Mr. BARRETT. So the trailer is considered— 

Mr. POWELL. It is not owned by the individual. 

Mr. BARRETT. It is just considered temporary housing. 

Mr. POWELL. Yes, sir. 

Mr. BARRETT. Thank you, sir. I appreciate your coming. 

Chairman NEY. Mr. Cleaver from Missouri. 

Mr. CLEAVER. Thank you, Mr. Chairman. I have a number of 

questions, so I will try to ask them all quickly. But, first of all, having gone through many of the public housing units in New Orleans 

in the 9th Ward and seeing the condition and smelling them, smellVerDate 0ct 09 2002 16:07 Oct 27, 2006 Jkt 030178 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 F:\DOCS\30178.TXT HFIN PsN: TERRIE
30

ing like the devil’s breath obviously, something is dramatically 

wrong; what is the plan for public housing? 

Mr. POWELL. Again, that is a plan that the local people have developed. And the plan for local housing, when you take into consideration the $6.2 billion that Louisiana has been allocated, and we 

are talking about Louisiana— 

Mr. CLEAVER. Yes. 

Mr. POWELL.—$6.2 billion that Louisiana has been allocated and 

the first CDBG money and the $4.2 billion that has been asked for 

in the supplemental and that totals roughly—and other mitigation 

money, in excess of $12 billion. In that plan, the Louisiana plan, 

there is $1.75 that is provided for rebuilding of affordable workforce rental housing that will speak to the low to moderate income 

tenants occupied properties. 

Mr. CLEAVER. Thank you. You spoke of the President’s supplemental budget. 

Mr. POWELL. Yes. 

Mr. CLEAVER. Do you have any indication why the Katrina/Rita 

rebuilding was not in the President’s budget? 

Mr. POWELL. I am not sure if I understand. No, it is in the supplemental, the $4.2 billion plus the $1.4 for levee. And then there 

are some other hurricane relief monies in that supplemental also. 

Mr. CLEAVER. So the fact that there is a proposed cut in the 

Community Development Block Grant, there is a proposed cut in 

elderly housing that is proposed— 

Mr. POWELL. Oh, I see. 

Mr. CLEAVER.—and housing for the poor in the budget. 

Mr. POWELL. Yes, I just know again what Louisiana is planning 

to build as it relates to the hurricane devastation and that is almost $2 billion for low to moderate housing. 

Mr. CLEAVER. Do you understand— 

Mr. POWELL. Yes, I do and I am sure the Secretary of HUD or 

some other people would be happy to answer that question, and I 

will pass that on. 

Mr. CLEAVER. I am also concerned—I am a former mayor, I am 

always concerned about the public hearings that are required by 

law for CDBG allocations and wondering whether or not that is 

going to be done or in some instances I think the legislation may 

say that the Secretary has the authority to waive or to stop a 

project, and I am hoping that is going to be in every dollar that 

is spent coming out of the Department of HUD for housing. I do 

think there has been enough blame going on, and I can’t tell you 

how upset I am over the paper today, and it is not a Democrat—

this is not just a Democrat expressing, as my colleague and I were 

going to vote from here and there was a discussion along the way, 

Democrats and Republicans are concerned. So I am not trying to 

blame—I don’t want to do any blame thing, but what I do want to 

know, and I think my colleague, Mr. Scott, asked this question in 

another way, if you had your way, what could this Congress do to 

make this problem go away? 

Mr. POWELL. I think it is terribly important that the supplemental—the monies asked for in the supplemental for levee protection, hurricane protection is critical to the safety of the people in 

New Orleans. And I would say, Congressman, I feel very strongly 

31

about the $4.2 billion for housing and also housing mitigation. I 

think that was a number, as I say coming from the bank and business, I would loan against. I think that, too, is very important together with all the other issues that the President has asked for 

as it relates to hurricane relief to meet the needs of the good people 

along the Gulf Coast. It is critically important that Congress approve the supplemental. 

