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




 
               THE FEDERAL ROLE IN FACILITATING RECOVERY
                    AND LONG-TERM REBUILDING EFFORTS
                        IN THE GULF COAST REGION

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 9, 2006

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-76


                    U.S. GOVERNMENT PRINTING OFFICE
30-178                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


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

                 Robert U. Foster, III, Staff Director
           Subcommittee on Housing and Community Opportunity

                     ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California
    Chairman                         NYDIA M. VELAZQUEZ, New York
RICHARD H. BAKER, Louisiana          JULIA CARSON, Indiana
WALTER B. JONES, Jr., North          BARBARA LEE, California
    Carolina                         MICHAEL E. CAPUANO, Massachusetts
CHRISTOPHER SHAYS, Connecticut       BERNARD SANDERS, Vermont
PATRICK J. TIBERI, Ohio              STEPHEN F. LYNCH, Massachusetts
GINNY BROWN-WAITE, Florida           BRAD MILLER, North Carolina
KATHERINE HARRIS, Florida            DAVID SCOTT, Georgia
RICK RENZI, Arizona                  ARTUR DAVIS, Alabama
STEVAN, PEARCE, New Mexico           EMANUEL CLEAVER, Missouri
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
MICHAEL G. FITZPATRICK,              BARNEY FRANK, Massachusetts
    Pennsylvania
GEOFF DAVIS, Kentucky
CAMPBELL, JOHN, California
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 9, 2006................................................     1
Appendix:
    March 9, 2006................................................    41

                               WITNESSES
                        Thursday, March 9, 2006

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

                                APPENDIX

Prepared statements:
    Oxley, Hon. Michael G........................................    42
    Ney, Hon. Robert.............................................    44
    Waters, Hon. Maxine..........................................    46
    Carson, Hon. Julia...........................................    48
    Powell, Donald E.............................................    49


                    THE FEDERAL ROLE IN FACILITATING
                   RECOVERY AND LONG-TERM REBUILDING
                    EFFORTS IN THE GULF COAST REGION

