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26–756 PDF 2006

H.R. 4100, THE LOUISIANA

RECOVERY CORPORATION ACT

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

NOVEMBER 17, 2005

Printed for the use of the Committee on Financial Services

Serial No. 109–64

(

(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 

PETER T. KING, New York 

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 

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)

C O N T E N T S 

Page 

Hearing held on: 

November 17, 2005 ........................................................................................... 1

Appendix: 

November 17, 2005 ........................................................................................... 49

WITNESSES 

THURSDAY, NOVEMBER 17, 2005

Batt, Hon. John A. Batt, New Orleans City Council, New Orleans, LA ............. 30

Isaacson, Walter, Co-chair, Louisiana Recovery Authority .................................. 25

LaFonta, Hon. Juan A., Louisiana State House of Representatives ................... 30

Nagin, Hon. C. Ray, Mayor, City of New Orleans, LA ......................................... 12

Schedler, Hon. John T., Louisiana State Senate ................................................... 28

APPENDIX 

Prepared statements: 

Oxley, Hon. Michael G. .................................................................................... 50

Batt, Hon. John A. Batt ................................................................................... 52

Isaacson, Walter ............................................................................................... 64

Nagin, Hon. C. Ray .......................................................................................... 67

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

′′FEMA Broke it’s Promise on Housing,′′ New York Times, November 

17, 2005 .......................................................................................................... 71

Letter to FEMA, October 7, 2005 .................................................................... 74

Watt, Hon. Melvin L.: 

AFL-CIO, news release, November 10, 2005 .................................................. 76

Ammendment to H.R. 4320, National Flood Insurance Program Commitment to Policy Holders and Reform Act of 2005 ........................................ 77

Children’s Defense Fund, letter, November 9, 2005 ...................................... 80

H.R. 4197, Hurricane Katrina Recovery, Reclamation, Restoration, Reconstruction and Reunion Act of 2005 .............................................................. 81

Leadership Conference on Civil Rights, news release, November 10, 2005 296

Local Ininitiaves Support Corporation, news release, November 10, 2005 . 297

National Association for the Advancement of Colored People, prepared 

statement, November 10, 2005 .................................................................... 299

National Urban League, news release, November 4, 2005 ........................... 301

(1)

H.R. 4100, THE LOUISIANA 

RECOVERY CORPORATION ACT 

Thursday, November 17, 2005

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

WASHINGTON, D.C. 

The committee met, pursuant to notice, at 10:14 a.m., Hon. Michael Oxley [chairman of the committee] presiding. 

Present: Representatives Oxley, Baker, Biggert, Shays, Feeney, 

Hensarling, Neugebauer, Price, Frank, Waters, Maloney, Watt, 

Carson, Meeks, Lee, Clay, Baca, Matheson, Scott, Davis, Green, 

and Cleaver. 

The CHAIRMAN. The Committee will come to order. Today we consider H.R. 4100, The Louisiana Recovery Corporation Act, authored 

by the Capital Markets Subcommittee’s Chairman Baker to assist 

in the rebuilding efforts of the Louisiana areas devastated by Hurricanes Katrina and Rita. 

First, I would like to take a moment and assess the active role 

this committee and its members have undertaken in the hurricane 

relief efforts. 

Upon Congress’s return after the August recess, and just days 

after Hurricane Katrina ravaged the Gulf Coast region, the Committee held a briefing to gauge the response of financial services 

companies and industry regulators to the hurricane’s effects and 

the needs of the impacted community. 

The following week, the Committee held a briefing on the response of the insurance industry to Hurricane Katrina. This past 

week, the Capital Markets Subcommittee hosted a briefing on the 

insurance industry response to Hurricanes Katrina, Rita, and 

Wilma. Under the leadership of Chairman Ney, the Housing and 

Community Opportunity Subcommittee held three hearings and 

briefings on the National Flood Insurance Program, and the critical 

housing needs of the hurricane-ravaged areas. 

In addition, the Housing Subcommittee has shepherded needed 

relief legislation to the House floor. The first week after the August 

recess, the House unanimously approved H.R. 3669, The National 

Flood Insurance Program Enhanced Borrowing Authority Act, introduced by Subcommittee Chairman Ney, Subcommittee Chairman Baker, and Congresswoman Brown-Waite, to temporarily increase the borrowing authority of the National Flood Insurance 

Program to pay Hurricane Katrina-related claims. 

And yesterday, the House passed similar legislation, H.R. 4133, 

The National Flood Insurance Program Further Enhanced Borrowing Authority Act, introduced by Congressman Fitzpatrick and 

2

passed in this committee in late October, to enhance borrowing authority for victims of all three hurricanes which have devastated 

the Gulf Coast region. 

In addition, yesterday, the committee passed a much needed bill 

to reform and strengthen the National Flood Insurance Program, 

H.R. 4320, The National Flood Insurance Program Commitment to 

Policy Holders and Reform Act, introduced by Ranking Member 

Frank and myself. 

In early October, the House passed three bills providing direct 

housing relief to survivors of Hurricanes Katrina and Rita: H.R. 

3894, The Hurricane Katrina Emergency Housing Act, introduced 

by Congressman Alexander; H.R. 3895, The Rural Housing Hurricane Relief Act; and H.R. 3896, The Hurricane Katrina Emergency 

Relief CDBG Flexibility Act, both introduced by Capital Markets 

Subcommittee Chairman Baker. 

On October 26, 2005, the House overwhelmingly approved GSE 

reform legislation, H.R. 1461, The Federal Housing Finance Reform 

Act, which included a housing fund provision granting priority to 

affordable housing proposals in hurricane-affected areas. 

In mid-September, the Financial Institutions and Consumer 

Credit Subcommittee held a hearing focusing on legislative relief to 

aid hurricane victims’ access to financial services. The testimony 

and discussion generated at this hearing provided the impetus for 

the consideration of three more financial services relief bills. 

On October 27, the House passed unanimously H.R. 3945, The 

Hurricane Katrina Financial Services Relief Act, introduced by 

Subcommittee Chairman Baker, to provide relief to financial institutions affected by Hurricane Katrina. That same day, the committee passed by voice vote a similar bill covering Hurricanes Rita 

and Wilma-affected institutions, H.R. 4146, Hurricanes Rita and 

Wilma Financial Services Relief Act, also introduced by Subcommittee Chairman Baker. 

The Committee also passed by voice vote H.R. 3909, The Hurricane Check Cashing Relief Act, introduced by Congresswoman 

Brown-Waite, to reduce financial difficulties for hurricane victims 

devoid of personal identification and financial records and with limited access to financial services. 

These are the efforts this committee has undertaken over the 

past few months. Our work, however, does not stop here. And I 

promise that this committee will continue to help lead recovery and 

rebuilding efforts. 

In closing, I would like to commend my fellow committee members for their diligence, compassion, and bipartisan spirit in 

crafting relief for the individuals and communities who have suffered the effects of these devastating hurricanes. 

I look forward to hearing from the witnesses, their views on Mr. 

Baker’s relief proposal, H.R. 4100, The Louisiana Recovery Corporation Act. And I now yield for an opening statement to the gentleman from Massachusetts. 

[The prepared statement of Hon. Michael G. Oxley can be found 

on page 50 in the appendix.] 

Mr. FRANK. Thank you, Mr. Chairman. This is a subject, obviously, of great importance. And the Congressional Black Caucus 

has had a very special interest in this and has developed comVerDate 0ct 09 2002 15:46 Jun 01, 2006 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 G:\DOCS\26756.TXT RODNEY
3

prehensive legislation on the subject, a piece of which was offered 

as an amendment yesterday, and after a very vigorous debate was 

defeated, but on a close vote, and we hope that it stays alive. 

And therefore, in the interest of the best, fullest discussion, I am 

going to yield the remainder of my time to our committee member 

who is a housing expert and also the chair of the Congressional 

Black Caucus, and major author of the bill, the gentleman from 

North Carolina. 

Mr. WATT. Thank you, Mr. Frank. I thank Mr. Frank for yielding 

to me to—for the purpose of making this opening statement. 

I want to welcome the witnesses, especially my good friend, Senator LaFonta, from the State legislature. Mr. LaFonta participated 

with us at the Congressional Black Caucus Annual Legislative 

Conference and provided input into the bill that the Congressional 

Black Caucus has produced, and welcome him, in particular. And 

I have seen the mayor on television; I have not met him in person, 

but we certainly want to welcome him. 

Let me just say that I assure Mr. Baker and the witnesses that 

our interest here is to try to find solutions that will be helpful to 

the Gulf region. And it is for that purpose that we are here. We 

are not necessarily at odds with all or parts of Mr. Baker’s legislation, although I think you will find that we think that’s a longerterm piece of legislation, and I hope you won’t be surprised if we 

focus more on some of the more immediate responses to this catastrophe today. 

That does not mean that we are not interested in the longer-term 

discussion, but we certainly will want to know what your positions 

are short of that because we take Mr. Baker’s legislation to be a 

last resort legislation. You set up this corporation to take people’s 

property, or to assume control over property, but we assume that’s 

a last resort. The first resort is to get people back into this area 

in ownership of properties that they previously owned and residing 

in that area. 

You should know that the Congressional Black Caucus consists 

of 43 members, and 12 of those members happen to be members 

of this financial services committee. So our desire is to have a constructive role in the process of shaping legislation that will be helpful to you and not be put in the position that we will have to play 

a destructive role in that process. 

But we are—we have a set of beliefs about what needs to be 

done. Three of our members are from the Gulf area: Representative 

Jefferson, from New Orleans; Representative Artur Davis, who is 

a member of this committee, from Alabama; and Representative 

Thompson, from Mississippi. So we get direct input from our members also about what is needed. 

And so, with that having been said, I want to assure you that 

we are here for a constructive purpose, and we are here to hear 

your honest views, not any views that may be coerced by the fact 

that a number of the dollars that participate in this reconstruction 

process may be coming from the Federal Government. 

So we hope you will be honest and open with us in your opinions 

and not let this setting deter you from expressing your honest opinions about both what is on the table and other questions that may 

be posed to you. Thank you. With that, I yield back, Mr. Chairman. 

4

The CHAIRMAN. The gentleman yields back. The Chair now recognizes the gentleman from Louisiana, the architect of this proposal, 

and thanks him for his leadership on so many of these issues. 

Mr. BAKER. Mr. Chairman, I thank you and Mr. Frank for your 

courtesies extended in this matter. It is certainly to be recognized 

by all of us within the State of Louisiana, that this Congress—this 

committee, in particular—has been significantly responsive to the 

needs and creative in providing those different methods of assistance to our State. 

And it cannot be said enough how appreciative all of our constituents are for the courtesies extended and the offers of assistance that continue to be made on our behalf. 

I wish to explain to members that I had intended to be a part 

of the witness panel this morning and speak to the committee as 

to the elements of H.R. 4100 from that perspective. I was asked by 

the chairman to be available to perhaps take the chair at a future 

point during this hearing this morning. 

And for that reason, I speak today as a member of the committee, but want to take a brief liberty to talk about what H.R. 

4100 does in order to establish it for the record and offer to the 

members of the witness panel, with which I would have been participating, to have questions with which they may not have comfort, relative to the construction of 4100 be referred to me, even if 

I am in the chair. 

Mr. FRANK. Mr. Chairman, could I just say at this point we 

would be glad to waive any 5-minute rule. I think it would be useful to have this laid out. So the gentleman shouldn’t feel constrained by time. 

I think it is in everybody’s interest to just lay that out, as extensively— 

Mr. BAKER. I am most appreciative for the gentleman’s courtesy. 

This does require a little bit more than a 5-minute explanation, 

and I will proceed as quickly as possible to first start with the purposes of H.R. 4100. 

It is to develop what we all collectively believe to be a responsible 

plan for the recovery of communities. This is not just about the restoration of a single individual’s home. To do so returns an individual, perhaps, into a desolated community without a grocery 

store, without a post office, without police. 

So this has to be community restoration. In some cases, the entire restoration of social order. There are no fire trucks; there are 

no schools; there are no groceries. There are literally are, block 

after block, of desolated homes. 

There isn’t, to my knowledge, a plan that has yet been identified 

to deal with that reality. There are a number of suggested plans 

going forward, but most are deficient when it comes to a recommended methodology for payment of the obligations associated 

with the recovery. 

We also understand, as Louisianans, and are most sensitive to 

the perceptions others may hold about our State from outside those 

who reside in Louisiana and that we have obligation to the taxpayers of this country to demonstrate a plan which, to the best of 

our ability, is responsible to and accountable for the expenditures 

5

made and, if possible, to restore the loans made to us during our 

time of critical need. 

I also wish to make clear that H.R. 4100, as distributed to the 

members this morning, was introduced now a month ago. It is a 

document in the works. Some witnesses this morning will explain 

their particular perspective on how it may continue to be modified. 

We have distributed for members’ benefit the modifications 

agreed to not contained in the document now at members’ desks, 

which I shall speak to momentarily, because there had been valid 

suggestions made and agreements reached to modify the bill. 

And there will be, at some point, either a manager’s amendment—if the bill were to be marked up in full committee—that 

would reflect those changes, or modifications to a bill, if it were to 

be included in another measure considered on the House floor. 

Today we have with us a city councilman, a State representative, 

a State senator, the mayor of the great City of Orleans, a representative of the Governor’s recovery authority, all of whom are 

here to speak to the advisability, from their perspective, of moving 

forward with something like H.R. 4100. 

So what does it provide? With the Treasury Department’s assistance, long-term full faith and guaranteed public debt would be 

issued, which would be made available to the corporation. The corporation would make utilization of those resources, not for expropriation. 

I wish to make clear this will not require any individual to forego 

ownership of their property if they do not choose to voluntarily 

enter into negotiations with the recovery corporation. If you don’t 

want to sell, you don’t have to. That is an essential element that 

has changed, from the perspective of some, from the original proposal. 

What will be offered? To owners who are now sitting with property that is impaired, who have a mortgage obligation, perhaps a 

job, perhaps not, maybe living in a FEMA trailer, maybe out of 

State, they have no expectation of how they can recover. 

The corporation will approach those individuals with an offer, 

principally relating to the equity they hold in their property. The 

mayor has made excellent recommendations as to valuation methodologies which might be employed to assure equitable treatment 

of homeowners. 

In addition, should the homeowner agree to a settlement figure, 

we will then step in, as the corporation, into the borrower’s shoes, 

and negotiate resolution with the financial institution. 

Financial institutions also find themselves in a unique and distressed circumstance. They now have a mortgage obligation for 

which payments are not being made. They have collateral which is 

impaired. In order to make the collateral marketable, they must invest money to clean it up, meaning they are going to have to put 

money into a mortgage obligation in order to recover a small percentage of the debt which they are owed—an untenable financial 

condition. 

The result is the corporation will reduce—take a reduction in the 

bank’s financial condition, but offer them a way to also escape from 

the untenable financial circumstance by making partial settlement 

on the mortgage obligation. 

6

As a condition of that settlement, however, it will be required of 

the lender to release the borrower from their obligations, so that 

the borrower, with cash in hand, and now a clean credit report 

with respect to that mortgage obligation, may come back to the 

community and reinvest, if they so choose, in the redeveloped community. 

Another opportunity. The homeowner may elect a first right of 

refusal. If they choose not to leave the community and wish to return, but not sure they believe us, that the redevelopment is going 

to meet their expectations, they can take their settlement figure, 

come back in 2, 3 years, and agree to repurchase the lot, which we 

bought from them, at a pre-development price. They get a deal. 

That enables them to make another choice: ‘‘I can leave for a 

while and come back and take a look and see if it’s the real deal, 

and if it is, I can reinvest.’’ 

A third option. They can be a true partner in the redevelopment. 