Mr. CLEAVER. Two other quick questions. One, HUD has what is 

called a 108 loan fund that does in fact allow for private entities 

to take advantage of the loan fund, and it is guaranteed by the 

city’s CDBG budget. And, as a banker, you are saying you would 

loan against it. We have a program, it is being cut. 

Mr. POWELL. Yes. 

Mr. CLEAVER. I am sorry, that was an editorial. The question, I 

mentioned earlier my speech in Cambridge 2 weeks ago, if someone 

asks you that question, when can I go back home, what would you 

say? 

Mr. POWELL. I would say that an individual who wants to go 

back home, that is the reason the CDBG money is critical. It is 

very critical to the rebuilding— 

Mr. CLEAVER. No, I mean if they say when can I go back home? 

These people are up in Boston, Anchorage, Alaska, Kansas City, 

Houston, they want to know what— 

Mr. POWELL. Yes, housing is a critical answer to that question, 

and I think it is very important. Some of them had homes, some 

of them were renters in housing, so housing is a very important 

thing. Number one, they want to feel safe. They want to feel safe 

that they can go home and that is the reason that the Corps of Engineers and the President has committed to rebuilding the levee 

system where people and business in both the public and the private sector will feel safe to come home and the person who is in 

Houston, Texas, or in Atlanta, Georgia, can come home. 

The second issue is housing. They have to have a place to live. 

And that is the reason that CDBG money that has been appropriated by Congress and in the supplemental of the $4.2 billion is 

critical to the housing issue. Housing is critical so it is very important that it be approved, the supplemental be approved where 

housing stock can be replenished so that person can come back 

home. 

Mr. CLEAVER. Thank you. 

Mr. NEUGEBAUER. [presiding] Mr. Green of Texas. 

Mr. GREEN. Thank you, Mr. Acting Chairman. And, Mr. Powell, 

thank you again for visiting with us today. I consider it an honor 

to have the opportunity to ask you some questions. You have spoken about the levee system being rebuilt to pre-Katrina standards. 

Do you agree that the pre-Katrina standard was Category 3? 

Mr. POWELL. I agree that the Corps of Engineers is on a mission 

to complete by the 1st of June, that they will repair all the 

breaches within the levee system, bring and correct any design 

flaws, number two, correct any design flaws, and bring the height 

of the levees back to pre-Katrina level. And when I asked the question if Louisiana is struck with another Katrina, would the city be 

safe and they have told me that once this work has been done, that 

32

the city will have some flooding but it would be manageable type 

flooding. Furthermore,— 

Mr. GREEN. Mr. Powell, if I may please because my time is limited, and I beg your forgiveness for interceding, but let’s talk about 

‘‘Karita’’ rather than Katrina. Karita, a Category 5, hits Louisiana. 

We have rebuilt to Katrina standards. That is the concern that a 

lot of the residents and business persons have. They are not concerned as much as you might think about pre-Katrina standards. 

And I don’t mean you in general, I am sorry, I meant in general, 

not you personally. We are looking at spending $100 billion rebuilding to pre-Katrina standards and on our watch having a Category 5 hit. On my watch, I have a duty to do everything that I 

can to make sure that we exceed pre-Katrina standards. My understanding is that pre-Katrina standards are Category 3. Category 3 

is not enough. You have not commented on the pre-Katrina standard is. You are saying rebuild to the pre-Katrina standard. Can you 

say yes or no that the pre-Katrina standard was Category 3? Yes 

or no? 

Mr. POWELL. As I have shared with this committee, that hurricane protection is very, very complex, very complex. And that is the 

reason there is, I believe, in excess of $200 million that is part of 

the allocation to study should we go to a Level 5 protection and 

that study is underway now, and hopefully it will be completed in 

a relatively short period of time. But hurricane protection is very 

broad. It includes not only the height of the level but it includes 

pumping stations. It includes canals. It includes wetlands. It includes armoring, all those issues. 