                              ----------                              


                        Thursday, March 9, 2006

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:00 a.m., in 
room 2128 Rayburn House Office Building, Hon. Robert W. Ney 
[chairman of the subcommittee] presiding.
    Present: Representatives Ney, Baker, Pearce, Neugebauer, 
Waters, Carson, Lee, Scott, Cleaver, and Green.
    Also present: Representatives Oxley, Hensarling, Barrett, 
Campbell, Frank, Watt, Barrett, and McCarthy.
    Chairman Ney. This morning we are going to hear from Donald 
Powell for the Gulf Coast rebuilding. Welcome, Mr. Powell, to 
discuss the Federal role in facilitating recovery and long-term 
rebuilding efforts in the Gulf Coast region in the aftermath of 
Hurricanes Katrina and Rita.
    Today's hearing will focus on the challenges and 
opportunities of both the intermediate recovery and long-term 
renewal plans for Texas, Louisiana, and Mississippi. I am most 
interested in learning about the Federal role in helping State 
and local governments establish and implement their plans for a 
rebuilding process.
    Events surrounding the late August and early September 
hurricanes in Louisiana, Mississippi, and Texas have certainly 
captured the attention of the American people, including this 
committee. The Housing Subcommittee and the Financial Services 
Committee have been at the forefront of hurricane relief 
efforts with numerous hearings and multiple briefings. We have 
had approximately 80 witnesses participating. That is between 
the Full Committee and the subcommittee. In mid-January, the 
Housing Subcommittee held the first post-hurricane 
Congressional hearings in Louisiana and Mississippi. So we were 
the first committee to actually go down there. And we reviewed 
the housing issues that the Federal Government will need to 
consider over the next few years. And I want to thank Chairman 
Oxley for supporting that subcommittee hearing and Congressman 
Barney Frank from Massachusetts and our Ranking Member Maxine 
Waters, and the members who participated in it. It was about 5 
or 6 hours. People paid complete attention and our members were 
very diligent in listening to the people from all backgrounds 
down in Louisiana and Mississippi.
    In addition, this committee, the Full Committee and 
subcommittee, has shepherded needed relief legislation to the 
House Floor in the months following the disaster that will 
affect not only families in the immediate hurricane-ravished 
areas but those families who are forced to suffer the aftermath 
due to flooding.
    Now, clearly, there are a lot of challenges, as you well 
know, Mr. Powell, and I am sure you will expound on it today, 
there are challenges ahead. And there are still many that are 
without permanent housing, jobs, and infrastructure. How best 
to go about the reconstruction of the region and the potential 
problems facing the mortgage and financial services industry 
are all issues that have to be continued to be addressed.
    I look forward to working with our chairman, who is here 
today, Mike Oxley, and the ranking member, Mr. Frank, 
Congressman Richard Baker, the chairman of the Capital Markets 
Subcommittee, and our ranking member, of course, Maxine Waters. 
I want to thank her for all that she has done. And the staff on 
both sides of the aisle, working together to do what is good 
and best in the interest of the citizens who have been so 
ravished and affected down in the Gulf area.
    So it is my hope today that the hearing will give Congress 
a unique perspective of how the Administration plans to move 
forward, what the current needs are, and what regulatory or 
legislative solutions may be necessary in the immediate future. 
Today's hearing is an important step in the recovery process, 
and I look forward to vigorous debate and discussion.
    I would also ask the indulgence of members; I am going to 
have to stick strictly to the 5-minute clock. I think we will 
give Mr. Powell a little bit more time, he might have some more 
to say, but we have to hold to that 5 minutes. I will just tap 
the gavel because I am afraid we will run out of time and 
members won't get a chance to ask a round of questions, so I am 
going to be pretty strict with the 5 minutes.
    With that, I want to thank our ranking member again, and 
yield to the gentlelady from California.
    Ms. Waters. Thank you very much, Mr. Chairman, for holding 
this hearing. I have a statement. Let me just start with this, 
good morning, Mr. Powell. We are delighted that you are here. I 
am sure that you can be helpful to us in shining the light on 
some activities that we are confused about or don't know about. 
And hopefully you will help us to understand what is being done 
in the long run to rebuild the Gulf Coast region and to assist 
the victims.
    Indeed, the backdrop of today's hearing is not a pretty 
one. As of late February, there were still 1,997 persons 
missing in the Gulf Coast region. And to think that nearly 1.2 
million people were displaced is simply mind-boggling. Although 
there are fewer persons displaced today than there were 
immediately following the hurricanes, this number is larger 
than the populations of many American cities, about 770,000.
    Money is still a major issue, particularly since the total 
estimate of the cost of the damage from the hurricanes is now 
approaching $100 billion. Housing, personal, business, and 
government property represent losses of every imaginable kind. 
Everything and everybody has been permanently affected by the 