Take no money. They make alternative arrangements during the 

interim for the recovery. During the recovery period, we try to assure them that a lot of approximate size and prior value in approximately the same location will be made available to them. 

Their only obligation is to reimburse us for the pro-rata cost of 

the clean-up work—taking down structures, cleaning up environmental problems—a few thousand dollars. They get their original 

site back, as best we can develop it, in the condition that it was 

prior to the storm for them to rebuild the home of their choosing. 

The last option. Do nothing. Keep your property as it is. We do 

not provide assistance; we do not coerce; we do not ask; it is the 

decision of the homeowner to choose which option suits their family’s requirements best and meets the needs of their future. 

Why will this work? Today we are an impaired community. We 

are desolate communities. The councilman will have photographs to 

present to the committee in a moment to show the before and 

afters in many instances. Very telling visual evidence of our problem. We can’t go in and build a single home. We can’t go in and 

build a block of homes. We need to go in and reconstruct communities. 

This requires something of the order of the corporation to be able 

to step in and help. Someone suggested this is a long-term plan. 

Let me explain the short-term consequences. 

Today we are closing in on the 90-day forbearance window granted homeowners on the payment of their mortgage obligations. That 

is going to run out. Banks will have no regulatory choice. Regulators will require them to act to protect the solvency of those financial institutions. What does that mean? It means foreclosure 

notices can begin to go out as early as January. That will be a disaster for over 100,000 homeowners. 

If we were to pass H.R. 4100, which provides a mechanism for 

future reimbursement of financial institutions for their mortgage 

obligation, I am told by regulators that a real recovery plan adopted by this House, moving forward through due process, will enable 

them to extend forbearance terms up to one year. 

That would mean, to homeowners in Louisiana who are now uncertain as to their future, if we are to pass 4100, which provides 

a take-out for the mortgage companies and financial institutions, 

7

that the regulators will say, ‘‘Your 90 days now is extended to a 

full year.’’ This is significant and immediate and absolutely urgent 

assistance needed for the people of Louisiana. 

By the way, this is not the only remedy proposed. Although not 

the subject of this hearing, nor within the jurisdiction of this committee, there is a broad expansion of the Community Development 

Block Grant program, which Mayor Nagin can speak to, I think, 

perhaps better than anyone in his capacity as mayor, and how 

CDBG has worked within his community, and what it would mean 

to have a Katrina/Rita-specific CDBG authorization with significant appropriated dollars associated with that effort. 

The Louisiana Recovery Corporation is not the cure for everything. It is a tool. CDBG is not the cure for everything. It is a tool. 

But the two together are a powerful, influential effect on our ability—at the local level, not the Federal level—to reconstruct communities in a way which they are deserving of getting assistance for. 

The LRC will not require the planning be done at the Federal 

level. The mayor, in his commission, the Governor in her commission, local homeowners organizations will decide where and if the 

corporation’s assistance is required. The corporation will not show 

up in communities and say, ‘‘We’re here to help you.’’ The corporation will come, based on the action of local community leaders requesting the corporation’s involvement, because the recovery is beyond the scope of resources of the local community or the State. 

The corporation will be invited in, and they will be invited in to 

implement the plan developed by local community leaders. They 

will make application through the recovery authority to the Treasury—excuse me, to the corporation, to the Treasury, who will issue 

the long-term public debt, enabling year over year reconstruction 

effort to proceed. 

And we should not mislead. This is not a resolution that will be 

easily achieved in 30 days, or 90 days, or 6 months. This is perhaps 

a decade-long effort. It will require the continued patience of this 

Congress, observing the fact that we are going to do this in a clear, 

transparent way. And at the end of this process, when the corporation has cleared the deck and reclaimed substantial acres of property, the property will be sold into commerce. 

There is the most important point for those of my friends concerned about taxpayer liabilities. That will enable us to have a repayment of the debt issuances by the Treasury Department from 

the sales of property reclaimed by the corporation. 

I hope that the committee understands that this is a recommendation not evolved in one office, nor by any single individual, but by all stakeholders over the period of the last month. 

H.R. 4100, as on your desk, is not the H.R. 4100 we are talking 

about today. Please find the addendum that has been distributed 

to all members that indicates the already agreed to modifications 

to H.R. 4100, which I believe each of the witnesses will speak to 

here this morning. 

Mr. Chairman, I have gone well over my allotted time. I wish to 

thank Mr. Frank for his courtesies extended, and do hope that the 

committee members will find this approach to be helpful in our resolution efforts. 

8

The CHAIRMAN. I thank the gentleman. The gentleman from 

Massachusetts? 

Mr. FRANK. Thank you, Mr. Chairman. First, let me say that, at 

the request of the gentleman from North Carolina, I would ask 

unanimous consent to include into the record the text of the CBC 

bill, and an explanation—I would yield to the gentleman, if that 

is— 

Mr. WATT. I would just—I thank the gentleman for allowing me 

to make the request, a unanimous consent request, to insert into 

the record a copy of H.R. 4197, and the bill summary in lieu of taking equal time to explain the bill that has been represented as 

there not being an alternative out there. 

Mr. FRANK. And I am sure we will be discussing that further. 

I want to talk not just so much about the bill—though there 

are—and it’s a new subject, and a difficult one, and obviously, 

many of us are going to defer, to some extent, to the people from 

the affected area. I have already spoke to our colleague—obviously, 

Mr. Jefferson—I called Senator Landrieu, and will be particularly 

interested in the input. 

And one piece of it does deal with something that has concerned 

many of us, which was the prospect of smaller banks, which have 

a very large percentage of their economic activity in the affected 

area, failing because loans that were prudent when made have 

been literally washed away. 

And that is not only unfortunate to the banks, but one of the 

things that many of us have been concerned about is the trend towards bigger and bigger banks and bank consolidation. Many of us 

believe that smaller banks, minority banks, and other banks, small 

credit unions, play a very important role. And having them wiped 

out would be a problem. There are aspects of this bill, obviously, 

that deal with that. 

But there is another aspect that particularly troubles me—it’s 

the reason I’m on this committee and why I got here 25 years ago, 

and that’s housing. And I am terribly disheartened by the absolute 

inadequacy of this Administration’s response in housing, both 

short-term and long-term. 

On October 7th, I wrote to FEMA. And one of the problems here 

is that HUD has sort of been kept out of this, and FEMA has been 

running the housing operation without, it seems to me, a lot of cooperation with HUD. I wrote to FEMA on October 7th, and I will 

ask that that letter be put in the record, saying, ‘‘Look, you gave 

people 3-month housing. What’s going to happen at the end of 3 

months? Let’s let them know now.’’ I got no answer. 

On Tuesday, 2 weeks before the expiration of the 3 months, 

FEMA announced that 50,000 people who live in hotels outside of 

Louisiana and Mississippi will have to move. People whose lives 

were disorganized, who may not have great economic resources, are 

now given 2 weeks to move, and to move into some place that’s 

going to rent to them for 3 months. 

I don’t know whether the people who run this are people who are 

used to kind of time share resorts. The notion that you can easily 

find a 3-month rental at these levels in the cities, apartment owners are not going to give their best stuff out for 3 months. 

9

To give 50,000 people whose lives have been disorganized and 

who probably don’t have the resources—because, otherwise, they 

would not be in the hotels; they would be in alternative housing 

they could have found—to give them 2 weeks to find a 3-month 

rental is just nuts or just shows a kind of great indifference to the 

needs of people. 

Beyond that, they announced that they’re going to continue this 

3-month restriction, and they’re going to keep cities and towns and 

States from helping. There is a very good article in today’s New 

York Times, page 820, by Ralph Blumenthal and Eric Lipton. Mr. 

Lipton has been following this closely. Headline, ‘‘FEMA Broke its 

Promise on Housing, Houston Mayor Says,’’ and we have here the 

gentleman from Houston, Mr. Green, who has been very concerned 

about this. I would ask unanimous consent to put this in the 

record. 

The CHAIRMAN. Without objection. 

Mr. FRANK. Mayor Bill White of Houston accused FEMA of 

breaking its promise to Hurricane Katrina evacuees by imposing 

strict limits on a housing relocation program, as it stops thousands 

of hotel subsidies. 

So there is chaos on the near term. Telling these people that—

now they’re on their own—if a State or a city wants to help by 

being an intermediary and finding the apartments, you know 

what? A landlord might be more willing to rent to a city or a State 

than to some individual who has no ties to the community for 3 

months. 

FEMA has said, ‘‘No, that can’t happen.’’ Why? Why do we debar 

States and cities who want to help, outside the hurricane area, 

from being intermediaries? 

And then we have the problem of the long-term housing, and 

that is an area where I think the CBC bill has a major piece that 

is missing. I would appreciate Mr. Baker—and we have had conversations, and he has, in his legislation now, talked about proposed expanding the community development block grant and 

home funds for public services. That’s important. 

But we need more than that. We need to do something about 

housing. To date, the only Administration program on housing is 

the urban homesteading program. Well, this is not 1843. And giving people a vacant lot and an axe ain’t going to work in New Orleans. In fact, you probably—maybe you don’t want them carrying 

axes around. 

You could, in the 19th century, go chop down trees and build a 

house in open space. You cannot do that in a big city. The President, in fact, acknowledges that. Because under the urban homesteading program, you get to be eligible for one of those in a lottery. Well, when you do a lottery, you are, of course, making clear 

what a very small percentage of people are going to win. You also 

get the right to build the house, but no money to build it. 

I should also add that one of the areas that they were going to 

use to provide the housing that would be available were FHA properties. In the reconciliation measure, the once and future—maybe, 

maybe not—reconciliation measure, we were forced to vote to rescind the funding for that program, that puts those houses into 

shape to be lived in. 

10

So there was this chaos in the near term with housing, and there 

was a complete absence of any recognition that significant subsidy 

funds are going to be needed if moderate and lower-income people 

are going to be able to live there. 

Now we did—and I appreciate the gentleman from Louisiana, the 

chairman’s help—we did, in our GSE bill, get a source of money 

that would be available, hundreds of millions of dollars would be 

available for affordable housing. We have differences over some of 

the restrictions, but there is an agreement to do that. 

Unfortunately, that’s not going anywhere in the Senate; the Administration is opposed to it. So I would hope, at the very least, 

they would recognize that we have offered them a non-budget-impacting way to send hundreds of millions of dollars for affordable 

housing to the affected areas. And so far, all we’ve gotten from the 

Administration is, ‘‘We’re against it.’’ 

So as we go forward in this, I intend to continue to draw attention to this. And I just close, the mayor of Houston says he can’t 

believe that FEMA’s restrictions on his ability to help people, many 

of whom live in Houston—as the gentleman, Mr. Green, has reminded us, because he has worked so hard with them—he can’t believe they’re going to stand. It is not too late for FEMA to get sensible. 

Mr. BAKER. [presiding] I thank the gentleman. Mr. Hensarling? 

[No response.] 

Mr. BAKER. Mr. Neugebauer? 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. I don’t have a lot 

of remarks, but I would just say a couple of things from experience 

in the past. 

In 1970, a tornado hit Lubbock, Texas, and hit an area some of 

which were low income. And we took that lemon and made lemonade out of that. We did that with the private sector and CDBG. 

Now that area, for example, doesn’t even qualify for community development block grant money because the income levels are too 

high. 

Also going on in our community today is one of the largest redevelopment projects in the country, basically a one-square mile area 

which was an area that had become laden with crime and substandard housing. And private sector driven, that area now is turning into a great area. It’s changed the dynamics of that area. 

And so, I think one of the things that I like about the plan being 

presented here is that it is a plan that allows the private sector to 

have a heavy participation in that. And I think that any successful 

plan for any area that has experienced this kind of devastation, 

this kind of change—and basically, you know, that area will be forever changed. 

And so, I think it’s incumbent upon all of us to look for ways that 

we can bring all of the community together. But certainly I think 

that if you want to have a successful one, you are going to have 

to have one that is private sector, maybe even led with the Government facilitating. 

I have served on the city council, now a Member of Congress, but 

I am a land developer and a home builder. And I know if you want 

participation from the private sector, you have to allow for a—to 

facilitate that, and you have to facilitate it with infrastructure, and 

11

you have to facilitate it in a way that allows for a market-drive recovery and a market-driven reuse of that area. 

Many people are going to put pressure on you to go back and try 

to put it back the way it was. But the thing about change is that 

change is not doing it the way it was. And maybe—hopefully—it 

will be for the better. 

And I would hope also—and I heard a little bit of some comments made today—with the purpose that we’re here today, and we 

can either talk about the lemons, or we can talk about the lemonade. And I hope our discussion today will be about the lemonade. 

Thank you, and I will yield back the balance of my time. 

Mr. BAKER. I thank the gentleman. Mr. Watt? 

Mr. WATT. Thank you, Mr. Chairman. I won’t take the full 5 

minutes, but I hope we’re here to talk about lemonade, too. And 

Mr. Chairman, I never did hear—I think you and the chairman 

were switching seats when I made a previous unanimous consent 

request, and that was never granted. I asked unanimous consent 

to submit into the record H.R. 4197 and a bill summary. 

Mr. BAKER. Certainly, without objection. 

Mr. WATT. Okay, I just wanted to make sure that we had gotten 

a ruling on that unanimous consent request, as well as the written 

endorsements of H.R. 4197 by the NAACP, the National Urban 

League, the United Negro College Fund, the Local Initiative Support Corporation, The United Way of America, Operation Hope, 

Rainbow/PUSH, The Black Leadership Forum, and The Children’s 

Defense Fund. I would ask unanimous consent. 

Mr. BAKER. Without objection. 

Mr. WATT. All right. Just wanted to just quickly make sure that 

the representation that has been made that there has not been a 

comprehensive bill introduced in response to the Katrina disaster 

is just not the case. And if we are going to talk about making lemonade, we need to talk about making lemonade around ideas that 

a wide variety of people have coalesced behind. It can’t be only 

about setting up a corporation whose primary purpose it will be to 

take land from people and be the master over that land. 

So if we’re going to have a lemonade conversation, let’s make 

sure that we’re talking about putting all the lemons and the sugar 

and the water into the lemonade. This will not be a discussion only 

by the lemon owners. With that, I yield back to the chairman. 

Mr. BAKER. I thank the gentleman. I am advised that the mayor 

has another obligation on the Hill. I do not wish to forestall anyone’s opening statement, but wish to make members know that if 

they would like to have the availability of his testimony, and perhaps an opportunity to question, that we could move forward to the 

mayor’s testimony. But I will not insist; I am merely making an inquiry. 

Would there be objection if we would proceed to the mayor’s testimony at this time? 

[No response.] 

Mr. BAKER. If there is not, Mr. Mayor, I don’t know that you 

need introduction at this point. Everyone certainly has come to 

know you through various means. I have come to great appreciation for your leadership in these difficult hours and particularly 

want to express my appreciation for the courtesies extended, as we 

12

have really tried to work our way through a resolution process, and 

we welcome you here this morning and look forward to your comments, sir. 

Mr. FRANK. We just didn’t recognize you with the tie. 

STATEMENT OF HON. C. RAY NAGIN, MAYOR, CITY OF NEW 

ORLEANS, LOUISIANA 

Mr. NAGIN. Thank you, Mr. Chairman, and to members of the 

committee. It’s, you know, a pleasure to be here for these committee hearings. I want to particularly thank Congressman Richard 

Baker for what he is doing and the leadership he is providing. 

To all Members of Congress, and especially our Louisiana delegation, the City of New Orleans owes you a great debt of gratitude 

to continue to look for solutions to help us as we come out of this 

incredible tragedy that has befallen our wonderful city. 