Mr. GREEN. I understand. Let me just share this with you, if I 

may, because I have to go to another topic. Studies have been done, 

studies were done years ago that prognosticated exactly what occurred with reference to a Category 3, Category 4, Category 5. If 

we continue to study this problem, something dastardly will occur 

on our watch that we may never be able to live with and within 

ourselves because there will be a greater disaster than we have 

suffered already if we get a direct hit with a Category 5. 

Now let me move quickly to something that you may not have 

a lot of authority with but I have to mention it because a serious 

problem is about to manifest itself, it is manifesting in fact as I 

speak, and that has to do with the voting rights of people from 

Louisiana. The process itself is going to cause many people who desire to vote not to have the opportunity to vote, the process. One 

part of the process that concerns me is candidates cannot connect 

with voters. FEMA has not released the list of candidates—pardon 

me, of voters where they are, addresses to candidates. If I campaign in my district to have an effective campaign, I can connect 

with voters. I can send them literature. I can write them. Those 

candidates in Louisiana don’t have that opportunity because FEMA 

won’t release the list of addresses of people who are scattered 

across the length and breadth of the country. 

The second part, we have the technology to allow people to vote 

wherever they are. In Houston, Texas, we have tens of thousands 

of people, we should have a polling place in Houston, Texas. There 

is no reason why people who live in Houston, Texas cannot vote in 

their election in Louisiana at a polling place on Election Day in 

33

Houston, Texas. The technology exists. We are failing the people 

who want the right to vote. It is not going to be an efficient effort 

on our part if we continue along these lines. How do you propose 

we make sure that everyone who wants to vote has the right to 

vote? 

Mr. POWELL. As it relates to the list, I am sure that—and I will 

be happy to convey your concerns to FEMA about releasing that 

list, I am not sure what the reason is. There may be legal constraints on releasing that list or other privacy issues or other 

issues that I may not know about, but I am happy to do that. 

As relates to the election in Louisiana, the State, I believe, has 

jurisdiction on how they want to conduct their elections, and I am 

happy to convey your concerns and your thoughts to the leadership 

in Louisiana. 

Mr. NEUGEBAUER. The gentleman’s time has expired. I would advise that we are going to try to have another round if you are interested. 

Mr. GREEN. Thank you. 

Mr. NEUGEBAUER. Mr. Powell, you appear to be of sound mind 

and body, you took the job, I don’t know, I have to raise questions 

about that. 

Mr. POWELL. My wife would question that. 

Mr. NEUGEBAUER. Just so that you know my background, are 

they the ones—the Corps of Engineers, are they the ones doing the 

study on the flood control? 

Mr. POWELL. I believe it is an independent study. I think— 

Mr. NEUGEBAUER. But it is the Corps of Engineers? 

Mr. POWELL. I will have to get that answer to you. We have in 

our district a little hole in the ground that is about 120 feet deep 

full of spring water and the spring comes out. Well, somebody decided years ago from the city to make the bottom more attractive 

to scuba divers so they dropped some big rocks in. As you can 

imagine, the water flow began to eat away at the sides so they 

have been trying for years to get out. Well, we put $50,000 I think 

or maybe $100,000 in the budget a couple of years ago to get those 

rocks out of there. Now you or I could have gone out and gotten 

them out for 10,000 bucks. Some of you are familiar with the oil 

field equipment. 

Mr. POWELL. Right. 

Mr. NEUGEBAUER. So the year passed and I asked did our rocks 

go away and they said, ‘‘No, we used the $50,000 to study them.’’ 

And I said, ‘‘Okay, are we going to get them out this year?’’ And 

they said, ‘‘Well, we need another $250,000 to study it this year.’’ 

The fact that you have got 200 million bucks, Mr. Green is adequately asking about that. 

You say the highest protection or highest priorities for you is to 

approve the supplemental for hurricane protection. Have you 

looked at how much money previously was sent there to upgrade 

the systems and how much money disappeared out of the system? 