events of August 2005. But the statistics do not bear witness 
to the magnitude of the human tragedy that has unfolded in the 
region. Some of our elderly citizens are living without 
medication, and people looking for housing, when they can find 
it, are in many cases the victims of discrimination. Members of 
the Financial Services Committee, as well as this Subcommittee 
on Housing and Community Opportunity, continue to hear reports 
about housing advertisements on the Internet that are blatantly 
racist and discriminatory--Internet advertisements that deny 
the disabled, families with children, African-Americans, and 
Hispanics equal opportunity to find decent, safe, and 
affordable housing. And, unfortunately, the FEMA deadline for 
providing assistance for persons living in hotels is about to 
expire on March 15, 2006. We are wondering what these people 
are going to do, particularly if one considers the number of 
persons and families already evicted from hotels under the FEMA 
program. At one time, there were some 26,000 persons living in 
hotels. Today, the number is one-third of that amount. Where 
many of these individuals and families have gone is debatable, 
but your guess is as good as mine. We just do not know. No one 
is tracking the displaced. No one is tracking the homeless. 
Homelessness is sure to be one of the major consequences of 
this tragedy. Trailers were supposed to be a major resource to 
assist victims during this period. Of course, FEMA estimates 
that there are more than 80,000 in place as of February 22, 
2006, but trailers do not represent a long-term solution to the 
housing crisis facing the victims, particularly when we are 
supposed to be focusing on rebuilding the Gulf Coast region.
    Now let me say this about the trailers. While we have this 
number over in Louisiana, in New Orleans, we were told that 
there would be about 80,000 in that area alone; there are only 
about 42,000. We understand that the numbers are closer to 
30,000 to 40,000 on the Mississippi side. But still it looks as 
if half of the people who need trailers, and were promised 
trailers, don't have them as of today's date.
    We all realize that schools are the glue that holds 
American communities together. But guess what? Schools, 
particularly the public ones, have all but disappeared in New 
Orleans. Only three public schools and eight charter schools 
have reopened of the 120 schools that operated before 
Hurricanes Katrina and Rita. Katrina and Rita remain a major 
test for this subcommittee, as well as for the House, itself. 
Today, the Subcommittee on Housing and Community Opportunity 
will examine a number of critical issues related to Katrina and 
Rita. I believe that this hearing represents another 
opportunity for us to give hope to people who cannot help 
themselves. The hurricanes were enough for any human to bear. 
Our obligation to the victims is to understand the long-term 
effects of the hurricanes and to develop the appropriate 
response to rebuild the region. People are unemployed, people 
are displaced, but most of all people are hurting. These are 
Americans in this region; we owe them our best. Therefore, our 
immediate response should be to continue to provide resources 
for those unintended victims of Katrina and Rita, while we 
begin to design a comprehensive, measured response that could 
restore some semblance of balance to these shattered lives for 
the future.
    Mr. Chairman, I realize you were with the President 
yesterday, and you toured in the New Orleans area. You were 
down in the 9th Ward, and I am a little bit baffled about the 
stories that are coming out that the President was blaming 
Congress for not appropriating money to restore the levees. I 
am a little bit surprised at the fact that the clean up of the 
debris is being described as being ``well along,'' when as a 
matter of fact, what I think you described was the clean up of 
public debris, and that those houses that have collapsed are 
still untouched in most of the 9th Ward. So, I am a little bit 
worried that on this 10th visit by the President of the United 
States, we are seeing some effort to blame somebody else, and I 
want you to explain that to us. And with that, Mr. Chairman, I 
thank you for your generosity, and I yield back the balance of 
my time.
    Chairman Ney. Thank you, Ranking Member Waters. The 
gentleman from Ohio, Chairman Oxley.
    The Chairman. Thank you, Mr. Chairman, and I want to just 
make my remarks part of the record and ask unanimous consent to 
do so, but I just wanted to welcome our distinguished witness 
today; all of us remember of course Chairman Powell from FDIC 
days. It has been great to work with you, and you have been 
handed an enormous responsibility, but clearly the President 
has a great deal of faith in your leadership, and we all do as 
well. Welcome to you.
    And also to Chairman Ney, I have not had a chance publicly 
to thank him for his leadership, particularly for the hearings 
down in the Gulf that, I think, opened a lot of eyes for the 
members. Also, the recent trip that the Speaker and our 
leadership, both Democrat and Republican, took last weekend 
down to the Gulf, I think, really did bring home to a large 
degree the problems that we face. But the good news is, we have 
able people, such as Chairman Powell, leading that effort. And 
I just wanted to add my congratulations and my pledge for the 
committee, the entire committee, to work closely with you to 
solve this enormous problem. And I yield back.
    Chairman Ney. The gentleman from Massachusetts, Mr. Frank.
    Mr. Frank. Thank you, Mr. Chairman. I share the Full 