You know, my message is to come up and support this bill, but 

also to say that New Orleans needs assistance, and we need assistance now more than ever before. A lot of our citizens are still 

spread out among 44 different States, and we really do not—we are 

running out of time, as it relates to individuals trying to make decisions on whether to move back, how to move back, whether they 

feel comfortable enough about the levee systems, whether they feel 

comfortable that they have the resources necessary to move back, 

and what this Congress and what the State government and what 

the local government is doing to facilitate and accelerate them coming back. 

You know, I don’t need to bore you with a lot of the details of 

Katrina. It was worse than anyone could ever imagine. It’s the 

largest natural disaster in the history of this country. And I am encouraged by everyone saying that New Orleans is so important and 

that we do not see—as the President said, ‘‘There is no way to 

imagine America without New Orleans, and this great city will rise 

again.’’ 

But the only way this great city will rise again is if we get help 

and if we get immediate help. So I have been up here on Capitol 

Hill at least once a week, talking to everyone, trying to get their 

ideas. I have been trying not to do what other people do, and that’s 

to shoot down ideas before I fully understand them. 

So I had the wonderful opportunity of sitting with Mr. Baker and 

discussing his bill because I did not understand it fully. And after 

coming away from that discussion and studying the bill even further, I thought that—and I still think this—that we have an opportunity to use this as an instrument to affect people’s lives, people 

that really need help. 

And I’m kind of off script right now, but I kind of feel the need 

to do this. What most people don’t understand about New Orleans 

right now is that we are moving in a very positive direction as it 

relates to recovery. But we still have a plethora of challenges in 

front of us. I have opened up enough zip codes in the city that, 

based upon pre-Katrina census numbers, we can bring back 

255,000 people. And it’s very diverse, you know; it’s—the demographics are very similar to what you had pre-Katrina. 

But there are some significant challenges in housing. And as I 

look at what FEMA’s doing, as I look at what the Corps is doing, 

13

and the slowness of the overall responses, the thing that bothers 

me the most and why I’m up here advocating this bill is because 

we have lots of home owners in New Orleans that are trying to figure out how to come back and rebuild their homes. And the Tauzin 

legislation basically deals with businesses. 

This piece of legislation that Congressman Baker has put forth 

deals with people and their homes. We have been able to figure out 

lots of solutions based upon individuals that have flood insurance 

or that can take advantage of SBA 2.67 percent loan money. The 

thing that we have not been able to do—and it’s frustrating lots of 

residents—is to come up with a comprehensive program to allow 

those individuals that cannot, or will not, or do not have the resources to rebuild. 

And let me give you some very specific examples. My entire family lives in New Orleans, for the most part. I have aunts and uncles 

that lived in their homes, that did not have flood insurance, that 

their homes were paid for, and they lived from day to day because 

they’re on fixed incomes in a retirement mode. There is tremendous 

amount of senior citizens in our city right now that cannot afford 

to pay for somebody to go in and gut their homes so that they can 

move forward in the rehabilitation of their homes. 

As I appreciate this bill, this bill will set up an authority. It will 

set up a process to provide financial resources. So for someone who 

fits in this category that I’m most concerned about that does not 

have the resources, it will allow them options. It will allow them 

options to maybe get some financial resources to repair their 

homes. It will allow them options that, if they want to take a check 

and they want to move to a senior assisted living facility temporarily until their neighborhood is rebuilt—and they still have rights 

of first refusal, once the neighborhood is rebuilt, to move back—

this bill allows them to do that. 

And here is the big thing that I am really hoping that this bill 

will help us to do. As people are moving back to make the decision 

to rebuild in New Orleans, they’re doing it in onesie twosies. So 

this is a neighborhood in New Orleans—this is a great example—

this congressman may decide to rebuild their homes, but all these 

empty chairs represent people that may or may not be able to rebuild their home. So I could be stuck with a neighborhood that has 

four people living in it. 

Over here, these folk on this side, on the left-hand side, have figured out a way, creatively, to rebuild their homes. So they may be 

well populated, and they may be able to create an environment 

where there is a neighborhood. But over here to the right, I do not 

have a neighborhood. And I am hopeful that this bill will allow us 

to create neighborhoods again in the city and particularly provide 

the resources for the people who need it the most. 

The congressman talked about CDBG money. I have worked with 

HUD over the years; I have seen the work that this particular 

group of funding does. It’s our most flexible dollars as it relates to 

redevelopment. We tend to use CDBG money for soft second assistance, for first-time home buyers. We can use it for down-payment 

assistance. We can use it for infrastructure development throughout the city. 

14

We have also come up with some innovative programs to help 

people that are on Section 8 certificates, to allow them to use those 

Section 8 certificate vouchers and those monthly payments, 

grouped with CDBG dollars, to allow them to become first-time 

home buyers for the first time in their life. 

And as we think about the redevelopment of New Orleans, a city, 

for the most part, that was a city of haves and have nots, if we can 

create the right instrument to create home ownership, or to maintain home ownership in some of the areas that need it the most, 

then you will see a city rise from the ashes—or I should say from 

the waters—you will see a city rise from the waters. And this Congress and this Federal Government will not need to support us for 

20 or 30 years in the future. 

But with CDBG dollars and these types of instruments and the 

other instrument that the gentleman from North Carolina outlined 

for us will allow for the Federal Government, State, and local government to create the initial stimulus for the private sector to come 

in and support this community so that we bring neighborhoods 

back up, you know, as we need to do that. 

New Orleans is going to come back. I have no doubt about that. 

It’s just a matter of how we come back, if we come back comprehensively or we do it in a scattered manner where we do not develop 

neighborhoods comprehensively. That concludes my testimony, Mr. 

Chairman. 

[The prepared statement of Hon. C. Ray Nagin can be found on 

page 67 in the appendix.] 

Mr. BAKER. Thank you, Mr. Mayor. I have shared time with you 

and don’t feel the necessity to ask questions in this forum. I would 

like to—it’s a little out of order; normally we go through each witness, and then we open up for questions. Given the mayor’s schedule, if we can perhaps provide for 10 or 15 minutes worth of questions and then proceed? 

One other little note of business. I would like to acknowledge the 

return of a distinguished former Louisianan, Member of the United 

States Senate, J. Bennett Johnston, good friend for many years. We 

served together on the Hill. Good to have you here, sir. Welcome. 

Mr. Frank? 

Mr. FRANK. Thank you, Mr. Chairman. Let me just deal with one 

issue, which I think you have resolved in the later version of the 

bill. 

But when the House debated the bill dealing with eminent domain, there was unanimous acceptance of an amendment offered 

by the gentleman from Texas, Ms. Jackson-Lee, which said it’s the 

sense of Congress that, ‘‘Any and all precautions shall be taken by 

the Government to avoid the unfair or unreasonable taking of property away from survivors of Hurricane Katrina, who alone would 

bequeath and assign such property for economic development purposes.’’ 

I take it now, with the modifications to that bill, that has been, 

in effect, accomplished? 

Mr. BAKER. Correct, sir. There will be an overt statement at the 

outset of legislation saying that the corporation shall not have the 

power of eminent domain. The only dispute resolution mechanism 

remaining in the bill would be if an offer were made to purchase 

15

a home at $300,000, the owner felt it was worth $400,000, there 

is litigation as to value only. 

And should an owner not wish to litigate, they could withdraw 

from the negotiation and withdraw their offer with no prejudice. So 

there is no obligatory, or any opportunity, for the corporation to 

take someone’s property who chooses not to release it. 

Mr. FRANK. All right. Now, let me ask a couple of questions, one 

of which was raised in some conversations I had with some people 

dealing with the nature of the appointment. We are talking about 

all Presidential appointees. Does that cause any of the panelists 

any concern? 

Mr. NAGIN. Well, you know, it initially caused me, you know, 

some concern. I think the direction that the bill is currently headed, where there will be seven members: four will be pure Presidential appointments and three will be through the Governor. 

I would respectfully ask that this committee consider the fact 

that a significant number of the commission members should be 

Louisianans and should be people who are from the affected areas. 

Now I also think that that should be sprinkled with national experts to kind of help us to look at things outside the box. But I 

think that this commission, at the end of the day, needs to be properly represented, especially from the people who are— 

Mr. FRANK. I appreciate it. I guess it was five to two. It’s now 

four to three, is that— 

Mr. BAKER. That’s correct, sir. 

Mr. FRANK. That’s correct? Okay. Thank you. I did agree—the 

three, meaning that they would have to come from a list. Is it all 

from the Governor or does the mayor get— 

Mr. NAGIN. It’s currently from the Governor. 

Mr. FRANK. From the Governor. 

Mr. NAGIN. I think three— 

Mr. FRANK. Okay. And the other four would be—actually, you 

have stated an ideal that is, unfortunately, not always reached. 

That is pure Presidential appointees, and we know that is they 

don’t always turn out to be pure. 

But I know that is the standard to which we strive. 

The area of my expertise—and I know the gentleman from North 

Carolina will have more questions about this—but that is, on the 

housing situation I am troubled. And this FEMA request—and I 

know this is not, by definition, in your jurisdiction; these are people 

who have had to move. But these are many of them, your former—

and we hope future—constituents. 

Mr. NAGIN. Yes. 

Mr. FRANK. This having to get out of the hotel in 2 weeks and 

the restriction that they, themselves, have to find—without intermediation from any local government—a 3-month rental. I wonder 

if you think this is an adequate level of response for them. 

Mr. NAGIN. Well, at the risk of getting involved in some heavy 

partisan politics up here in Washington, you know, I will tell you 

I think that particular move is very concerning to me, as mayor of 

the City of New Orleans. 

You know, what I have witnessed FEMA, over the months that 

I have dealt with this tragedy, is to be a very—almost haphazard, 

very reactive process that they have, whether it be hotel rooms, 

16

whether it be shelters, whether it be cruise ships that are sitting, 

docked in the City of New Orleans. 

At some point in time there seems to be someone somewhere that 

looks at a budget number and tells FEMA that they’re spending too 

much money. And then, within a 2-week time period, they’re making major decisions that stress families and individuals out that 

have been stressed for way too long. 

So with the mandate to move 150,000 people out of hotels in 

pretty short order is going to create lots of angst and anxiety and 

more stress, and I think that’s going to put more pressure on temporary housing, which leads me to the other area. 

FEMA is driving people out of hotels, but simultaneously we’re 

not getting the flow that we need on the temporary trailers. So, 

now that these people are being dumped into the private market, 

if you will, and trying to find apartments— 

Mr. FRANK. But FEMA— 

Mr. NAGIN.—if they can’t find that, they can’t get the temporary 

trailers, so they become homeless. And I think that’s— 

Mr. FRANK. Well, thank you. And the only thing I would say is 

that you needn’t worry, I think, about it becoming partisan because 

I know I have spoken, for instance, to the gentleman from Ohio, 

Mr. Ney, who is the Chair of the Housing Subcommittee, and he 

shares some of these concerns. 

So I think this becomes—let me just ask you—my time is up, and 

I will just ask you—you know, you will be responding later, and we 

will be interested—one of the pieces of the CBC bill that’s very important to many of us is what it tries to do for low and moderateincome housing, for public housing, and for other forms of housing. 

And I would be interested—not now—because that’s something 

that’s not addressed in the other bill that we need to do additional 

things. I would be interested in your sense of what kind of Federal 

help we ought to be doing to make sure that we have got moderateand lower-income people able to continue to live in the city. 

Mr. NAGIN. The only way that we can manage, you know, a 

mixed income environment as New Orleans is, is with Federal 

help. Right now, market conditions are driving rents and housing 

prices significantly. And unless we have, you know, some Federal 

help to make sure that there is the proper mix of low to moderate 

income, the dynamics in the community will change substantially, 

as they are changing up here in Washington and in other urban 

centers around America. 

Mr. BAKER. The gentleman yields back. Mr. Neugebauer, did you 

have a question? 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. Mr. Mayor, tell me 

a little bit about, as you go back—and I think that was a great 

analogy—let’s talk about these neighborhoods right now, the ones 

that Mr. Feeney and I live in and we don’t have any neighbors. 

From a land planning standpoint and a future planning standpoint, there has been a lot of debate about whether some of these 

areas should go back as residential or should maybe become open 

space or mitigation areas for some of the other redevelopment. Can 

you kind of talk to me about where you are in the planning process? 

17

Mr. NAGIN. Well, there are two distinct issues with that particular discussion. You know, what we are seeing over here with, 

you know, only a limited number of people moving back into a 

neighborhood and the creation of blight around them, that’s a big 

issue for us. 

The second issue is this whole debate about whether we should 

rebuild certain areas of the city, based upon their elevations as it 

relates to the flood plain. From my perspective, we should rebuild 

all of New Orleans. 

Now we’re not going to do that immediately. And in the areas 

that are most prone to flooding, we should look at techniques and 

different styles like they have in Galveston, and other cities, where, 

if you rebuild in those areas, the first floors are more parking or 

more storage and the second and third floors are the living spaces. 

In addition to that, I was talking to this lady from San Francisco, 

and she was talking to me about the fact that we are designing 

communities to basically fight the water, and we should learn to 

live with the water and live more in harmony with it, from the 

standpoint of maybe we allow a certain amount of flooding, and we 

design neighborhoods to accommodate that. And as the water subsides, we hose the streets down and then we go back to our normal 

mode of operation. 

Those ideas and concepts are being incorporated in a plan that 

our commission is putting together. We are working with ULI, the 

Urban Land Institute. 

And might I add that the Governor also has a commission that’s 

in place. They’re focused on State-wide issues. The commission I 

put together is focused on New Orleans issues. But we have crosspollinated each other’s commissions, and we are working well together to come up with one vision for New Orleans and Louisiana. 

Mr. NEUGEBAUER. One of the things that—and as I hear you 

talking about, you know, redesigning the housing and having the 

first floor—one of the things we need to make sure, though, that 

that is market driven. Because that kind of housing may or may 

not have a marketable appeal to the folks coming back in. 

And I—a great example, when I was on the city council, there 

was a story of a neighborhood group and the city planners and city 

council, and we were all talking about what kind of facility we were 

going to build over the neighborhood. 

And then, at the end, we decided, ′′Well, let’s go over into the 

neighborhood and ask them about what they think about that 

idea.′′ And what they told us, they didn’t want that, that they 

wanted something different, that that had more meaning to our—

to their particular neighborhood. 

Mr. NAGIN. Yes. 

Mr. NEUGEBAUER. So I think we have to be careful in this process of saying, ‘‘We’ve got a new and improved way for you to live 

in this area,’’ but make sure there is going to be market acceptance. 

And I think what I was trying to say to you a while ago is if it’s 

private-sector driven, in the sense that—the private sector, before 

they go out there and build a lot of housing stock in this redeveloped area, is going to make sure that they think there is market 

acceptance. But you don’t want to go spend all of those dollars to 

18

set your infrastructure up to build that kind of housing in advance 

if you’re not sure that the market acceptance of that is going to be 

going on. 

And so, what are—how is the—when I hear you talking about 

these task forces, how much private sector folks are sitting in this 

process to be giving you that kind of feedback? 

Mr. NAGIN. We have a significant number of private sector individuals sitting on every meeting that deals with the specifics of 

urban design in New Orleans. 

The reason why I brought up that example is because what we 

found in the floods—we have about 70,000 homes that were severely damaged in the flood. Most of those homes are single-story 

slab-type homes. And from this experience with Katrina, we know 

that we cannot build a significant number of those types of homes 

in New Orleans going forward. 

And we also have learned that some of the areas that didn’t 

flood, those homes were built on—in an elevated fashion similar to 

what we described. But we do have the private sector; we have the 

HUD executives, and we have this public/private dialogue going on 

right now. And hopefully, we will come up with the right solution. 

Mr. BAKER. The gentleman’s time is expired. 

Mr. NEUGEBAUER. Thank you. 

Mr. NAGIN. Thank you. 

Mr. BAKER. Ms. Waters, and I—as I recognize you, I had a prior 

announcement. The mayor has an obligation that will require him 

to leave about 11:20. I just wanted to let you know that before you 

began your questions, in light of the mayor’s request to leave early. 