I hear quite a lot but I have never heard that confirmed, have you 

looked at the leakage out of the system? I am talking about leakage 

of dollars? 

Mr. POWELL. Yes, you are talking about pre-Katrina. 

Mr. NEUGEBAUER. Yes. 

34

Mr. POWELL. Yes, I have not done a study on— 

Mr. NEUGEBAUER. So my question is what assurance do I have 

as a person voting on this that the same thing is not going to 

occur? 

Mr. POWELL. I think that is always in the uppermost part of my 

mind, I am a fiduciary and make sure that the taxpayers’ dollars 

are spent as directed. As you know, there are many oversight bodies that look at not only the Corps but what is being spent down 

there. Inspectors General are engaged. There is an audit function 

that the Corps, I believe they call it the Triple A, an audit function 

that does nothing but look at the Corps’ expenditures and their 

work and their progress for the integrity of the dollars that are 

spent toward that. 

Mr. NEUGEBAUER. Just as long as you are aware that is a big 

question. 

Mr. POWELL. Yes, it is. 

Mr. NEUGEBAUER. I don’t think you can address it. 

Mr. POWELL. Right. 

Mr. NEUGEBAUER. But I would think that if it does not get addressed, that the future supplementals can desperately be at risk, 

at least my particular vote. 

How much commerce is actually moving through the ports now? 

I know that is a big piece of not only— 

Mr. POWELL. Yes, the port is open, it is 100 percent availability. 

There has been some slow down in the port because some people 

are looking at other alternative ports. 

Mr. NEUGEBAUER. A slow down from what? 

Mr. POWELL. It is probably about two-thirds back up as it relates 

to revenue stream. 

Mr. NEUGEBAUER. Okay. 

Mr. POWELL. Fifty to two-thirds revenue stream. There is another issue as it relates to—it is a deep channel issue there, it is 

a safety versus economy issue. 

Mr. NEUGEBAUER. You mentioned the additional distribution of 

funds up to $150,000. What will determine what level of funding 

people are eligible for? 

Mr. POWELL. I am sorry, I am not sure— 

Mr. NEUGEBAUER. The President’s suggestion that we give 

$150,000 to each homeowner, each person. You said that it would 

be a varying scale, from 60 to 70— 

Mr. POWELL. Oh, I am sorry, I was just using that as an example. 

Mr. NEUGEBAUER. I understand but— 

Mr. POWELL. The pre-Katrina value, whatever your pre-Katrina 

value was, independent from— 

Mr. NEUGEBAUER. Is there going to be any screening based on 

what they brought in from their private insurance? 

Mr. POWELL. Yes, sir, yes, sir, it will be less that. Yes, sir. 

Mr. NEUGEBAUER. Are they going to have to give up their home 

to get that? In other words, if I have got a home that is 30 percent 

damaged, given the number of trailers that are sitting in houses, 

I don’t have a great deal of confidence that if I have a house there 

that is partially damaged, and I get the payment, I am not sure 

35

how the government makes sure it comes out okay, that I don’t 

find a windfall out of that. And I think there is that point. 

Mr. POWELL. Yes, that will be part of the Administration process, 

to be sure that you are only reimbursed for the damage that you 

actually received. 

Mr. NEUGEBAUER. But let’s say I have got a house worth $150,000 and the insurers all it a total damage, I got $150,000 and 

the house still belongs to me. I can go in and maybe use the— 

Mr. POWELL. The salvage value you are talking about, yes. 

Mr. NEUGEBAUER. The frame— 

Mr. POWELL. Yes, it would take that into consideration. 

Mr. NEUGEBAUER. Are you going to use private— 

Mr. POWELL. In other words, that would not be a total, that 

would not be 100 percent— 

Mr. NEUGEBAUER. Are we going to depend on government agencies to determine these values or are you going to use the private 

sector to determine that? 

Mr. POWELL. We have looked at FEMA numbers. We have looked 

at HUD numbers. And part of that will be obviously the onus of 

the administrator disbursing the money. 