Committee chairman's high regard for Mr. Powell and appreciated 
the work we were able to do together within the FDIC so what I 
am about to say will not be aimed at him personally. But I am 
embarrassed by the response of the Federal Government, of which 
I am a part, to the terrible tragedy that has befallen the 
people of the Gulf region, New Orleans in particular, but the 
surrounding areas as well. Our response has not come close to 
being the response that a great and wealthy and powerful and 
compassionate Nation ought to be offering to some of its 
citizens, who through no fault of their own, find themselves 
months after this tragedy in distressed circumstances.
    There are many, many aspects of this that are troubling. 
There were problems obviously with the initial response, but I 
could have said, okay, this is a problem, this is a crisis, you 
don't have always the capacity in literally the eye of the 
storm to respond, but there is no justification for the slow 
and inadequate pace of efforts to respond to date and in 
particular the absence of critical plans for the future.
    Now, I saw the President criticizing the Congress. And I 
must say my first response when President Bush criticizes this 
Republican-controlled Congress is to sit there and cheer on 
both sides but this is far too serious an issue to allow that 
to be the attitude. In fact, I think that the President's 
criticism has been unfair in some respects. And, in particular, 
I want to give credit to my colleagues on the Appropriations 
Committee for adding to the program an important element that 
the President neglected. And Mr. Powell, I know, appreciates 
the importance of this, but in his prepared statement, which is 
the Administration position, and goes through OMB, etc., there 
is no reference, that I can see, to the need to rebuild housing 
that is affordable for low- and moderate-income people. As Mr. 
Powell was discussing before, New Orleans--and we are talking 
about working people here, we are not talking about lazy 
people--we are talking about a population who works in the 
service industry, a major part of the New Orleans economy, 
people who cook and clean and literally clean up after others 
at all hours of the day and night. And they don't get paid 
nearly enough to live comfortably. These are people who are not 
going to have decent places to live if we simply leave this to 
the market economy because these are people, who as hard as 
they work or not, are major beneficiaries of the market 
economy. And so there has got to be a commitment of Federal 
funds to build, rebuild affordable housing, including 
significant rental housing.
    One of the great problems we have in this country are 
people who talk about home ownership as if that were the be all 
and end all of the housing situation. In fact, I was appalled 
right afterwards, when the President went down and he proposed 
his housing program, and the only thing he had was a 
homesteading program, as if New Orleans today was Kansas in 
1870. And the people of New Orleans can go chop down some trees 
and build their own houses. The fact is that we will not have 
decent housing for the people of New Orleans; we will have a 
displacement of the population of New Orleans if we don't 
commit some funding to affordable housing.
    Now there are other problems as well in terms of home 
ownership. That is why I was very proud when this committee 
late last year passed a bill that reflected the combined 
efforts of our colleague from Louisiana, the senior member of 
the Louisiana delegation, and our colleague from North 
Carolina, which would have created an entity, and its still 
pending, the House could take it up at any time, was passed 
overwhelmingly by this committee a bill that provided for the 
problems of people whose homes have been destroyed. It provides 
a reasonable way to make sure that we don't have bank failures 
imposed because of this tragedy. It provides funding for the 
Congressional Black Caucus' good work for affordable housing. 
The Administration has zero proposals that I can see for 
affordable housing. And when the $4.2 billion was proposed by 
the Administration, as I understand it, it was originally just 
for mitigation. It was mitigation with nothing to mitigate, at 
least in terms of housing. Certainly housing built should be 
subject to mitigation but making it only for mitigation was a 
mistake.
    Now, I was therefore very pleased when my staff called to 
my attention that in the appropriation of the $4.2 billion, 
while there is I think a problem because it does not give 
Louisiana the specificity--and I agree Texas needs some help, I 
think the people of Houston have distinguished themselves, for 
example, by the decency with which they reached out to people, 
and we should be helping there as well but in addition to, not 
in subtraction from, the money for Louisiana. But this is a 
point that was added by our colleagues in the Appropriations 
Committee, and I was delighted to see it, that $1 billion, at 
least $1 billion must be spent on affordable rental housing 
stock. ``Provided that not less than $1 billion,'' it is on 
page 72, ``from funds made available,'' this is out of the $4.2 
billion, ``shall be used for repair, rehabilitation, and 
reconstruction of the affordable rental housing stock, 
including public and other HUD-assisted housing in the impacted 
areas.'' That is a very good thing, it has been absent.
    So as we talk about the problems of the past, the most 
stunning thing missing here is a recognition that we need 
