[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
                        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



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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana          PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio                  MAXINE WATERS, California
SPENCER BACHUS, Alabama              CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware          LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York              NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California          MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma             GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio                  DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice Chair   JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                GREGORY W. MEEKS, New York
JIM RYUN, Kansas                     BARBARA LEE, California
STEVEN C. LaTOURETTE, Ohio           DENNIS MOORE, Kansas
DONALD A. MANZULLO, Illinois         MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, Jr., North          HAROLD E. FORD, Jr., Tennessee
    Carolina                         RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois               JOSEPH CROWLEY, New York
CHRISTOPHER SHAYS, Connecticut       WM. LACY CLAY, Missouri
VITO FOSSELLA, New York              STEVE ISRAEL, New York
GARY G. MILLER, California           CAROLYN McCARTHY, New York
PATRICK J. TIBERI, Ohio              JOE BACA, California
MARK R. KENNEDY, Minnesota           JIM MATHESON, Utah
TOM FEENEY, Florida                  STEPHEN F. LYNCH, Massachusetts
JEB HENSARLING, Texas                BRAD MILLER, North Carolina
SCOTT GARRETT, New Jersey            DAVID SCOTT, Georgia
GINNY BROWN-WAITE, Florida           ARTUR DAVIS, Alabama
J. GRESHAM BARRETT, South Carolina   AL GREEN, Texas
KATHERINE HARRIS, Florida            EMANUEL CLEAVER, Missouri
RICK RENZI, Arizona                  MELISSA L. BEAN, Illinois
JIM GERLACH, Pennsylvania            DEBBIE WASSERMAN SCHULTZ, Florida
STEVAN PEARCE, New Mexico            GWEN MOORE, Wisconsin,
RANDY NEUGEBAUER, Texas               
TOM PRICE, Georgia                   BERNARD SANDERS, Vermont
MICHAEL G. FITZPATRICK, 
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina

                 Robert U. Foster, III, Staff Director
                            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


                        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 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 comprehensive 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 longer-term 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.
    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 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.
    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, 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.
    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.
    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.
    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 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 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, 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.
    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 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, 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 moderate-income 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 moderate- and 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?
    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 cross-pollinated 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 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 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 emergency 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 
Davis-Bacon, 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.
    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 encouraged 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 
flood-designated 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.
    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--
    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 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, 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.
    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--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 comfortable for everyone, that 
would be a balance of true Louisianians 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.
    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.
    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 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.]
    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, 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.
    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.
    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 Nation 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 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.
    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 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 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 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 know-how 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 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?
    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.
    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.
    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 non-existent, 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.
    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 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.]


                            A P P E N D I X



                           November 17, 2005 


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