Ms. WATERS. Thank you very much. I would like to thank all of 

our presenters here today, the State representatives, the city council, and you, Mr. Mayor. And I would like to say to you that as we 

have watched you for all of these days following Katrina, our 

hearts have just gone out to you and the tremendous challenge that 

you were confronted with. 

And so, I am pleased to see you here today, and I am pleased 

to see you in high spirits, continuing the struggle, and advocating 

for that which you think is right and best for your city. 

I want to ask something that is not directly related to the bill 

so that we can try and clear the air. Mr. Mayor, there was a meeting in Dallas that you attended. 

Mr. NAGIN. Yes. 

Ms. WATERS. And it was described in the Wall Street Journal as 

a meeting of the shadow government of New Orleans, of the rich 

and powerful. And supposedly, one of the main items of that meeting was to talk about the rebuilding of New Orleans and how to 

make sure that there are not as many poor people back in New Orleans as you had before. Is there any truth to that? 

Mr. NAGIN. Well, you know, as best I can in this setting, let me 

just tell you this. New Orleans is a place that has evolved over 

many, many years. It’s a chocolate city: 67 percent African American voters in the city. But the realities of the economics of the City 

of New Orleans is that most African Americans do not participate 

in a meaningful way in the economics of that. 

And I’m being very frank with you, since—if you ask me a question, I must tell you. I’m going to try my best to give you the 

19

straight answer because I believe in truth. And I’m protected by 

truth all the time. 

So there is an element in the city that would like to see less of 

what we used to have. And some of it is racial, but I think the 

more of it is class oriented because what was draining the city 

prior to Katrina, was a heavy weight of poor people that the city 

did not have the resources to adequately deal with. 

So a lot of people in the City of New Orleans basically survive 

from day to day in a kind of a depth of poverty that shouldn’t happen in this country. So that meeting in Dallas was a meeting of 

business leaders that wanted to talk about how we move New Orleans forward. 

Now, unfortunately, one of the members of—in that meeting did 

an interview that left the impression that the group wanted to talk 

about how to get rid of poor black people. 

When I went to that meeting, I made it very clear to the group 

that I was happy to meet with them; I was happy to talk to them 

about New Orleans. But if they wanted to talk about the New Orleans of 1812 and how we get back to 1812, I had no interest in that. 

And I was interested in talking about the New Orleans of 2012, 

that was more akin to a model like Chicago or Atlanta or some of 

the great urban cities that have more equity and have more fair 

opportunity for all people. 

Ms. WATERS. I appreciate your honesty and being quite up front 

with that. Secondly, I’m worried about—as you know, I was in the 

city. 

Mr. NAGIN. Yes. 

Ms. WATERS. The day before Mr. Baker was there, I believe. 

Mr. NAGIN. Yes. 

Ms. WATERS. I went to your staging ground, and we helped to 

transport some people over from the airport to Alexandria. 

Mr. NAGIN. Yes. 

Ms. WATERS. And then I visited New Iberia and on and on and 

on. So I feel very strongly that we should all in this country be involved in helping you. 

I am worried about the contractors there now, and I am worried 

about the immigrant workers who are coming, people who are not 

getting paid. I am worried about people who want to go to work, 

come back into New Orleans in some way. Maybe they have to live 

in another city, but the jobs, I mean, this is how we empower people, with giving them jobs with decent wages. 

I understand the President has reversed himself on Davis-Bacon, 

but the contractors, are they recruiting undocumented workers to 

replace the workers in New Orleans, and are they treating them 

badly and not paying them and getting away with this? 

Mr. NAGIN. What did you eat for breakfast this morning? 

Ms. WATERS. I eat it every morning. Every morning. 

Mr. NAGIN. You are asking some pretty tough questions, and I 

appreciate them. 

Let me try and describe the environment in New Orleans right 

after the storm. As you know, FEMA and the Corps of Engineers 

have established relationships with contractors. And they immediately issued four huge contracts. I think they were $4 million a 

piece. Those companies went about their business during the emerVerDate 0ct 09 2002 15:46 Jun 01, 2006 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 G:\DOCS\26756.TXT RODNEY
20

gency of immediately trying to rescue, de-water the city, and clean 

up debris. 

There was contractors that were put in place, which fundamentally left out New Orleans and Louisiana vendors, with the exception of one, being Shaw Industries, which is based in Baton Rouge. 

As time went on, we started to get these complaints from local 

vendors and local contractors, that they needed to participate. We 

started to get them involved, but at that time, a minimum flow had 

already taken over and there were some—I don’t know if they were 

illegal workers coming in, but they were workers that weren’t Louisiana or New Orleans residents. And I have seen some tapes of 

some kind of sweat shop environments where they are taking these 

workers after hours and just putting them in environments that 

are really unsanitary and unworkable. 

I hadn’t heard that the President reversed himself on DavisBacon, but I think that’s a great thing if he did that. 

But to answer your fundamental question, there is some momentum happening for local vendors, but it’s not enough. Then there 

is lots of work in New Orleans for people to come and work. As a 

matter of fact, Burger King is offering $6,000 signing bonuses, 

enough to almost entice Reverend Jesse Jackson to take a job when 

he was down there not too long ago. 

So it’s getting better, but we still have a long way to go. 

Mr. BAKER. The gentlelady’s time has expired. 

Ms. WATERS. Thank you very much. 

Mr. BAKER. Mr. Mayor, I will leave it to your discretion. There 

are several members who have requested the opportunity to ask 

questions. 

Mr. NAGIN. Whatever you prefer. 

Mr. BAKER. I know there are several members on this side who 

would like to ask questions. 

Mr. NAGIN. Well, we will do one on both sides if that pleases the 

Chair. 

Mr. SHAYS. Thank you, Mr. Mayor. Mr. Mayor, this is not intended to be antagonistic, but maybe to give you an opportunity to 

respond. 

Mr. NAGIN. Sure. 

Mr. SHAYS. I was in New Orleans a week after the horrible 

Katrina incident, and I realize it was a storm of biblical proportions, and so everyone was tested to the limit. 

But I was sitting next to a police officer who was there along 

with National Guard and others, and I started to ask the police officer some questions. And he was very antagonistic to me and said, 

‘‘I’m not allowed to answer any of your questions.’’ I said, ‘‘I’m a 

Member of Congress. I’m here just to learn the truth. You don’t 

even want to tell me?’’ And he looked at me and snickered and 

didn’t answer any questions. 

Right following, I had an employee—I had someone from the 

New York Fire Department who said all of his volunteers are down 

there helping and only 20 percent of the firemen were showing up 

for work. 

I contrast that that same day being in Mississippi where the firemen and policemen showed up for work beforehand, and all of 

them showed up afterwards. 

21

And I want to ask you this. How can you give me a sense of 

faith, both in the competence of the people who were trying to rebuild New Orleans and in their honesty? And tell me how I should 

sort that out because I have just a very bad feeling. 

Mr. NAGIN. I think I understand your question. And I’m not sure 

who you talked to. But in any organization, you’re going to have 

people that tell you the truth and people that don’t tell you the 

truth. And New Orleans, obviously, is not immune to that. 

For the most part, I can tell you that most of our first responders 

are very honorable people, hard working; they were heroes during 

the—most of the event that happened. But they were also victims. 

And almost over 80 percent of our firefighters, police, and the 

emergency medical personnel lost their homes. 

So I am not sure who you were talking to; I don’t know what 

state of mind they were in. We did not have any gag orders in effect, you know, at any particular point in time. We were being 

overwhelmed with press inquiries. 

Mr. SHAYS. It was just such a contrast. And I will get to my 

question. But in Mississippi, all the firemen in one parish lost, all 

the policemen in one parish lost their homes. But they all showed 

up for work the next day—and about two-thirds of the firemen—

and they all showed up for work. It was just such a contrast, and 

it just makes me feel like there must be a culture that you have 

to deal with that is going to make your job all that more difficult. 

Let me ask you, with CDBG and Mr. Baker, my chairman’s, legislation, if you combine them both together, doesn’t that give you 

kind of the tools that you would need to clear out a whole section 

and rebuild? 

Mr. NAGIN. I think so. I mean, with this type of tool, with some 

modification, with adequate CDBG funds, I think we can do the job 

necessary to rebuild whole communities, versus doing just spot rebuilding in certain sections of the city. 

Mr. SHAYS. And would your preference be to rebuild whole communities? 

Mr. NAGIN. Absolutely. Whole neighborhoods. 

Mr. SHAYS. Whole neighborhoods. 

Mr. NAGIN. We have 70-something distinct neighborhoods in the 

City of New Orleans. 

Mr. SHAYS. Well, I will yield to my colleagues on the other side, 

and just say the devastation that I saw was just unbelievable, monumental, and I realize the task is Herculean. 

Mr. BAKER. The gentleman yields. 

Mr. SHAYS. Thank you. 

Mr. BAKER. I thank the gentleman. I recognize Mr. Watt, and if 

he chooses to yield— 

Mr. WATT. Thank you, Mr. Chairman. Thank you for being here, 

Mr. Mayor. And I want to applaud, in particular, one statement 

that you made in your opening comments and that is your willingness to not reject things until you understand them and understand the comprehensive nature of them. And that’s exactly what 

we have been trying to do between yesterday and today. 

We have seen an evolution in Mr. Baker’s proposal—apparently, 

I haven’t seen the language—but the summary suggests a movement in a direction that is certainly desirable. And we have encourVerDate 0ct 09 2002 15:46 Jun 01, 2006 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 G:\DOCS\26756.TXT RODNEY
22

aged our members not to reject out of hand—as I said in my opening statement—any proposal until we understand it fully. 

There is one provision in the revised statement that I do want 

to pull up, though, and that’s in part two of what we were handed 

this morning. The new bill would have a clear statement that no 

property owner or homeowner may be compelled by the corporation 

to accept a settlement offer, which ultimately is a statement, an affirmation, that individual property owners should have the first 

rights to their property. And I assume you endorse that? 

Mr. NAGIN. Yes. 

Mr. WATT. Now you referred in your comments to a number of 

people who, in your—some of whom were in your family who didn’t 

have flood insurance. 

And so my question is were all of those people in an area that 

was designated—were some of those people in an area that was not 

designated as a flood insurance-required area? 

Mr. NAGIN. You’re getting into a really complicated and interesting area. 

Mr. WATT. Well, I— 

Mr. NAGIN. Let me just give you a quick— 

Mr. WATT. Can you just answer my question because I —and 

then I’m going to go to the next one. 

Mr. NAGIN. Some were and some weren’t. 

Mr. WATT. Some of the people were in areas that were not flooddesignated areas? 

Mr. NAGIN. That’s correct. 

Mr. WATT. Okay. And for those people, Mr. Mayor, would it be 

of some advantage to them, in deciding whether they were going 

to sell their property to this corporation or not sell it to the corporation, to really improve their position as individual property 

owners if they could retroactively buy into the flood insurance program? 

Mr. NAGIN. That would help. 

Mr. WATT. That would help? Okay. And so the bill—the amendment that we offered yesterday that failed in this committee 34 to 

32, you believe would be helpful if it covered some of the—those 

people who were outside the flood area, didn’t have any expectation 

to have flood insurance because they weren’t in a flood area. Isn’t 

that right? 

Mr. NAGIN. I’m not quite clear on what was proposed yesterday. 

Mr. WATT. Okay. Well, that’s fine. Let me just go forward and 

ask you about a couple of other things. You are familiar with Hope 

VI? 

Mr. NAGIN. Yes, sir. 

Mr. WATT. New Orleans used the Hope VI program before, hasn’t 

it? 

Mr. NAGIN. Yes, sir. 

Mr. WATT. Would it be an advantage, either in connection with 

this, Mr. Baker’s legislation, or independent of it, to have more 

funding put into Hope VI? That would help you reformulate these 

communities, would it not? 

Mr. NAGIN. I appreciated the Hope VI program, and I think it 

would be helpful to move New Orleans forward also. 

23

Mr. WATT. And CDBG, Mr. Baker has put in his—that’s in the 

Congressional Black Caucus bill too, you have already indicated, 

that would be very helpful to you. 

Mr. NAGIN. Yes, sir. 

Mr. WATT. And more aggressive fair housing enforcement. That 

would be helpful to you? 

Mr. NAGIN. Yes. 

Mr. WATT. All these things are in the CBC bill, I want you to 

know, that some people have said there is not a comprehensive 

plan out there to deal with this. 

Now the other thing you talked about was the local employee and 

local contracting requirements. Nothing in this legislation that 

we’re having this hearing today that really addresses that, one way 

or another. But there is in the CBC bill, which I want to make sure 

you get a copy of before you leave here. 

Mr. NAGIN. I would love to. 

Mr. WATT. I know you all have been busy, but every single person on this panel, I want to make sure, subsequent to today, after 

you have had a chance to review H.R. 4197, after you have had a 

chance to review it, I want to get your comments about it because 

I think it’s important for you to see what has been proposed, and 

have your comments. You are the closest people to it. 

But one of the things in that is a local employment—contracting 

requirement, and another thing is a local employee requirement. 

You endorse that, without seeing the specifics of it, in general 

terms? 

Mr. NAGIN. In that concept, absolutely, 120 percent. 

Mr. BAKER. If the gentleman can begin to wrap up, sir. 

Mr. WATT. All right. I will yield back. I just wanted to make 

sure, before the mayor leaves, I hand him a copy— 

Mr. NAGIN. But Congressman, let me just make sure that you 

understand my position on all the bills that are moving. 

We have worked with Congressman Jefferson and with the bills 

that he has been pushing forward, and I think I hear it passed last 

night. This bill was an instrument that we kind of came across and 

started to study and tried to get behind to support. If you have another bill that you would like for us to study, we will get behind 

that one also. 

Mr. WATT. I will give it to you. 

Mr. NAGIN. Because I don’t see any one bill as being big enough 

to solve the challenge of New Orleans. This is unprecedented, 

where an entire city was almost destroyed, and a city as important 

as New Orleans. So we would love to work with you on the bill that 

you are crafting. 

Mr. WATT. Mr. Mayor, I am also going to give you a copy of the 

amendment that we introduced yesterday. I would love to have 

your input on whether— 

Mr. NAGIN. Thank you, sir. 

Mr. WATT.—it would have value to you. 

Mr. BAKER. Mr. Mayor, it’s up to you. We can go to another person. 

Mr. NAGIN. I think I have to go. I need to be excused. 

Mr. BAKER. Well, if we may, there are several members that 

would probably— 

24

Mr. NAGIN. All right. One more question, and then we can go. 

Mr. SCOTT. Thank you, Mr. Mayor. I will be very brief on this 

because I think it’s very important for us to get the record straight 

on your concern. 

I have a concern about the formation of the seven-member board. 

And I want to make sure that we got your comments correct on 

that. Because it strikes me as a glaring omission not to have at 

least the mayor of the City of New Orleans, the epicenter of the 

whole event, where easily 80 percent of the damage and 80 percent 

of the correction needs to take place, for that mayor not to have 

at least 1 voice, 1 opportunity to have input on this seven-member 

panel. 

It’s fine to have the President make some appointments. When 

you look at the responsibilities of this board, it will acquire the 

property; it will make the necessary infrastructure repairs; it will, 

if given the opportunity, allow those who don’t have the money to 

receive some form of compensation for their equity; it will have 

first right of refusal. 

Would not you want to make a plea before this committee today, 

that—and we are in the process of a hearing here—and from the 

hearing we will take recommendations and make some improvements to the bill. Would not you want to have a seat at this table, 

at least to have an opportunity—and if we could put an amendment to this bill that would give you, as the mayor of New Orleans, 

at least one of these appointments? 