Federal funding for affordable housing. And I'd appreciate just 
30 more seconds, Mr. Chairman, and that is why I am 
particularly disappointed that this Administration has opposed 
legislation that passed overwhelmingly in this committee that 
would take 5 percent of the after-tax profits of Fannie Mae and 
Freddie Mac, not hitting the taxpayers at all, and make it 
available for affordable housing with priority given in the 
first year or two to the Gulf region. So there is this great 
need that remains unaddressed for the future. We have the 
problems currently but there is a great need that remains 
unaddressed in the future. Our colleagues in the Appropriations 
Committee have begun that process but the Baker bill and our 
GSE bill are also important parts of this, and I hope we will 
hear that there is from the first time from the Administration 
a recognition of this need for addressing the affordable 
housing situation going forward.
    Thank you for your indulgence, Mr. Chairman.
    Chairman Ney. Thank you. And we will move on to the members 
now. I would remind members that all other members have 3 
minutes for an opening statement. The gentleman, Mr. Baker, 
Chairman Baker.
    Mr. Baker. I thank the chairman for calling this hearing 
and for all his good work in the past. Also, I want to express 
my appreciation to members for their attendance on the trip to 
New Orleans recently and the Gulf Coast for their kind support 
of the needs of our State, and more specifically to the 
taxpayers who have been generous in helping us try to find our 
way.
    Mr. Powell, since I am very time constrained, I have got to 
move pretty quickly, and I regret that, but you have the most 
thankless job in the entire government right now. I don't know 
where you can go to find a smiling face but I hope you do. You 
have been like the Energizer Bunny, you just keeping going and 
going and going, and it has not been lost on us that you are 
trying. But this is a task of extraordinary scope and 
difficulty to resolve. I have the obligation to explain to this 
committee that despite the $100 million figure, the $85 billion 
figure, the $50 billion figure, whatever figure you may have 
heard, as of March 1st, the Disaster Relief Finance Report, 
prepared by FEMA, which I have here which has been carefully 
reviewed, I can tell you that the aggregate spent to date 
outside of flood insurance premiums, contractual obligations is 
$15 billion.
    Ms. Waters. How much?
    Mr. Baker. Fifteen. Now that is not actually spent, that is 
contracted, not necessarily expended. Of the $15 billion, 
FEMA's administrative expenses amount to 24.9 percent. Now if 
you did that in any corporation in the country, you would be in 
the dismiss category. When you look at the cruise ship/FEMA 
trailer program, which I can tell you Louisianans have not 
suggested nor been in favor of this approach, that is about $9 
billion. When you take out in excess of $3 billion 
administrative, that gets you back to about a $3 billion 
figure, which most members of this committee would consider to 
be emergency relief in nature, emergency medical. The things 
that you would think of when you see the disaster and what 
people are going to do.
    I just want to make clear that this is not a Louisiana-led 
recovery. We are working with the Federal Government in 
response to programs designed at the Federal level, and we are 
appreciative of it and I would never want to leave this city or 
this hearing and have the people of this country that we are 
not appreciative. We are, very much. In fact, we would like to 
see it work slightly differently, more efficiently, and 
perhaps--I hate to say it--with even less overall money spent 
to get a more effective outcome for the people whom we 
represent.
    I appreciate very much the gentleman's comments from 
Massachusetts, relative to H.R. 4100. And, as I have discussed 
with Mr. Powell and Mr. Hubbard over many months now, I think I 
have come to an understanding the principal reason for 
objecting to the bill was the view that it is not a Federal 
role to acquire, manage, and dispose of real estate which is 
within a State's jurisdiction. And that it would be preferable 
for that activity to be conducted by the State of Louisiana if 
State officials chose to proceed in that manner.
    Given my time constraints, and I am out already, I want to 
explore when my opportunity comes perhaps an alternative to 
what has been posed to date that would give us the same 
resolution conducted at the State level and perhaps curtail the 
necessity of a longstanding Federal presence in our State. 
Right now, I am very, very troubled about our potential 
outcomes; none of them seem very positive for us at this 
moment, economically or in restoration of housing. And I do 
want to continue to work with you, Mr. Powell, in any way 
possible to come to what I know you want as well: the most 
efficient resolution in the quickest manner possible. And I am 
very appreciative.
    Chairman Ney. Time has expired. The gentlelady from 
Indiana, Ms. Carson.
    Ms. Carson. Thank you very much, Mr. Chairman. I would like 
to ask first and foremost that the balance of my remarks--that 
the majority of my remarks be inserted in the record.
    Chairman Ney. Without objection.
    Ms. Carson. To the chairman, and certainly to the Full 
Committee chairman, thank you all for calling this very 
important hearing. I would like to thank Mr. Powell for being 
here today. It has been almost 7 months since Hurricanes 
Katrina and Rita devastated our Gulf Coast. It is estimated 