Mr. NEUGEBAUER. Again, my objection is that we have all sorts 

of stories of abuses, at some point we have to admit that the government may not have the capability to work in this sort of fashion. It has done a very poor job. 

Mr. POWELL. Yes, I have had lots of discussion with the State 

leadership about that particular issue, and that is the reason the 

integrity of that administrator, it needs to be very transparent, 

subject to lots of oversight where everybody can watch what is happen. 

Mr. NEUGEBAUER. The Chair would recognize Mr. Cleaver for a 

second round. 

Mr. CLEAVER. Thank you, Mr. Chairman. One of the issues that 

you spoke of earlier was the fact that local banks remained optimistic and there is no prediction of bank failures in the region, is 

that accurate? 

Mr. POWELL. Yes, that is my testimony, yes, sir. 

Mr. CLEAVER. Are you that optimistic as well? 

Mr. POWELL. The sense of recovery and the sense of coming back 

in the spirit of the people makes me feel very optimistic. The practical matter and the reality of it, it always goes much slower than 

what I would hope and what they would hope. A lot of that depends upon perhaps factors that are out of their control. But I 

know there is adequate liquidity, there is a lot of money, band deposits are 20 to 25 percent larger than they were pre-Katrina, so 

liquidity is not an issue. I know that bankers are willing to work 

with SBA. They are willing to work with some other programs to 

make sure that capital is injected into the economy. I attended a 

bank conference last week that the FDIC was the sponsor of and 

it brought together bankers in the area, bankers from outside of 

the area. They had workshops on how they could help each other. 

There were some innovative, very productive ideas to enhance the 

banks that may have some problems, some issues from participation to deposits to buying capital. Lots of very productive thoughts 

were brought forth at that workshop. And I was encouraged. 

36

When I go to the area, one of the things I always gravitate to 

because of my background is to go talk to the bankers, how is it 

committed to doing, what do you see, what kind of economic activities are occurring, what can we do to help you? And while there 

are clearly some challenges, and much work that needs to be done, 

I sense some optimism with those bankers. 

Mr. CLEAVER. Does that include optimism for the minority banks, 

there may be three or four minority-owned banks? 

Mr. POWELL. I touch base with those folks. Each bank has a 

unique set of challenges. There are some programs that they have 

availed themselves with. There are some larger institutions that 

are looking for ways to assist those particular banks. And it is my 

hope that 5, 6, 7, 8 years from now they will be stronger and better 

in serving those communities. 

Mr. CLEAVER. When I go to a community, I gravitate to churches 

because I am a Methodist ordained minister. So one of the things, 

we met with a number of the clergy in the area, churches are just 

gone. I don’t know what the legality is but are we able to assist 

churches? 

Mr. POWELL. One of the things the President also assembled was 

a group of foundations, about 60 days ago, and charged them with 

the idea that government cannot meet all the needs. There will be 

some fill in the gaps, faith-based issues, childcare, senior citizens 

communities, libraries, all the things that government by law cannot meet those needs. And we assembled something like 20 foundations. We have a person in our office who is in constant contact 

with those foundations. The State of Louisiana and the State of 

Mississippi have submitted applications to those foundations to 

meet those needs. I am also familiar with the Bush/Clinton Katrina 

Fund, and at the assistance of this president, there have been 

something like $20 million allocated toward black churches in the 

stricken areas. So it is an issue that this Administration feels very 

strong about and we feel very strong about it in our office. And I 

am convinced that those foundations and the generous spirit of the 

American people will meet some of those needs. 

And I will say, Congressman, one of the contacts I talk to are 

various leaders and faith-based leaders in the area, and you are 

right that it is a center of hope. It is the center of the soul of those 

people, and we need to make sure that they are restored as well 

as other infrastructure. 

Mr. CLEAVER. If the churches come back, the people will have a 

little more faith that the city will come back. 

Mr. NEUGEBAUER. Mr. Green. 