Mr. NAGIN. I would love to have a seat. You know, I am working 

with the—this bill to try and get it modified. And the position that 

if the bill moves in this current form, I would be in a position of 

working through the Governor. 

But I think—if you’re asking me what would be a perfect world, 

a perfect world would be for the most effected parishes, which are 

Orleans, St. Bernard, and Plaquemines, to recommend to the President or to the Governor to have representatives on this commission 

directly. That would be a perfect world. 

Mr. SCOTT. All right— 

Mr. BAKER. And if the gentleman will suspend—I am sorry, I 

have extended courtesies to the gentleman to ask his question out 

of order, ahead of some other members, and the mayor has indicated a need to leave. 

What I would ask, without attempting to be at all disrespectful, 

is have members formulate their questions in writing. I will assure 

you we will get you timely answers back, but to enable the mayor 

to make his appointment without further— 

Mr. NAGIN. Thank you, Mr. Chairman. I really appreciate listening to the members, really appreciate your frankness and your attention to this. New Orleans will come back with your help. Thank 

you. 

Mr. BAKER. Thank you, Mr. Mayor, for your courtesy of your 

time and participation. 

At this time, we would like to return to our regular order. Our 

first—I am sorry. I have just been advised—I did not—I was not 

made aware. There is a vote now pending on the floor with about 

5 minutes remaining. I have to ask the panel’s indulgence. We are 

25

going to go vote. We will recess for 15 minutes and come back and 

reconvene. 

[Recess.] 

Mr. BAKER. Reconvene the hearing. I apologize. I did not know, 

at the time of recess, there were three votes in a row, not simply 

one. That delayed us a bit. And there will be members coming 

back. I rushed from the conclusion of the vote to get here quickly. 

So without delaying you further—I know that some have concerns about flights—I would first like to introduce Mr. Walter 

Isaacson. For some, they may know him for his business relationship to publishing efforts, a distinguished businessman. 

And he has taken on the responsibility as co-chair of the Louisiana Recovery Authority. This is an authority created by executive order of the Governor of Louisiana to assist in the overall planning and management of the reconstruction effort. 

Welcome, Mr. Isaacson. We certainly look forward to your comments and insight. 

STATEMENT OF WALTER ISAACSON, CO-CHAIR, LOUISIANA 

RECOVERY AUTHORITY 

Mr. ISAACSON. Thank you, Congressman Baker. And thank you, 

personally, for showing the leadership. At a period like this, you 

find out which great leaders emerge. And I want to say, on behalf 

of people in Louisiana—and for that matter, on those of us who are 

ex-patriots and recovering journalists and everything else, it’s good 

to see somebody like yourself emerge as a great leader in this. 

I have a prepared testimony—and if you don’t mind, I would like 

to have it submitted so I don’t have to read the whole thing to you. 

Mr. BAKER. Certainly. And all witnesses, a formal statement will 

be made a part of the official record. Thank you, sir. 

Mr. SHAYS. Could I just ask the gentleman to yield? Were you 

required to say that in order to be invited to this panel? 

Mr. ISAACSON. Well, I— 

Mr. BAKER. He’s the first journalist that has ever said anything 

like that. 

Mr. SHAYS. I know; I am shocked. 

Mr. ISAACSON. We journalists know that. But also, I will take the 

opportunity also to say how much we appreciate Congress. 

Like you said, Congress has really shown a lot of forbearance 

and help to the State of Louisiana. And to the distinguished Congressman from Connecticut, who made a comment that I think we 

should all take to heart, that there were times when we didn’t 

show great leadership, whether it was in the stress of the moment, 

and a lot of us messed up, and that sort of thing, and I also think 

that we have to make it clear that we plan to rebuild ourselves. 

We were all talking while you were away about how far we’ve 

gotten ripping out the basement, and ripping out the drywall 

board, and coming back, and making sure everybody was coming 

back. My family neighborhood is in Broadmoor, in uptown New Orleans, and I know we have to do this with our own hands, to a 

large extent. 

We also have to, in terms of what Congressman Shays said, 

promise a few things, one of which is we’re going to get our priorities straight. We’re not all going to be talking with different voices, 

26

all shouting and all asking for everything. And the priorities have 

been put very clearly now by the Louisiana Recovery Authority, 

working very closely with the mayor. 

And I will say that when the mayor’s commission was formed 

and then we formed the Louisiana Recovery Authority of the Governor, the first question I got as vice-chair was, ‘‘How are you going 

to work with the mayor’s commission?’’ And we said, ‘‘We’re going 

to surprise you. We’re going to astonish you by how well we work 

together and get over that hump of people not pointing fingers, 

people pointing fingers at each other and stuff,’’ and I think we 

have astonished people, as we cross-pollinated our two groups and 

worked together. 

We also know that we have to be frugal and sensible. We’re not 

going to rebuild everything, and we’re not going to ask Congress 

to rebuild everything. And I hope too—and this is finally the point 

that Congressman Shays has made—our authority is there to make 

sure things are scrupulously honest. I don’t want to go back into 

the history of Louisiana, but we all know there have been occasional times that it’s good to be a journalist in Louisiana because 

you’ve got a lot to cover. 

But we have a new authority here. We have one of the big three 

accounting firms down to look at every penny. Everything is going 

to be frugal, zero tolerance for corruption, and very honest and 

wise. 

And I will now summarize briefly, if I may, the testimony. As 

part of the recovery authority appointed by Governor Blanco to address the needs, I wanted to say that all of us appreciate the legislation that Congressman Baker has put forward. We have all studied it, and the more we study it, the more comfortable we are with 

it. 

I also want to add to my prepared testimony a message I got last 

night from the Governor herself, who said she wanted me to stress 

in my testimony that she personally has now looked over this and 

is very strongly in favor of this piece of legislation. I think I told 

your staff that last night, but I wanted that put in the record. 

Mr. BAKER. Thank you very much. That’s most appreciated, sir. 

Mr. ISAACSON. Louisiana needs a smart and bold process. I think 

one of the things we have seen with the problems with FEMA—

and also, if I may say so, the similar problems with the SBA—is 

that there hasn’t been a lot of creativity and smarts put to how do 

we deal with an emergency situation. 

I think that this bill that Congressman Baker has put forward 

does give us a smart and bold process to channel the resources for 

the rebuilding of our State. I have consulted with a lot of people 

on the LRA board, and the executive director, Andy Koplin, and 

now the Governor, and we believe that this concept is the best one 

to serve as an important enabler for getting our homes and our 

communities back. 

I think it deserves prompt consideration, and I know you’re doing 

a great job pushing it through. But this is pretty desperate. Everybody is sitting there, day by day, trying to figure out, ‘‘How do we 

get our homes back?’’ We’re doing it most with our own hands, but 

we need to know that the neighborhoods can come back as well. 

27

There are many statistics. You know I’m not going to go over 

them all. But according to the Red Cross, Katrina destroyed approximately 275,000 housing units. That’s something that is hard 

to comprehend, and it is why we had some trouble responding prudently right away. That’s 10 times as many, for example, as was 

destroyed by Andrew. 

Level of devastation also has created a banking and a financial 

disaster in the making if we don’t do something. Like many Americans—whether it’s my family in Broadmoor or any of the families 

that have come before you and that you know and that you meet 

when you come back down—a lot of your personal wealth is in your 

home. And that’s linked to the riches of the communities that we 

all prize. And all of that has been washed away. 

So we need some partnership, especially with SBA in being so 

slow in helping us, some partnership to help the communities come 

back. It’s also affected and hit hard our local banks and financial 

institutions, with the mortgages they have extended. Many of them 

minority owned, serving the poor citizens of the State, and everything else, they face huge losses as a result of this, and they are 

essential to our economic life. 

So what you are doing is really going to help in so many areas. 

We need a vehicle for helping to redevelop our neighborhoods. We 

need to provide the liquidity through a standard process, a process 

that the people in Washington—I mean, whether it be the Congressmen here or the Washington Post—that you can trust, that 

you can say, ‘‘Okay, this is a very reliable authority; this is not just 

money being sent down there, and we don’t know how it’s going to 

happen.’’ 

You, Congressman Baker, have set up a very good system, where 

it’s going to be a very comprehensive, trustworthy process, so that 

the money is not squandered. 

The LRA, as you know, was provided to provide leadership and 

set the priorities of the rebuilding. This will be a perfect complement to the LRA. There is absolutely no conflict, of course, with 

the LRA or, if I may speak, for Mayor Nagin, with the city commission, or anything else. We’re broadly represented in the State. I 

know that you have talked to people on the LRA even last night. 

I know that your staff has been working with us very well. 

And I want to say for the record—which is also not in my statement—that Congressman Baker and the staff have diligently 

worked with all of the leaders in the State of Louisiana and the 

leaders of the LRA, the Louisiana Recovery Authority, to assure 

that this recovery corporation and this bill will follow the important principles that we need, which is that partnership through the 

State and localities, partnership through the LRA, State and local 

involvement for development, consistency with State and local redevelopment plans that we are all doing, individual choice by 

homeowner, market-based solutions, absolute scrupulous transparency and honest, and cost efficiency, all of which we owe the 

people of the United States if we’re going to ask for any money. 

Boy, this bill does that, and it’s very good. 

As you can see, it’s a long way to go before we can restore the 

people of south Louisiana to the wonderful lives we cherish. It’s a 

pretty long marathon. But on behalf of the LRA, I want to thank—

28

and all the citizens of Louisiana—I want to thank Congressman 

Baker and all the people of Congress for helping support us in 

these efforts. Thank you very much. 

[The prepared statement of Walter Isaacson can be found on 

page 64 in the appendix.] 

Mr. BAKER. Thank you very much, sir, for your fine statement. 

And express my appreciation to the Governor for her kind words. 

Our next witness is the State senator from what is called the 

north shore of Lake Pontchartrain, the area that was significantly 

impacted, not commonly thought of in the minds of most people 

watching the evening news. State Senator Schedler, also in your 

prior capacity as a businessman involved in the banking industry 

as well, I think brings unique perspective to the problems we face. 

Please proceed, sir. 

STATEMENT OF HON. JOHN T. SCHEDLER, LOUISIANA STATE 

SENATE 

Mr. SCHEDLER. Thank you, Mr. Chairman. And I certainly want 

to echo Mayor Nagin and Mr. Isaacson’s comments about your leadership in this and the bill that you brought forth, at least for a 

methodology out there that can possibly assist in the rebuilding of 

the greater New Orleans area, and the region. 

As you indicated, my past background, I was president of a bank, 

and I still sit on a national bank board of a regional nature. And 

certainly we are very concerned about some of the possibilities that 

could be forthcoming when the forbearance is uplifted. 

You brought out the fact—or Mayor Nagin brought out the fact—

that one of the concerns that we have, and we share, is the very 

scenario that he created of this side of the House, one or two individuals buying—repairing their homes when the rest of the area 

remains blighted for some time, for various circumstances. And the 

other sector, because of availability, rebuilds and somewhat comes 

back pre-Katrina or Rita. 

We’re concerned about that, and we likewise are concerned about 

the levee systems and the vulnerability that remains. But what we 

do see in this particular bill is hope that this is one method that 

could be used by communities to bring back some of those areas 

that maybe will be down in that type of situation for some time. 

Further, I think it’s also fair. I think it’s fair, most importantly, 

to the U.S. taxpayer because it’s not a hand-out. It’s not Louisiana 

coming up here and saying, ‘‘Give me, give me, give me.’’ And I 

think that what you have seen to date has been that. 

What I like about this most, it’s fair to that individual in Idaho, 

in Maine, in Connecticut, and the West Coast because it gives an 

opportunity for some reasonable, prudent pay-back to the American 

taxpayer if you follow this all the way through the process. So I 

think that is certainly something that should give it some credibility, you know, in the market place. 

I am also very encouraged by the transparency that is being created here. I know there is some debate on how the composite—how 

we compose that committee. In speaking to the author of the bill, 

he certainly has shown some willingness to be flexible on that, and 

I think we can work out something along those lines that would be 

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29

ians from affected areas, and yet some credibility from the side of 

national perspective, and some talents that they bring to the table. 

You know, we have somewhat shot ourselves in the foot. We recognize that. There is one thing I have always—this is off script a 

little bit—I have always marveled at how Louisianans and Louisiana politics play out, and it’s very misunderstood. 

I think there is problems in every State in this country. I read 

the Wall Street Journal, and I certainly see problems all over the 

country. Louisiana certainly has their share, and we certainly contribute to that. But it is a very hardworking people, and we want 

to be as fair as we can to everybody in this process. And you know, 

let’s please don’t be—that be the reason of why you don’t give assistance to Louisiana. 

Mr. Watt’s alternative bill I certainly want to look at. I share 

Mayor Nagin’s comment about the possibilities that may exist with 

dual instruments out there that may give us some relief. I don’t 

know if there is the ‘‘silver bill,’’ but we will take anything and everything we can get to assist us in Louisiana and the general Gulf 

Coast. 

You know, the comment was about, you know, lemons and lemonade. I don’t know if we have sugar or lemons, but I know we got 

the water. That’s one thing I can assure you, we’ve got that one 

ingredient taken care of. 

And that’s what has caused the most diversity. It is a sea of uncertainty out there right now, to all Louisianans in the greater region, of to come back, not to come back. Is my insurance going to 

pay? Is it not? Did I have flood insurance? 

And I think this plan would at least put some certainty on the 

table, that at least there is some methodology, if you want to participate to bring back some of these neighborhoods, like the mayor 

envisioned, that could be done in a more futuristic type basis, with 

the basement levels—and to me, this plan is the only plan that 

would allow that to unfold in a very orderly fashion, unlike anything else I have seen. 

Louisiana has been highly criticized for not having a plan. And 

I certainly applaud, again, Congressman Baker for at least bringing forth a plan. And it’s a plan that I certainly embrace. I am the 

caucus chair on the Republican side in the State Senate. And I’m 

not saying it’s endorsed yet by the Republicans; I’m going to bring 

this back to them. But certainly it’s endorsed by me, its chairman, 

individually. 

And we are building a consensus, as you can see from this table. 

And I think we can further improve on that, as we move through 

the process. I was encouraged, again, as Mr. Isaacson last night, 

when we received word that the Governor now embraces it wholeheartedly. 

And with the mayor, I think we are building a very strong consensus across all political positions, and I would urge you to work 

through the process and, hopefully, deliver this to us sooner than 

later. Thank you very much for the opportunity. 

Mr. BAKER. Thank you, senator. I certainly appreciate your comments and your time. 

30

Our next witness is the Honorable Juan LaFonta, who is also a 

member of the Louisiana State House of Representatives and professionally an attorney in the Orleans area. Welcome, sir. 

STATEMENT OF HON. JUAN A. LAFONTA, LOUISIANA STATE 

HOUSE OF REPRESENTATIVES 

Mr. LAFONTA. Thank you, Mr. Chairman and members of the 

committee. First of all, before I get into some of my testimony, I 

would like to say how we got here. 

Initially, I shared a lot of the sentiments of your Congressional 

Black Caucus here about concerns with the eminent domain provisions in the bill, which have been removed. A lot of the other issues 

we have been working out, and this is very much a living document. 

The way I look at it, from a community perspective, is this is just 

the beginning. This is how we address the long-term large scale 

problem that New Orleans may face in repopulating and redeveloping the city. 

And I would love to look at your document, and I will even volunteer to come up here and testify on your behalf for the short-term 

goals because I do think we have some issues as to pushing folks 

out of hotel rooms, not giving them proper housing, and not giving 

them alternatives. But I do think this is the beginning of a larger 

plan. 

The way I was able to accept the plan was to read it. It’s really 

a reactionary document, so if people need assistance, they can go 

to it. It’s not forcing anything on anybody. 

The other thing that really pushed me in the direction of support 

is if you look at this table, you have people from all walks of life. 