that the hurricanes destroyed or damaged over 300,000 housing 
units, killed about 1,400 people, and caused roughly $90 
billion in damage. Since the storm hit, we have had hearing 
after hearing, yet we are very slow to move for a resolution 
and to get things done to help this region and the people who 
have been so devastatingly affected. We passed legislation with 
bipartisan support that would begin the process of rebuilding 
and reviving the Gulf Coast but the Administration turned it 
down. Not only did they turn down the proposal but they have 
failed to come up with an alternative plan. Representative Watt 
proposed another piece of legislation that would also start the 
rebuilding. People in this room were willing to take action, 
while the Federal Government is reluctant to step up to the 
plate.
    I am not about to criticize you, Mr. Powell, for having 
this delay occur that has affected so many vulnerable people in 
the South. But I would hope that your leadership would lead us 
in the right direction so that we can expedite some relief for 
these poor people who are just left stranded out in the 
wilderness, if you will.
    I will yield back the balance of my time, Mr. Chairman. If 
you don't want it back, I will keep talking.
    [Laughter.]
    Chairman Ney. I thank the gentlelady. Mr. Neugebauer.
    Mr. Neugebauer. Thank you, Mr. Chairman. In the interest of 
hearing from our witness, I will enter any remarks I have into 
the record. But I do want to welcome my friend, Mr. Powell, 
this morning. And just for a little bit of information, he has 
a constituency in my district which he is very fond of, and we 
are glad to have him here this morning.
    Chairman Ney. The gentlelady from California. I would also 
note we are expecting the first set of votes from 11:05 to 
11:20 today.
    Ms. Lee. Thank you, Mr. Chairman. Let me also thank you and 
our ranking member for putting together this very important 
hearing but also for conducting the hearing in New Orleans and 
in Gulfport. It was quite devastating, what we saw during the 
hearings, and quite unbelievable what we heard from people who, 
of course, were left to fend for themselves by our government, 
who then even in the disaster following with their transition 
to temporary housing were left to fend for themselves. And now 
it appears in the rebuilding effort, that they are being left 
to fend for themselves. And the entire world witnessed the 
Administration's failure in planning for and responding to 
Hurricane Katrina. Now the entire world is witnessing the 
failure to respond once again in terms of a real rebuilding 
effort so people can return home and return home quickly.
    For the life of me, I don't understand why the 
Administration wouldn't support the Baker bill, won't support 
the Congressional Caucus' bill. These road maps to rebuilding, 
Mr. Powell. And it is not a good sign that the Administration 
continues to talk the talk but not walk the walk.
    So, I hope the people of New Orleans and the Gulf Coast 
hear something from you today that gives them hope because, 
quite frankly, and I have talked to many members who were there 
last week, what they saw just last week during the hearings and 
what we saw a month, month-and-a-half ago is just about the 
same. And there is very little progress taking place. People 
who didn't have money, who didn't have the resources to 
evacuate once again were left unfortunately on roof tops and in 
areas of New Orleans that had been subject to neglect because 
of the warning going unheeded about the levees. They were 
living in areas which we had turned our back to those 
communities for years and years and then we turned our backs 
again on them.
    And so thank you, Mr. Powell, for being here. I hope I can 
ask unanimous consent for my statement to be placed into the 
record. Mr. Chairman, I look forward to your testimony.
    Chairman Ney. Without objection.
    The gentleman from Texas, Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman. And I would like 
to add my welcome to Chairman Powell, and I want to thank him 
for taking on what I think Chairman Baker just described as the 
most thankless job in the Federal Government. It is clearly a 
testament to either the gentleman's patriotism or lack of 
commonsense that he would take this on. Knowing him as I do, I 
know it is a testament to his patriotism.
    I will attempt to be brief. I was fortunate enough to be 
invited to be a part of the congressional delegation that 
recently traveled to the Gulf Coast to witness the devastation 
and indeed the camera lens cannot do justice to the amount of 
devastation and human suffering that has taken place along 
there. It has certainly made impressions on me that I will not 
soon forget.
    But I also remember meeting with many local and State 
officials along the Gulf Coast, many of whom, not all, but many 
of whom seemingly took very little responsibility for the 
actions of their government and all of whom are looking for 
large checks to be written by the Federal taxpayer over and 
above the roughly $100 billion the Federal taxpayer has already 
handed out in relief and tax incentives.
    The questions many of us have, and certainly many of us are 
willing to write out even more checks drawn on the account of 
the Federal taxpayer, but we are curious as to where is the 
plan? Where is the accountability? What is the proper Federal 
role here? And what is the contribution, for example, of the 
City of New Orleans, the State of Louisiana, and able-bodied 
individuals under the age of 65; what are they doing to help 
