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Tuesday, November 21, 2006

New York Times Editorial - For Katrina's victims, purgatory isn't over

New York Times Editorial - For Katrina's victims, purgatory isn't over
Copyright by The New York Times
Published: November 20, 2006


Excuses sound hollow when you're trapped in a flimsy trailer. For Gulf Coast residents waiting for long-promised U.S. government housing assistance, patience has given way to anger, and anguish. What is clear more than a year after Hurricane Katrina is that their needs - and the demand for action from the American public - have largely gone unmet.

In Louisiana, only 28 families have received their share of the federal dollars intended to help them repair or replace their homes. After a local uproar, and a strict new deadline from the governor, the number of residents approved for funds is now just under 5,000 - out of nearly 78,000 applications.

Louisiana's housing reconstruction authority should not bear all of the blame for this problem. All the gears of government grind too slowly for the victims of the storm. It took the Bush administration nearly six months to request the necessary rebuilding funds. Congress hemmed and hawed until June before approving the legislation. Down the coast, Mississippi's program has also been plagued with delays.

The federal housing money alone is not going to solve the difficulties faced by Katrina's victims, particularly in New Orleans. The normal market mechanisms on the Gulf Coast have been shattered, and they need to be repaired if Katrina's victims have any hope of putting their lives back together. Local banks are filling up with a reserve of billions of dollars in private insurance money. The Louisiana Recovery Authority points out that many victims who have been approved for help still have yet to ask for their checks.

Some people have shown amazing faith and determination, pressing on and putting construction costs on their credit cards. But other residents, in spite of their will to rebuild, are unable to use the funds for a host of reasons. Contractors are nearly impossible to find, and high prices reflect their scarcity. Insurance rates are rising to levels unaffordable for the average homeowner. Many victims have missed bill payments or lost sources of income, hurting their creditworthiness and leading to higher interest rates on any loans they might need.

The normal hard decisions of real estate are amplified a thousand times by the possibility that a house in an empty neighborhood in a broken city could be worthless. Imagine every house in your neighborhood is damaged or destroyed. The average government award in Louisiana is $60,200, and it will cost more than that to replace your house, and more than it was worth before the storm, when every house on the block was whole and children played out front. Do you rebuild?

The president's Katrina czar, Donald Powell, is soft- spoken and deliberative. Those qualities have served him well in the past, but not now. As the government's emissary (and the former head of the Federal Deposit Insurance Corp.), he has a powerful pulpit and the ability to summon all the key players - major lenders, buyers of loans like the large investment banks and Fannie Mae, and federal regulators - to help fix the system. Powell needs to speak out more forcefully and act more aggressively.

The ruin of a region and the historic city of New Orleans could not be more important, and the tangle of destruction is nowhere near unwound.

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