Myself, I’m a very community activist type person. The rest of this 

people on this panel represent all different interests all over the 

State. We’ve come to this point where we’re all supporting this bill 

because we understand the concept and we understand the need 

for this type of document. 

I would also like to say I look forward to seeing the development 

of this thing be more community involved. And I have spoken with 

Congressman Baker, and we are looking to redirect and redevelop 

some of the seats on it so it can give the mayor, if he needs to get 

a seat, or some positions so we can have more effect on it from a 

local level. Thank you. 

Mr. BAKER. Thank you very much, sir. We appreciate your willingness to appear here, too. 

And our last witness is a city councilman from the Lakeshore 

area of the city, the Honorable John Batt, who is—brings another 

perspective, think, to the resolution necessity. Please proceed, sir. 

STATEMENT OF HON. JOHN A. BATT, NEW ORLEANS CITY 

COUNCIL, NEW ORLEANS, LOUISIANA 

Mr. BATT. Thank you, Mr. Chairman. I wanted to ask, though, 

have the members of the committee received the package— 

Mr. BAKER. If we haven’t distributed those, we certainly will do 

it at this time. And while he is getting ready there, those are some 

photographs personally taken by the councilman that reflect the 

pre and post-Katrina condition. 

31

I think one set of photographs is even in your own backyard? 

Mr. BATT. My own backyard, with my daughters Bailey— 

Mr. BAKER. We will make sure members see it. 

Mr. BATT. Thank you. Thank you, Congressmen, for having me 

today to discuss this extremely difficult situation we face in the 

City of New Orleans and explain why I think the Louisiana Recovery Corporation is essential to bringing back our great city. 

Now I know all of you watched Hurricane Katrina hit the City 

of New Orleans and saw the pictures of the man-made levees 

breaching because of faulty construction, flooding 80 percent of our 

city, leaving 350,000 people homeless. 

It has been said that the New Orleans greeting of, ‘‘Where are 

you at,’’ has been replaced with, ‘‘How’s your house?’’ 

Who are the hurricane homeless? Many live in my council district, in neighborhoods tourists rarely venture to, in neighborhoods 

like Carrolltown, St. John, Hollygrove, Midcity, Palmier, and 

Lakeview. 

They are police officers and physicians, lawyers and teachers, 

firemen and engineers, businessmen and union members, and they 

are the hardworking middle and upper-class and glue of our city. 

They represent over one-third of the tax base of the City of New 

Orleans. They are the people who bring you Mardi Gras and Jazz 

Fest. On any given weekend, you can see over 3,000 kids playing 

soccer with the Carrollton and Lakeview soccer associations, watch 

throngs of teenagers heading to the St. Dominic’s CYO events, and 

see empty nesters tending to their yards for the Lakeview Garden 

of the Month contest. 

Whether newcomers or seventh generation New Orleanians, they 

love their city and long to return. After a lifetime of hard work, 

they never dreamed they would be a hurricane homeless. And they 

want nothing more than to get their piece of the American dream 

back. 

Now you are probably still sitting there wondering, ‘‘Who are 

these hurricane homeless people? What do they look like? How do 

they dress? Are they anything like me? Will I ever meet one?’’ 

Well, you already have. I’m hurricane homeless. Hurricane 

Katrina pushed 10 feet of water into my Lakewood South neighborhood. Water sat in my house for 2 weeks. As you can see from 

these photos, it turned my lush green backyard into a barren 

brown wasteland. It destroyed the contents of my home, which was 

covered in mold after two-and-a-half weeks of water and rendered 

my entire neighborhood unlivable at the present time. My story is 

not unique. It’s the norm. 

Pam and Kevin Lair lost their home when the 17th Street Canal 

breached in their backyard. They also lost the nine-employee neighborhood mortgage company they had worked for 5 years to build. 

Ilene and Mario Simoncioni, a disabled couple who owned rental 

properties, lost all of their property and their income. 

Vicki and Steven Sobel, parents of preschoolers, lost their home 

while Steven was in the hospital receiving his first round of chemotherapy. 

All we want is to be able to rebuild our homes and our neighborhoods. But that is a difficult proposition because each homeowner 

is faced with a different situation. Some have flood insurance; some 

32

don’t; some have a little. Some have a business or a job to return 

to; some do not. 

As you hear the stories, as I do every day, it is clear that a vehicle is needed to relieve these homeowners of the immediate burden 

of their loss and assure those who want to rebuild that they will 

be able to without fear or uncertainty over what their neighbors 

will do. 

Congressman, your bill is the only sensible solution I have heard 

of that will let people who can rebuild with confidence while allowing those who cannot be compensated for their loss and have their 

mortgage paid off. It will prevent a wave of bankruptcy filings from 

under-insured, unemployed homeowners and give those individuals 

the first right of refusal to repurchase in their old neighborhood 

once they are on their feet again. 

The Baker bill is not eminent domain. Rather, it gives homeowners four great options: they can sell outright to LRC; they can 

sell to the LRC with a special option to repurchase; they can partner with the LRC to clean up their property; or they can do nothing 

at all. It’s completely voluntary. 

With these four options, I feel confident that people will be able 

to make the decision that is best for them in a timely manner. It 

will encourage historic preservation in one of America’s most historic cities, because those properties will not become blighted. Instead, they will be saved. 

Banks will be relieved of the burden of foreclosing on thousands 

of properties by using U.S. Treasury bonds that will be paid back 

by private investors. It is a fiscally responsible vehicle to provide 

relief to the victims of Hurricanes Katrina and Rita. 

As a city council member, I am constantly faced with zoning decisions. And the decisions I will be faced with in the aftermath of 

these hurricanes concern me greatly. I need to know the status and 

outlook for each of our beloved neighborhoods. By quickly determining the direction that homeowners are taking in each of the 

New Orleans neighborhoods, the Baker bill will allow for master 

planning an effective community redevelopment. 

Without the Baker bill, we risk becoming a Wild West of opportunistic house-flippers and fly-by-night developers who will create 

an incoherent hodge-podge of a city. 

New Orleans neighborhoods have always been what city planners 

across the United States are striving to achieve: traditional neighborhood developments, children that can walk to school, and to the 

corner, to the store to get a popsicle, families to church on Sundays, or to local restaurants at night. Neighbors meet over coffee 

on their front porches. We want our neighborhoods to be rebuilt in 

this manner, but better than ever. 

On behalf of all Louisianians, I urge you to look into your hearts 

and answer this question. When a major city in the country has 

been destroyed, shouldn’t we seize the opportunity to rebuild it better than ever? I urge you to pass the Baker bill, The Louisiana Recovery Act, and give our citizens a second chance at the American 

dream they so desperately deserve and need. Thank you. 

[The prepared statement of Hon. John A. Batt, Jr. can be found 

on page 52 in the appendix.] 

33

Mr. BAKER. Thank you, councilman, and I want to express, 

again, appreciation to each of you. You, on short notice, were willing to get on a plane and make difficult transportation arrangements. For those not familiar, flights in and out of New Orleans 

are still not the most convenient in the world. Some of our witnesses will actually be departing and flying into Gulfport to get 

home today, trying to drive home to get back to family this 

evening. And for that, I am most appreciative. 

Mr. Isaacson, I wanted to comment further on the Governor’s endorsement. From your perspective as the vice-chair of the authority, have you been made aware of any group within the State to 

date that—although there may be many people still not aware of 

H.R. 4100—is there any organized opposition to the proposal in the 

modified form that we are now discussing? 

Mr. ISAACSON. No, no major opposition. And it’s partly a testament to the fact that you have listened to a whole lot of people, 

whether it be at the Governor, the mayor’s level, and others, and 

some of his staff, so it’s been modified in a way that everybody 

feels comfortable with it. 

I think that both the eminent domain provisions are absolutely 

clear, and nobody fears them any more, whatsoever. The question 

of who, beyond the commission—you know, we can all argue that, 

one way or the other, but there is actually pretty good unanimity, 

that whether it’s four to three—I think the way you’re now having 

it is good. 

I would personally probably get in trouble a bit because last 

night I was saying to the mayor, ‘‘It’s not the worst thing in the 

world to have Felix Rohatyn or Colin Powell or Alan Greenspan or, 

you know, having some distinguished appointees who aren’t from 

the State. 

But all of those type of things you have been willing to work out. 

I am sure we can work out amicably. 

Mr. BAKER. Terrific. Going forward, as to the structure itself as 

a business structure, it doesn’t preclude any other additional assistance being made available to the authority. At one contemplated further modification—as I understand may have been 

suggested—is that the authority itself become the recipient of funding that might be made available by the Federal Government for 

reconstruction purposes. 

Mr. ISAACSON. CDBG-type funding? 

Mr. BAKER. Correct. 

Mr. ISAACSON. Yes. 

Mr. BAKER. And that if there are other avenues that potentially 

might be made available—Mr. Watt’s proposal or others—that 

those resources could also be simultaneously directed to the authority to facilitate even a broader or, in some perspectives, a more 

prompt rebuilding. 

I think it important to get on the record that even if the Congress were to act the first week of December—which is my hope, 

to get this bill and the CDBG portion into a House-passed Katrina 

relief package the first week of December—assuming miracles happen, and it got out of the Senate, and the President signed it, to 

begin the process of standing the corporation up, and to begin the 

research on titled property, to actually tender offers, issue the debt, 

34

have the resources to deploy, we’re well into next year. Hurricane 

season starts June 1. 

We have an unbelievable task ahead of us, even if all of this 

works without controversy. So just from us back to the Louisiana 

representatives, I want to make sure everybody understands even 

if this were to go as well as could possibly be expected, there is 

going to be a delay in the delivery. And I don’t know that there is 

a good remedy for that problem. 

Mr. ISAACSON. Yes. And I do think that the Congressman from 

Massachusetts and the Congressman from North Carolina both addressed the fact that there is certain very immediate needs and 

that the Small Business Administration has not distinguished 

itself, just as FEMA hadn’t, with good, well-intentioned people in 

both places. They just haven’t been very creative or aggressive in 

understanding the emergency situation. 

So I do think that this bill does not solve everything, and we 

want to make that clear. I think that Don Powell is also very clear 

about that, and they’re all very upset about some of the FEMA 

process and the SBA process that has gone on. So I thank you for 

putting that into the record. 

Mr. BAKER. Thank you. And I would like to ask both—my members of the legislature, with regard to concerns of speculative opportunists being engaged in the community, I have grave concerns 

that people who are very afraid right now about their future may 

grasp at any straw that’s extended. 

Is there any role that we might play, or help you play, in educating the community? Because, as the mayor indicated, we have 

dislocated individuals in 44 States. These folks can be very bright 

and find these individuals who are in Oregon and make an offer 

via mail, and that person may well accept it without having knowledge that there is a recovery plan in place. 

What—do you have a view about how we can address that issue 

and what can be done? Or how can we help you, as the local folks 

respond to that concern? 

Mr. SCHEDLER. Well, it certainly is a concern. And I—you know, 

each day that goes by, that possibility becomes more forefront. 

You know, one of the issues is just mail delivery to even contact 

some of these people. We’re going through that debate right now 

in the legislature, with even voting issues of upcoming elections, of 

how to contact those individuals that have been displaced. And 

FEMA has somewhat taken the position that they’re not going to 

give us the list because of privacy issues. 

So—but to answer your question more directly, yes, I do think 

that’s a big concern. And to answer what you can do, I think it’s 

more just a public service announcement. I think we need to use—

you know, in our area, WWL seems to be the airway everyone is 

listening to right now. That has the broadest reach across a lot of 

the affected areas of where folks are. 

So certainly that, newspapers, and any other mechanism we can 

come up with. But that is a major concern and, you know, I didn’t 

point out—I mean, my mother was 8 feet of water, my sister was 

10 feet of water in these affected areas. And we are going through 

those exact battles, like Councilman Batt indicated, for my mother 

and family. 

35

So this affected many, many, many people from all levels of society. And the one thing I didn’t do—Mr. Chairman, if you would beg 

my indulgence—is that I was very pleased to hear that Ms. Waters 

has been there, and Mr. Shays, and I would certainly urge other 

Members of Congress to come down to the affected area. You cannot believe it unless you walk the ground and see it yourself. 

Because we will find a way to put you up if we got to put you 

up in our own houses, but the more Members of Congress from the 

House and Senate that can see the devastation—I don’t remember 

the Senator’s name, but just this past week I think Senator Vitter 

had a Senator in the area, and his comments were, ‘‘You have to 

see it to believe it.’’ 

And it’s like nothing you have ever seen. If you can just imagine 

a major city of this country in total darkness, it’s just—Senator 

Chaffey—in total darkness, with no people around, no green, everything dead, and just no life. And we’re talking almost approaching 

90 days after the storm passed. 

And for those—I had the pleasure of taking a Blackhawk trip 

this past week and get on the ground; we could certainly make arrangements for you to do that also if you wanted to take advantage 

of that. 

But the devastation is beyond comprehension. I don’t know how 

some of these people will ever come back. And that’s why I’m so 

encouraged by your bill, that it gives some tool in the tool box to 

maybe get some of these folks back quicker than we thought. 

Mr. BAKER. Representative? 

Mr. LAFONTA. Yes, and my sentiments are pretty much the same 

as Senator Schedler. I do think we need to do a PSA, and one of 

the things we’re having a problem with in the City of New Orleans 

now is online buying. 

A lot of folks are buying properties without even seeing them, 

and they’re buying them up in bulk. And they’re finding ways—like 

you said—they’re finding ways to contact folks. We don’t want people like that to buy up in bulk areas and redevelop for purposes 

that are not consistent with the community needs and with the 

community culture. So I definitely would urge you all to do a public 

service announcement. 

Another thing that I was wanting to talk about was the addresses. And I know this isn’t the direction of this panel, but—and the 

Louisiana Legislative Black Caucus is presently preparing a lawsuit against FEMA for the addresses and for the knowledge and 

whereabouts for our constituents, because we don’t think, one, that 

they were—you know, not all of them were voluntarily moved. 

And a lot of folks that they picked up from New Orleans from 

the flooded areas were not told where they were going. And a lot 

of people are dislocated and can’t locate members—even to this 

day—can’t locate members of their family. So we feel, you know, 

it’s part of our call to represent our constituents, folks that got displaced due to the storm. So we’re actually preparing a suit against 

FEMA. 

So if there is anything that Congress can do to urge FEMA to 

help us get those addresses so we can get contact to people, so we 

can notify them of our programs, we would surely appreciate it. 

36

Mr. BAKER. All right. Thank you, sir. My time has long expired. 

Mr. Watt? 

Mr. WATT. Thank you, Mr. Chairman. Let me first address a couple of things that Senator Schedler said. 

First of all, I have been there twice now, and I agree with you. 

This can’t be appreciated without seeing it in person. And I am 

sure it’s not getting any better, really. 

Mr. SCHEDLER. No. 

Mr. WATT. Second, I want to correct the impression—and it may 

have been unintentional—that H.R. 4197 is an alternative bill to 

this bill. I really don’t view it in that way. H.R. 4197 needs to be 

evaluated. This bill needs to be evaluated. And I think there are 

things that can complement each other. 

So it’s not H.R. 4197 or this bill. They are—these things need to 

exist in tandem. And I want to go forward and explain why, because one of the initial concerns we had about Mr. Baker’s bill was 

that it was not clear what authority this corporation was going to 

have. 

The transition that has been made from yesterday to today, or 

through whatever process it was made—may be over a longer period of time—makes it clear that no property owner or home owner 

will be compelled to accept a settlement offer. 

We had a lot of people out there who were given false options. 

Yes, FEMA was offering them this—the alternative was nothing. 

And as between this structure and this free-wheeling people out 

there buying up property site unseen, developers being, you know, 

irresponsible—I don’t think I have any doubt about which one of 

those I would prefer. 