themselves and their families? And, finally, where are the 
reforms so that, for example, the guy who works at the bottling 
plant at Pepsi Co. in Mesquite, Texas, in my district, who 
works very hard for his paycheck and wants to help out his 
fellow man, but when he says, ``Congressman, tell me I am not 
going to have to write out this check again in 5 years.'' What 
are the reforms that we will undertake to ensure that people 
are not put needlessly in harm's way and that factory workers 
don't have to do that.
    So I appreciate your testimony. I look forward to hopefully 
getting some insight into these questions.
    Thank you.
    Chairman Ney. The gentleman from Georgia, Mr. Scott.
    Mr. Scott. Thank you very much, Mr. Ney. It is indeed a 
pleasure to have us with you today, Mr. Powell. Welcome to the 
committee. First of all, I think we do need to respond to the 
President. I think the President ought to be ashamed of 
himself. It is his failure, it is his watch, it is his 
Administration. Everybody in America knows this. And for him to 
go down to New Orleans and point a finger of blame at the 
Congress is the height of hypocrisy. And it points out really 
what is wrong. Here is a man whose clear responsibility it is 
to execute the policies. Congress' responsibilities are to 
appropriate the money and do the oversight. We have done that. 
And it is a shameful example of gross neglect, mismanagement, 
and bad leadership on the part of President Bush. And for him 
to go down into New Orleans, in that belly of despair and 
hopelessness, and not say, ``Folks, we blew it. We are sorry. 
This is my watch. And here is what we are going to do to solve 
this problem.'' We have given him the money. And let me tell 
you something else, Mr. Powell, for the President to point a 
finger at Congress when he did everything in his power to stop 
a bill that was being pushed by the Congressman who represents 
Louisiana to deal with the problem. It was the Bush 
Administration who stopped the Baker bill. It was the Baker 
bill that had incorporated in it the hard work of the 
Congressional Black Caucus under the leadership of our 
chairman, Mr. Watt. We know that there is no body of people up 
here who are more sensitive and who understand the situation of 
the plight of the majority of those people affected in New 
Orleans than the Congressional Black Caucus. But the President 
of this United States would not even meet with us. So for him 
to go down there and point a finger of blame at the 
Congressional Black Caucus, this Republican-controlled Congress 
is the height of hypocrisy. And I am convinced that the 
American people see right through this. This is not just a low 
point in America's history. It is a low point in the 
effectiveness of the Executive Branch of Government. What a 
failure. And for him to go down and not do the responsible 
thing but to point fingers.
    I represent Georgia. We are second only to Houston, Texas, 
in terms of being a recipient of these evacuees. And I can tell 
you we, in Georgia, have done a remarkable job. And I can tell 
you this--I am a Democrat but I can tell you this that there 
have been Republicans in this body who have worked very hard.
    Chairman Ney. Time has expired.
    Mr. Scott. And if I was a Republican in this body, I would 
be very, very disturbed and angry with this President for 
saying this Republican-led Congress did nothing on Katrina.
    Chairman Ney. Time has expired. The gentleman, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Let me thank you 
again for your leadership, as well as Ranking Member Waters, 
and all of the members who have been conscientious on this 
subject. I know that you, Mr. Powell, are in a difficult 
position, to say the least. I am sure your hair was completely 
black when you took this assignment. And I hope that we can 
turn it back shortly.
    My issues are pretty much those that have been addressed by 
others, that I was disturbed as everyone else by this front 
page story today with the blame coming to Congress. And, of 
course, Mr. Baker's bill is one that most of us embraced with 
some significant parts from the CBC's comprehensive Katrina 
bill, H.R. 4197. The issue that I wanted to raise, and I won't 
take up my entire 3 minutes, and I will hopefully get into 
some--maybe we can dialogue later to try to get your 
perspective, but I don't understand what is going on. There has 
been a lot of tripping but there has not been much helping.
    And I don't know if this is something that the Government 
of the United States wants to raise a white flag on and say we 
surrender, we cannot do anything, or if we are going to keep a 
lot of these people still roaming around the country in 
cultures and climates of which they are not familiar. And I 
wish people could see--in addition to the people in New 
Orleans, I substituted in a speech for Ranking Member Waters up 
in Cambridge, Massachusetts, and a couple came to this forum 
where I spoke and told of what happened with them. They were 
put on an airplane and not told where they were going. The guy 
never--he and his wife and three children had never been out of 
New Orleans in their lives, in their entire lives, and there 
they were landing in Massachusetts. He thought it was Florida. 
And he got there and when they started talking about snow and 
cold weather, he panicked. But more than that, he wants to go 
home. And I was the only Member of Congress there and so he 
just kept asking me, ``When can I go home? When I am going to 
be able to go home?'' In fact, as he spoke, people began to 