Mr. GREEN. Thank you, again. Mr. Powell, permit me to share 

this brief vignette with you, and this actually occurred, I have some 

personal knowledge of it. A parent provided the funds for a party 

for a child and the child wanted to invite a certain person who was 

known to be disruptive at parties. And the parent said, ‘‘No, that 

person cannot come to the party.’’ And the child said, ‘‘But it is my 

party.’’ And the parent said, ‘‘But I am paying for it.’’ Now, I mention this to you because we are paying for the recovery in Louisiana, $100 billion in the final analysis, perhaps even more. If we 

are paying for it and we recognize that people are about to have 

their right to vote circumvented, then we ought to do something 

37

about that. That is the role of the parent. That is the role of the 

Federal Government, to make sure that every citizen’s right to vote 

is protected. We are about to witness citizens who want to have the 

right to vote not have the opportunity to vote, who want the right 

to vote, to exercise their right to vote and not have the opportunity 

to vote. So now in the key position that you are in, how can you 

help them with their right to vote, to merely explain that the local 

government has purview and control is really not enough because 

we have a lot that we can do as the parents who are funding the 

party. 

Mr. POWELL. Congressman, I am sure it is the wishes of every 

local and State official in Louisiana that everybody that is entitled 

to vote be allowed to vote. And I am sure all of those issues were 

discussed. And I would also suggest that I am sure the Justice Department is aware of all of those issues and the court system is 

available. But the good people in Louisiana want every person that 

is eligible to vote be allowed to vote. 

Mr. GREEN. I was at a meeting with the Mayor of Louisiana, and 

he expressed concerns about this. He is one of the good people of 

whom we speak, and he has his concerns about whether people will 

have the opportunity to exercise their right to vote. The NAACP in 

Louisiana, they are among the good people of whom we speak, they 

are speaking of the possibility of litigation because they too are 

concerned about the right to vote. The right to vote is the most precious right, among the most, I suppose there are some others, precious rights that citizens have. If we see an injustice about to take 

place, we ought to do something to thwart that injustice. And I am 

just making an appeal to you that when you talk to the Justice Department, when you talk to the folk who can make a difference, 

talk to them about this because my understanding is satellites 

were not used so that people in remote locations can vote where 

you have a large cluster, Houston, Texas, for example, because it 

was thought that the people of Louisiana could not afford it. They 

are on a very limited budget. It is my belief that if we are paying 

for the party, we can require or at least encourage that some of 

this money that we are using and sending be used to have open, 

free, and fair elections because when this is all over and you see 

that the body politic, the face of it has changed, you are going to 

have for years to come people who are going to express disenchantment in ways that will cause us to have to respond. This is not 

right what is about to take place in Louisiana. It is just not right. 

I yield back. 

Mr. NEUGEBAUER. The gentleman yields back. Mr. Powell, you 

had mentioned the job training for 20,000 people. Do you have an 

approximate cost range that job training is going to cost per person? 

Mr. POWELL. I do not, Congressman, but I am happy to get that 

for you. 

Mr. NEUGEBAUER. How much total funding are we talking about 

for that job training? 

Mr. POWELL. I can’t answer that specifically, I will get that to 

you. 

Mr. NEUGEBAUER. Okay, and the reason I ask is because we have 

seen programs that send people back to work for 50 bucks. 

38

Mr. POWELL. Right. 

Mr. NEUGEBAUER. And programs where it takes $5,000, and I 

have again given the backdrop of everything that occurred in the 

application of funds. 

Mr. POWELL. Cost is always a factor. 

Mr. NEUGEBAUER. What are you doing to hold people accountable 

for the waste, the fraud, and the abuse that has occurred with relationship to this particular expenditure of funds? 

Mr. POWELL. Our office, as you know, cannot—we do not have an 

investigative arm or we don’t have an inspector general but I can 

assure you that it is part of our deliberation, part of our discussion, 

transparency, accountability, checks, and balances, are often mentioned words when we are sitting down talking to the good people 

in Mississippi, Louisiana, Alabama, and Texas. 