But that’s not really what the model is, because I mean, that’s 

one—that’s the downside model. We’re looking at the upside model. 

Our country is based on private property rights, individual property rights. All of us would agree—and it’s interesting to hear Republicans agree—that a Socialist model that moves kind of like this 

and makes property decisions for a whole neighborhood is more efficient and might give you better planning. I am not saying that 

in a derogatory sense, but in a sense, this bill sets up a Socialist 

model for restoration. 

What we want to make sure is that the individuals, before they 

decide whether they are going to buy into this model or don’t buy 

into it, have the best options available to them. 

And they have a range of other services that are around so that 

this really, as I believe is clear, should be the last option that a 

homeowner or a property owner buys into. 

And so, our bill is focused more on the things that would be before this bill. As far as I know—I guess nobody on this panel would 

tell me there is any organized opposition to H.R. 4197. Anybody 

know of any organized opposition? We’ve got plenty of support 

groups that have endorsed it. I hope you gentlemen will look at it 

and decide whether you like some of the provisions or not. 

We are trying to move these things in tandem, but it seems to 

me if we move this bill first and leave people with no option other 

than to sell their property or transfer ownership of their property 

to people who have the means to organize and rebuild communities, as opposed to allowing individual people what our whole NaVerDate 0ct 09 2002 15:46 Jun 01, 2006 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 G:\DOCS\26756.TXT RODNEY
37

tion has been based on, and make that a meaningful option, we 

will have missed the boat. 

And so, be clear on what we are trying to do, and I am trying 

to make Mr. Baker clear on it, too—I mean, we have had—this is 

not an adversarial process. But to give people this option before 

you give them some other viable assistance and options is not going 

to solve their problem. It’s going to—yes, they will go and they will 

sell their property. They will put it in this thing, and they will take 

advantage of it. But for the life of me, I can’t see why—and I don’t 

know which one of you unknowingly mentioned flood insurance—

why it wouldn’t be a better option to allow people to retroactively 

buy into the flood—from their own individual perspective. 

Mr. SCHEDLER. Let me take a stab at that. First off, Mr. Watt, 

I didn’t—and I never, ever took it as an adversarial deal; I always 

looked at it as an option. And I don’t know every detail of H.R. 

4197, but I certainly will look at this on the way back to Louisiana. 

But one of the debates going on about flood insurance—and I am 

familiar with the clawback, or payback, of the 10-year—we have 

that—we are in session right now on a special session that is in 

the Governor’s call as an item, and I don’t know who introduced 

the bill, but we are debating that bill in the legislature as we 

speak. We close out 6:00 p.m. next Tuesday. 

But one of the problems—at least in some neighborhoods—is that 

even if we are able to get individuals flood insurance under that 

plan, is that in many cases it doesn’t go to where we need it to go 

because of the limitations. You know— 

Mr. WATT. That’s the high-income areas. 

Mr. SCHEDLER. Well, that’s— 

Mr. WATT. That’s $250,000. That’s right. 

Mr. SCHEDLER. I understand. 

Mr. WATT. And I know it is not a cure-all, but $250,000— 

Mr. SCHEDLER. Is a lot of money. 

Mr. WATT. To anybody is a lot of money. 

Mr. SCHEDLER. I understand. But just an example, someone 

made the comment about the Homestead Act with an axe and a lot. 

I mean, in all honesty, many of these people would be—including 

my own mother—would be better off with, right now, a vacant lot 

and an axe because at least she doesn’t—she is not confronted with 

the cost of demolition and putting it down to the vacant lot. 

But I hear what you’re saying, and I’m not trying to disagree 

with you, but I mean, I’m just pointing that out. And it does in 

some cases, but the building costs have gone through the ceiling. 

I mean, I will give you an example. In our area, I need to replace 

my own roof. The three-tab shingle roof— 

Mr. WATT. Now, Senator, you’re not saying to me that somebody 

who has $250,000 is not better positioned to make a good decision 

about whether the deal with this corporation that this bill would 

set up than somebody who doesn’t have $250,000. 

Mr. SCHEDLER. Absolutely not. 

Mr. WATT. Isn’t that right? 

Mr. SCHEDLER. Yes, sir. I am not at all arguing that point. I 

mean, I will tell you, I have some concern, from an actuarial standpoint, of what that does to the Federal flood program, but that’s 

38

not for me to decide. I mean, I do have some questions on that 

issue, but absolutely, I agree with you on that comment. 

Mr. LAFONTA. And just to reiterate some of the comments, I am 

here because this is an option for my community, bottom line. Be 

it last resort, second-to-last resort, whatever, it’s an option for my 

community. 

And the problem that we have had right now, in the legislature 

and trying to get things across to the national audience, is we need 

more options for our people at home. And I do not think any panel 

member here is adverse to 4196 or 4196, and I think once we read 

it, we probably could support that. And I don’t look at it as an alternative to what we’re doing; I just look at it as another option. 

And Congressman Watt, you know I voiced to you several weeks 

ago my concern about folks pontificating, about pontificating, about 

pontificating, and not putting that into action, and not doing something that’s going to embrace and help people now and for the long 

term. And what I think Congressman Baker’s bill does is it addresses our long-term problem of redevelopment in our communities. 

I mean, does it address the immediate problem of the people who 

are getting pushed out of hotels and given 2 weeks to either find 

another hotel or be in a homeless situation? No, it doesn’t. And I 

hope that the bill that you’re doing does address those needs. 

Mr. WATT. Well, it creates about 300,000 new Section 8 vouchers 

for this area, which would help solve that. 

But, Mr. Chairman, I am over time, too, but I do want to take 

the liberty of just saying to this gentleman that the comments that 

he made at our Congressional Black Caucus weekend were so profound, and he is absolutely right. It led to the challenge that we 

made to the members of the Congressional Black Caucus, that we 

can’t afford to just voice a lot of rhetoric—pontificate, as you say—

on this issue. There has to be a concrete set of proposals out there. 

It was your comments that really led, as directly as anything I 

can think of, to the creation of the Congressional Black Caucus’s 

bill. Because nobody was stepping forward with a viable, comprehensive alternative that really looked at the whole range of 

issues that were out there. 

And so, I appreciate—I want to express publicly my thanks to 

this gentleman for his— 

Mr. LAFONTA. Well, I am glad you took it as constructive criticism. 

Mr. WATT. Absolutely. 

Mr. LAFONTA. I have done the same thing with the State of Louisiana, and I haven’t had as great a response. So I am glad, you 

know, that you definitely took the ball and ran with it. 

Mr. BAKER. The gentleman’s time has expired. But Mr. Isaacson, 

did you care to comment? 

Mr. ISAACSON. No, I have taken very seriously the Congressman 

from North Carolina’s bill and was reading it. And I just want to 

say to you, first of all, I appreciate it, and we appreciate it, and 

we will look at it, et cetera. 

And obviously, there are things in the bill that if we could have 

them both or have them all, it would just be wonderful. We have 

always asked for more than we could possibly get. 

39

Obviously, if we got $250,000 retroactively for homeowners, this 

would just be a great solution. I will look at everything else you 

have, which is, you know, the home program for $1 billion, et 

cetera. This is all good. 

That said, when I was talking a couple of weeks ago to the Small 

Business Committee in the Senate and they were exercising the 

good oversight, they had three different competing measures, and 

everybody said, ‘‘Well, I’m not going to go for this one while this 

one is there because you’ve got to have them both,’’ and we never 

got anything. And it was a disaster, and businesses are dying. 

I know you’re not suggesting that. I am just saying that sometimes the perfect is the enemy of the good, and sometimes—if this 

bill is going to pass, let’s not do anything to slow it up, even if this 

would be a nice complement to it, because I get astonished when 

I come up here, where people do have maybe better ideas, but they 

slow down ideas that are something we really need. So just don’t 

slow us up. Thank you. 

Mr. BAKER. The gentleman’s time has expired. Mr. Shays? 

Mr. SHAYS. Thank you. I would like to weigh in on this as well 

and just say what I like and what I do not like. 

What I didn’t like was to see a huge breakdown of government 

officials that I thought needed to step up to the plate on the local, 

State, and Federal level. I was embarrassed for my country, particularly Mr. Brown and his failure to recognize that his technicalities about what he legally could do meant that literally hundreds 

of people probably died. That’s my view. 

I was appalled to see a mayor that, frankly, just said what would 

he do differently, and he said he would yell louder. I think he’s 

doing something differently now, and he’s not yelling louder. And 

I like that. 

And I was appalled by a Governor, frankly, that didn’t realize 

that she had to make some tough decisions and not keep delaying 

them. 

Having said that, I can put that all aside; I can put it all in the 

back and say, ‘‘Where do we go from here?’’ And what I like is that 

all of you are recognizing that we can be very helpful; we can accomplish more together and that if you all can be clear what you 

want, and what you need, and how you get it, you make it more 

likely. 

What is, for me, a hollow, hollow effort to help people is to suggest that people could buy into insurance for 10 years when they 

didn’t buy into it 10 years ago and then have insurance. To me, it’s 

like waiting until you got into an automobile accident to then buy 

insurance or waiting until you’re sick and then buying insurance. 

It just is absurd to me. I can’t get beyond the absurdity of it. 

But what I am struggling with is to understand what we deal 

with, in terms of such a large group being blown apart by a biblical 

storm. To be in Mississippi and to realize that 10 miles in they had 

20 feet of water when never had any water, 20 feet of it. And I saw 

it. 

And I will affirm what all of you have said. To go there is to recognize that you have to cut everyone a lot of slack. Because the 

challenges that confront you are unbelievable. Unbelievable. I don’t 

even know what you do with all the debris. I don’t know where you 

40

put all the debris. Where are you going to put it all? I don’t know. 

I can’t imagine how long it’s going to take you to just clean up, to 

get sites ready. And that’s why I like what my chairman has put 

forward. 

I was thinking, as I was flying over by the—in the helicopter in 

New Orleans, I thought, ‘‘Well, if I owned a house there and I had 

the resources to fix it up, if I fixed it up, next to me is just a 

swamp of houses that are totally destroyed.’’ So you all are on the 

right track, I think, with the chairman, my chairman, with suggesting that you have got to guarantee that you can fix up the—

that your neighbors will basically—or somebody else—will fix up 

whatever is next door to you. However you achieve it, it seems a 

logical thing to suggest. 

What I would love to know is how are we protecting people? It 

reminds me, during the Revolutionary War, soldiers were paid in 

paper dollars. And the paper dollars tended to have no value. Alexander Hamilton said, ‘‘They’re going to have value because to not 

have value means that there is no real basis to have commerce in 

our country.’’ And so, ultimately, we gave value to those dollars. 

But before then, people sold them off a penny on a dollar or less. 

What can we do and what are you doing to make sure that people don’t panic and sell their property for less than it’s worth, even 

if it’s worth something on the dollar? 

Mr. BAKER. Whoever chooses to respond, please. 

Mr. ISAACSON. Why don’t you start, and I have something I 

wanted to add— 

Mr. BATT. There are a couple of things, or a few items, that need 

to be addressed first and foremost. And first and foremost is the 

levee system. The people need a commitment that they’re going to 

be built properly and they will be structurally sound. 

The 17th Street Canal, which flooded most of District A, was construction flaws and design flaws. Everybody is aware of that now. 

Those levees were not topped. It wasn’t from storm surge. They 

were built badly. It was human error. As a result, 70,000 to 80,000 

people in my district are displaced and— 

Mr. SHAYS. How many homes in your district does that represent? About 70,000 homes? 

Mr. BATT. Thereabouts, yes. Maybe about 50,000. Homes ranging 

in value— 

Mr. SHAYS. 50,000 homes? 

Mr. BATT. No, no, no, excuse me. About 25,000 homes. 

Mr. SHAYS. Right, right. 

Mr. BATT. But homes ranging in value from—anywhere from 

$75,000 to $100,000 all the way to $3 million. 

Mr. SHAYS. Right. 

Mr. BATT. My district runs the gamut in— 

Mr. SHAYS. So one thing is to guarantee that levees can be— 

Mr. BATT. No one is coming back if those levees are not put back 

in shape. 

Mr. SHAYS. You’re talking about the coming back part. How 

about just helping me understand how you—and what you’re talking about is important. But just first off, how you stop the hemorrhaging of people panicking and saying, ‘‘My house isn’t worth 

anything. Someone is going to give me $10,000,’’ and so they just 

41

unload it. Is there any thought on how we’re dealing with that 

issue? 

Mr. BAKER. And I hate to interrupt, but that will have to be the 

gentleman’s last question. I have been informed we will expect 

votes some time around 1:20 or so, and I want to make sure all 

members present get a chance to ask questions, so this will be the 

gentleman’s— 

Mr. SHAYS. Well, then, let me just throw on the table and maybe 

you all— 

Mr. BAKER. Yes, sure, just please respond to the gentleman’s 

question. 

Mr. SHAYS. Just—there is two things. One is how people don’t 

panic, and the other issue that I would love to have addressed is 

is there an anticipation on the part of all of you—maybe that’s the 

question I really want you to answer—that people will be held 

harmless, or do you anticipate and expect, given resources, that 

people are going to have to absorb some of the loss themselves? 

They didn’t have insurance; they’re not going to have some magical thing happen where people step in and fill in the gap. 

Mr. ISAACSON. Let me speak to that. First of all, no, we’re not 

going to be held harmless. We’re going to have to—no, we’re not 

going to be held harmless. We’re going to have to work really hard 

and all of us have lost a lot of our family savings. And we just need 

some partnership here, which is what this bill gives us. It doesn’t 

try to say you can buy into insurance and get everything back 

when you didn’t have it, et cetera. 

And if you were down there this past week, like I was, and we 

were all looking at our neighborhoods saying, ‘‘Don’t panic, don’t 

sell out, we’re going to be back,’’ everyone is working real hard and 

just borrowing dollars all over the place trying to make sure they 

can get the houses back. 

So this is a joint effort. We are going to show you how hard we 

can work, but this bill preserves it. 

Mr. SHAYS. Right. 

Mr. ISAACSON. On your second part, the don’t panic thing, first 

of all, this bill is the best thing to help us not panic. If we know 

this is coming down the pike, it’s going to help. 

Mr. SHAYS. Fair enough. 

Mr. ISAACSON. Secondly—and this is what Jay Batt said, which 

I was going to say, but I will reiterate, which is we set our priorities after we first threw everything on the table—and probably lost 

some of our credibility—and said, ‘‘Okay, let’s set our priorities.’’ 

Priority one is a good levee system. That’s going to keep people 

from panicking, as well. As long as we know those levees are going 

to be built back, that—we got to say it over and over again, we 

need your help there. Because we can be—you know, we can all put 

our elbow grease and our own personal dollars— 

Mr. SHAYS. Good point. And I— 

Mr. ISAACSON. We can’t fix the levees. That’s a Federal— 

Mr. SHAYS. Basically, you’re saying Mr. Batt was really answering my question. 

Mr. ISAACSON. He’s exactly right. And then, thirdly, small business loans. You need to get the businesses back. Now you talked 

about FEMA being an embarrassment, and Michael Brown, and I 

42

admit that up and down the State, from the lowest level to the top, 

we all didn’t react—we were honest; we were good, but there was 

some lack of decisive leadership. You saw that in some places, as 

well. 

That’s happening right now in the SBA. You’re talking about the 

founders. The founders gave you oversight authority. You’re seeing 

a slow motion FEMA disaster happening now, where people are 

panicking because nobody can get the 90-day emergency bridge 

loans they need. That’s the third thing we need to keep people from 

panicking. 

And finally, we’re not going to panic, because, believe it or not, 

New Orleans has an amazing magnetic attraction. People like me, 

people like my family, everybody you have met—it’s not like any 

other city—people are going to want to come back and make it 

work. 

Mr. SHAYS. Let me just say— 

Mr. BAKER. The gentleman’s time has expired. 

Mr. SHAYS.—my constituents want to help you all. And with that 

kind of attitude that all of you have, you’re going to get a lot of 

help. 

Mr. ISAACSON. Thank you so much. 

Mr. LAFONTA. Can I just say one— 

Mr. BAKER. The gentleman’s time has expired. I need to go to 

Ms. Carson, if I may. 

Ms. CARSON. I will be extremely brief. I was trying to discern 

whether or not underground, in Louisiana, there is sufficient knowhow and manpower to rebuild the city. Reminds me of Charles 

Dickens’s ‘‘A Tale of Two Cities.’’ Do you have people there, living 

there, available there, who can begin the reconstruction process of 

a city? 

And then, secondly—and I don’t want to cause any trouble, because that’s my middle name—FEMA. Should FEMA be allowed to 

run its course? I realize any entity, agency, has its mistakes to 

make. But when I read where they were telling those people they 

had to get out of the hotels, they apparently don’t know what their 

mission is, in my opinion. 

Because I’m in the abstract now, and I admit that. Are you at 

liberty or are you apprehensive about criticizing FEMA in terms of 

how it’s responded and what it plans to do now? If not, I will understand it, and won’t regard that as being disrespectful. 

Mr. LAFONTA. Well, and I want to kind of pull in what I wanted 

to tell Congressman Shays. My perspective is from somebody who 

was not indecisive. I come from a group of decisive black leaders 

who when the flood hit, we got buses and trucks and everything 

we could get our hands on to get people in and out of the city and 

deploy folks. 

And my position is also that I’m not really politically afraid of 

any group or whatever. I didn’t get here because I made a lot of 

friends. I ran against the whole organized machine to get in. 

So my thing to you is I do think that the FEMA situation needs 

to be revisited. I mean, if that’s a political statement. I think it’s 

terrible when we were coming in and out of New Orleans to get 

people out, that they had trucks that weren’t deployed, they had 

buses that weren’t deployed. Now we got people who were put in 

43

hotels that they’re about to kick out. I mean, you’re giving us a 

bunch of solutions to do what? 

I mean, what immediate actions—if you’re an emergency management association, if you’re dealing with a large scale problem 

and you have immediate problems, why aren’t we addressing those 

problems? 

Just to give you a personal story, I have had friends who have taken 2 to 3 months to receive a $2,500 check or a $2,000 check. 

Or I have had people who had several—because in New Orleans, 

a lot of family people live together, but they’re like a lot of adults 

that live in the one household. But then when the flood came, those 

adults kind of broke up and went to other States, so some folks 

went 2 months without getting any Federal assistance to help tide 

over. 

My district ranges from the French Quarter to Dillard University. I’ve got five historic districts. But in all of it, I have a lot of 

minority population. I have got 70 percent of my district is minority folks that are struggling. 

And I’m not going to get in any political wherewithal up here, 

but I do think that FEMA needs to be revisited. Because if it’s set 

up to help folks like me and my family and my community, then 

we’ve got a big hole in it that needs to be patched. 

Mr. BAKER. And if the gentlelady would yield on that point, just 

to add a bipartisan view, the entire Louisiana delegation has deep 

concerns about the FEMA operation. We all have our own stories. 

We share the sentiments of the gentlemen at the witness table, 

who are being very gentlemanly in their comments. It was a disaster. 

Ms. CARSON. It still remains a disaster, it appears. 

Mr. BAKER. I am very interested in seeing some of those unspent, 

uncommitted funds be diverted into helping the corporation and 

the CDBG effort get funded quickly. We need to wind FEMA down, 

get them out of town, and have alternative resources deployed as 

quickly— 

Ms. CARSON. You need legislation to do that, Mr. Chairman? 

Mr. BAKER. Well, I am hopeful that, working with Mr. Watt and 

others, that we can come to some resolution. But, yes, we do. We 

need to get something done pretty quickly, too. 

Ms. CARSON. I yield back, in deference to my other— 

Mr. BAKER. I thank the gentlelady. 

Ms. CARSON. Thank you. 

Mr. BAKER. Mr. Green? 

Mr. GREEN. Thank you, Mr. Baker. And I thank the chairman 

and the ranking member for holding these hearings. I was born in 

New Orleans, Charity Hospital, have a great affinity for the city 

and the people. 

I did return, and I was with Senator Ed Murray. We toured the 

entirety of what I believe to be the most devastated area, including 

the Lower Ninth Ward. I think that, without question, New Orleans will come back. The question is, who will come back to New 

Orleans? And how do we do the right thing such that people who 

have an affinity, who were there when Katrina hit, such that they 

have an opportunity to come back and experience again the New 

Orleans that I know, and I love? 

44

A lot has happened prior to your arrival. A lot has been said. 

Some of the things that were said I wish people would retract 

about various pieces of legislation because I think that we have two 

good pieces of legislation. And we ought to try to get the best from 

both. We really ought to try to do that. I don’t think that’s impossible. 

But when people use some of the language, some of the diction 

has been less than superb. Some of the diction does not appeal to 

people who love Louisiana and New Orleans and who want to see 

it come back. 

So I am asking, first, that we tone down the rhetoric, to the extent that we can. And I know that I am to be terse, and laconic, 

pithy, and concise, but I do have to make a couple of more comments, if I may. 

We did the right thing after 9/11. We spent billions, but we did 

the right thing. I don’t have a problem saying that. We did the 

right thing when we bailed out the savings and loan associations. 

It’s time to do the right thing with Louisiana, Mississippi, and Alabama. And doing the right thing requires that we do more than 

give property owners certain rights and privileges. 

Many of the people who were born and reared in New Orleans 

never owned property. They never had a fee simple to anything 

other than a legacy of poverty that many of them inherited. If we 

want to do the right thing, we have to find the methodology, the 

means, and the will to give those people an opportunity to come 

home, too. It was home to them before the hurricane. There is no 

reason why it can’t be home to them afterwards. 

So as I peruse this legislation, I am looking to see how can we 

tweak it, if you will, such that we can give persons who were born 

and reared, but never owned property an opportunity to come home 

to New Orleans. I thank you for the time, Mr. Baker. 

Mr. BAKER. I thank the gentleman. 

Mr. GREEN. I yield back. 

Mr. BAKER. I thank the gentleman. Mr. Cleaver? 

Mr. CLEAVER. Thank you, Mr. Chairman. Let me, first of all, just 

express some dismay and some embarrassment. Had this hearing 

been held 2 months ago, all of these seats would have been filled, 

all of those seats would have been filled, TV cameras would have 

been hanging over the rooftops. And it shows that Congress, and 

perhaps even our country, is suffering from Attention Deficit Disorder. We just can’t maintain our attention on anything for an appropriate amount of time to solve the problem. 

This is unbelievable. Unbelievable. I think everybody is connected with New Orleans. My son, a student at Dillard University 

and proud to say he was the starting point guard for Dillard and 

the captain of the basketball team, he made it out, home. I feel 

very strongly about New Orleans, which is why I had some problems with some of the statements made earlier, which I won’t get 

into. 

But I am a former mayor. I think my city was about the same 

size as New Orleans. Almost a half-million people. And so, when 

you start talking about an authority, it gets my attention. When 

you start talking about community development, block grants, it 

gets my attention. 

45

I mean, with an authority, not only the appointment process 

bothers me, but does the authority have bonding capacity? 

Mr. BAKER. If the gentleman would yield? 

Mr. CLEAVER. Yes. 

Mr. BAKER. You talking about H.R. 4100; is that your inquiry, 

sir, the bill under consideration today? Does that have bonding authority? 

Mr. CLEAVER. Yes. 

Mr. BAKER. The corporation itself does not. Technically, what it 

does is sell shares of stock to the U.S. Treasury. The U.S. Treasury, 

to pay for those shares of stock, issues long-term public debt, guaranteed by the full faith and credit. And the reason is to get us out 

of the appropriations cycle here and to allow the Treasury Department to get debt issued year over year for the long-term resolution. 

So, the short answer is yes, but that’s how we do it. 

Mr. CLEAVER. Okay. I was concerned about trying to rely on the 

full faith and credit of New Orleans. 

Mr. BAKER. No, sir. It’s been acknowledged that both the city and 

the State are already having some credit impairment, and their 

ability to sell debt into the markets would be at a very high rate 

right now. So that’s why it’s U.S. treasuries. 

Mr. CLEAVER. Okay. So if we are able to get some kind of sizeable community development block grant, it would go to the authority? 

Mr. BAKER. It’s my position at this time. I have suggested and 

I think the chairman of the authority has indicated he would like 

to see that. 

The community development block grant piece is not technically 

a part of the bill. I delivered a copy of it to Mr. Frank today, and 

I have asked for his consideration to make it part of H.R. 4100. If 

we did, then I would propose to have it sent to and be received by 

the authority for their use. 

Mr. CLEAVER. Yes, because with CDBG dollars, there are certain 

requirements. 

Mr. BAKER. Yes. And in lieu of going to the Governor, as is the 

usual practice, with the Governor’s understanding I am told, it 

would go to the recovery authority in this case for this purpose. 

Mr. CLEAVER. Well, no. The community development block grants 

from HUD will go directly—I mean, they go directly to the cities. 

They don’t go to the Governor unless they are second class cities. 

The smaller cities make applications on a competitive basis with 

the State. 

But New Orleans and Baton Rouge, the money comes directly 

into them. 

Mr. BAKER. In this case, because we’re talking about a significant 

rural component beyond Orleans—and this, really, the CDBG program that is contemplated, is even beyond Louisiana. It’s the whole 

Gulf Coast. 

So in the Louisiana case, all funds would go to the recovery authority. In other States, the regular order would apply. So only in 

Louisiana would we follow this procedure to coordinate the recovery authority’s ability to redevelop. That’s the reason in Louisiana. 

Mr. CLEAVER. Good. 

46

Mr. BAKER. So whether it’s a small community or a big community, it would go—at least under current discussion; and this is all 

open to the gentleman at the witness table to advise us—but as 

contemplated at the moment, it would go to the recovery authority, 

to have a consolidated recovery plan. 

Mr. CLEAVER. Okay. So we will have to suspend some of the 

CDBG requirements. 

Mr. BAKER. Yes, that’s correct. 

Mr. CLEAVER. One of them is, you know, the—we would probably 

have to suspend—which creates trouble, which means that there is 

an annual—as you know, Councilman—you have to have annual 

hearings on the community development block grant. And in some 

cases, those hearings are held in various parts of the community 

and—which I’m assuming won’t take place, which goes back to the 

whole issue of the appointment of the authority. 

I don’t want to take a lot of time. I have a lot to say and a lot 

of questions to ask. I am extremely concerned—I mean, we voted 

on—we had a bill before us yesterday, and it was voted on yesterday, that the problem is we have entered a situation where we 

have a concert and then we try to tune up the instruments. And 

I’m not a good musician, but I mean, basics would be tune up the 

instruments and then have the concert, which—we did it just the 

opposite here. 

The Member of Congress representing New Orleans has not 

signed off on this legislation. As a former mayor, in our city we 

practiced what was called legislative courtesy. 

In other words, if we were entertaining something for a particular council district and that council district representative was 

not on board, the chance of that being approved were almost nonexistent, even if some of us felt strongly about it. We were not 

going to push something in someone else’s district that they did not 

want, or move things around, or appropriate dollars. It’s a process 

that is practiced probably in most cities—I would imagine New Orleans has the same kind of operation. 

And Congressman William Jefferson, I spoke with him maybe an 

hour-and-a-half ago, said that he had not signed off on this legislation. And I am just one person, but it’s going to be extremely difficult, or monumentally difficult, for me to support this without 

him supporting it. And I would try to discourage others from voting 

for it unless, of course, Congressman Watt advised me otherwise. 

Because, I mean, I think that the interest in what goes on is 

high. And I don’t think that we should put legislation in place 

without, you know, having dug deeply into all of its components. 

And I do believe that the Watt amendment had some components 

that are not in H.R. 4100. 

If I could ask you a question—this sounds off the track, but do 

any of you have any idea what the African American population is 

of San Francisco? 

[No response.] 

Mr. CLEAVER. I checked just before I left. I was right. It’s three 

percent. Three percent. That used to be significantly higher. But 

poor folk can’t live in San Francisco and so the population for African Americans, being the lowest of the income groups in San Francisco, it is gone. 

47

And one of my fears about New Orleans is that I don’t see anything in any of the legislation or anything that I have heard or 

read to this point that moves against the possibility of 

gentrification. I mean, there ought to be a gentrification barrier. 

There ought to be something in place that would halt 

gentrification. 

And if the rumors are true, which is that people are coming and 

buying huge tracts of land, I fear that one of these days I will be 

able to refer back to this day and say that I cautioned the leaders 

about the possibility of gentrification occurring in New Orleans. 

And it troubles me deeply. 

Mr. BAKER. Would the gentleman yield, just on one point? 

Mr. CLEAVER. Yes, sir. 

Mr. BAKER. I appreciate your courtesy. I just want to point out 

that the affected area for the implementation of H.R. 4100 is, in 

fact, broader than Congressman Jefferson’s district. It does include 

Congressman Melancon’s district, and he has signed on. 

And I am in discussions with Mr. Jefferson, have been. He has 

indicated—he has enumerated about five issues which he has 

brought to our attention, and we are trying to work resolution on 

that matter, with sensitivity to your point. 

I only ask, in return, that if the Louisiana community comes together, we continue to observe that rule. Thank you. 

Mr. CLEAVER. Let me just conclude. We have a bill that I happen 

to feel strongly about, which is the CBC Watt amendment and 

then, of course, H.R. 4100, which has some significantly good and 

proper components. 

And I found that there are two sides to every question, as long 

as I am not personally concerned with it. And so, to me, even 

though there may be two pieces of legislation, I am concerned with 

the issue and with the legislation. And so, I appreciate the opportunity, Mr. Chairman, for the work that you have done. I don’t discount that, and I don’t, you know, throw arrows at it. But for me, 

Congressman Jefferson has to say, you know, ‘‘This is something 

good.’’ 

I just think that it would be—I would not want him to come into 

Kansas City, Missouri—or anybody—and vote to do something that 

I am not supportive of. 

Mr. BAKER. And I certainly share the gentleman’s sentiment, and 

that’s exactly my appeal, that if we, as Louisianans, can come together with something that is publicly defensible and meets reasonable standards, then we would hope the Congress would look on it 

as an acceptable path. 

And I think members from the Orleans area have some decisions 

to make, and it will be clearly difficult, I’m sure. But we are going 

to all look to them to do what’s necessary in this case. And I appreciate the gentleman’s comment. 

Is there any further comment by any member at this time? 

[No response.] 

Mr. BAKER. If not, I know that votes are imminent, and we have 

detained our guests beyond the agreed-upon hour. Let me express 

to each of you our deep appreciation for making the effort to come 

forward, express your views, and we would welcome any comment 

48

you choose to make about any pending matter before the Congress 

relative to the resolution of the Katrina difficulties. 

Mr. WATT. Mr. Chairman? 

Mr. BAKER. Yes, Mr. Watt? 

Mr. WATT. I just want to reiterate an earlier question because I 

did specifically ask each of the witnesses to review the other bill, 

which number I keep forgetting—4197—and to let us have their 

written comments about it. That would be very helpful. 

Mr. BAKER. Yes, that clearly is on the record, and there, I’m 

sure, will be other questions from members who, unfortunately, 

had to leave the hearing before being recognized. 

But again, our deep appreciation for your courtesy and your comments here today. Our meeting stands adjourned. 

[Whereupon, at 1:31 p.m., the committee was adjourned.] 

(49)

A P P E N D I X

November 17, 2005

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Æ


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