Mr. NEUGEBAUER. If you were to guess at the combined waste, 

fraud, and abuse as a percent? 

Mr. POWELL. I wouldn’t—I don’t know, Congressman, what that 

might be. 

Mr. NEUGEBAUER. You had mentioned that one of the things that 

we, as a Congress, can do is approve this supplemental. How many 

more supplementals and how many more dollars do you think it is 

going to take because this is a question I am beginning to hear frequently in my District? 

Mr. POWELL. Some of this will be going on for days, months, and 

years, so the FEMA money and etc., and so forth, I am not sure 

about. Long-term planning, I know that Texas has asked for some 

additional money and that Mississippi has asked for some additional money. The $4.2 billion in the supplemental is dedicated to 

Louisiana. I am convinced that the plan that Louisiana has 

brought forward, that will include expenditure in excess of $12 billion, which a majority of it is for housing, will meet their needs as 

it relates to housing. The levee issue is very important, and again 

that is the reason that the President has asked for the additional 

$1.4 billion in the supplemental. And depending upon other studies, there may be some needs for additional modifying some of the 

levee hurricane protection, wetlands, and all of that going forward. 

But I think the Louisiana is one that has been well thought out, 

one that we agree upon the number of units, and that the housing 

needs will be met under that $7.5 billion. 

Mr. NEUGEBAUER. In the attachment that came with your presentation today, the second line item under one of the spreadsheets 

is flood insurance. 

Mr. POWELL. Yes, sir. 

Mr. NEUGEBAUER. $18.5 billion. 

Mr. POWELL. Yes, sir. 

Mr. NEUGEBAUER. We have had testimony in this committee that 

$23 billion in losses were suffered and were due to come out of the 

flood program, and I think we authorized that $23 billion in additional loans. Is this $18.5 in place of? 

Mr. POWELL. I think that is an in place of and in addition to 

what they said. It is whatever the contractual obligation is, it is to 

replenish the reserves in the flood insurance program. 

Mr. NEUGEBAUER. There are no reserves to be replaced. We have 

the capability to generate $1 billion a year in premiums. 

39

Mr. POWELL. Right, and they are gone. 

Mr. NEUGEBAUER. It is actually an infusion of funds into that. 

Mr. POWELL. Right, right. 

Mr. NEUGEBAUER. The $150,000 payments, are those in addition to this $18.5 billion for flood insurance? 

Mr. POWELL. Yes, yes, sir, that is all CDBG money. Yes, sir. 

Mr. NEUGEBAUER. So you mean we are going to be out $18.5 bil- lion, which was the $23 billion estimate was what the flood damage 

appeared to be, and we are going to pay on top of that? 

Mr. POWELL. Yes. 

Mr. NEUGEBAUER. People can get money from— 

Mr. POWELL. That is a contractual obligation under the flood insurance. Those are people who had flood insurance so that is a contractual obligation. 

Mr. NEUGEBAUER. And you are saying you can get flood insurance from that contractual obligation as well as the $150,000? 

Mr. POWELL. No, it is less insurance proceeds. It is to cap, a maximum of $150,000. 

Mr. NEUGEBAUER. How many people are going to fall under the 

$150,000 max program? 

Mr. POWELL. I will get you those exact numbers. 

Mr. NEUGEBAUER. If you could. 

Mr. POWELL. I will be happy to, yes. 

Mr. NEUGEBAUER. Okay, well, our time has elapsed and they are 

urging us to finish our work before there is a mutiny. The Chair 

notes that some members may have additional questions for this 

panel which they may wish to submit in writing. Without objection, 

the hearing record will remain open for 30 days for members to 

submit written questions to those witnesses and to place the responses in the record. 

With no other comments, this hearing is adjourned. 

[Whereupon, at 12:56 p.m., the subcommittee was adjourned.] 

(41)

A P P E N D I X

March 9, 2006

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