weep out in the audience. This is a human tragedy, and I think 
our government is putting on display for the world our 
inability to help our own people. And it is painful to me and 
hopefully to people all over the country.
    Thank you, Mr. Chairman.
    Chairman Ney. The gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. And I also thank 
Ranking Member Waters. I would like to thank the ranking member 
of the committee, Mr. Frank. And thank you, Mr. Powell, for 
being with us today. I am very interested in what you have to 
say.
    I do want to mention voting rights. I firmly believe that 
we are about to witness a great injustice upon the folks from 
Louisiana, New Orleans in particular, in terms of their right 
to vote. We have scattered them across the length and breadth 
of this country. And we have the technology, the means and 
methodologies by which we can afford them the right to vote 
such that it will not be circumvented by process. We can do 
satellite voting. I think the Federal Government has to step in 
and make sure that every one of those citizens who wants to 
vote has the right to vote. If the right to vote is denied by 
virtue of process, Mr. Powell, we are going to see a great 
change in the politics and the political body, the body politic 
in Louisiana. We ought not let a natural disaster and process 
prevent people from having their legitimate right to vote. We 
have got the technology, we can do it.
    We also have not heard a firm commitment as to what 
standard we will use reconstruct the levees. We have heard a 
lot of talk, but not a commitment as to what standard the 
levees will be reconstructed to. As of late, it has been 
indicated that some inferior work has been done with the 
levees. If businesses are to come back and make meaningful 
investments, they must be assured that we are going to have 
levees in place to the highest standard. I have consistently 
supported Category 5 standards. We ought to rebuild the levees 
to the highest standard. We are the country that built Hoover 
Dam. We constructed the Golden Gate Bridge. We can rebuild 
those levees to standards such that people, as well as 
businesses, will be safe.
    And, finally, Mr. Powell, sir, we cannot continue to 
explain away FEMA's inability to put trailers on lots. We 
cannot continue to expect people to believe that we are 
faithful to our duties and our responsibilities by explaining 
this away.
    Chairman Ney. Time has expired.
    Mr. Green. We put a man on the moon, FEMA can put a trailer 
on a lot.
    I thank you, Mr. Chairman.
    Chairman Ney. Thank you. And, again, I just want to remind 
members that between 11:05 and 11:20 today, there will be a 
vote. The gentleman, Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman, for your courage today. 
I am not a member of the committee so I didn't come to speak 
but my name has been mentioned a few times. I came to hear what 
Chairman Powell has to say because if there is one thing that 
has been consistent, it is that the members of the 
Congressional Black Caucus, which I am honored to chair, have 
worked across party lines, across philosophical lines to try to 
find some solutions and responses that are appropriate for the 
Gulf region. And it has been because of the face that was 
projected on this disaster following the hurricane. It was 
disproportionately black because it was disproportionately 
poor, and so we have been at the heart of that. So any 
constructive, positive things that you can suggest to us today, 
we will be looking forward to hearing and working on and 
joining with our colleagues of whatever party or philosophy to 
try to implement.
    Thank you, sir.
    Chairman Ney. Thank you. The gentlelady from New York will 
be the last statement. Any other member arriving can submit for 
the record. The gentlelady from New York.
    Ms. McCarthy. Thank you, Mr. Chairman. And I thank you for 
having this hearing, and I, too, am not on the subcommittee, 
but I am on the Financial Services Committee. Mr. Powell, when 
we met with you, I believe is on Friday morning, or maybe it 
was Thursday night, those days kind of blur together, and you 
were very positive meeting with the businesspeople and all the 
different States that have come together with their brightest 
and their best as you have said in your testimony. They have a 
lot of answers, in my opinion, on how do we go ahead and start 
to rebuild. The one thing that was brought up constantly, and 
it didn't matter what State we were in as we toured the Gulf 
Coast, was the response of the private insurance companies and 
it is something that this committee is going to have look at. 
Gene Taylor from Mississippi said so far not one claim has been 
put out. Now, I live on Long Island and many of us who live in 
areas that could be affected from hurricanes, what we saw, we 
want to try to make sure it doesn't happen in our areas. Or if 
it does happen, certainly that we are going to be looking at 
things differently, so that other States might not have to go 
through what we see going on right now.
    I guess what I want you to think about, and I will bring 
that question up during the question and answer period, is 
looking at a natural disaster plan instead of just having flood 
insurance because the insurance companies are saying it was 
water, not wind. Houses were blown away. But the bottom line is 
if you listen to the Governors, they have a lot of good ideas 
but it is also the flexibility of the laws that we have in 
place, especially with FEMA. What I am concerned about, June is 
right around the corner. That is hurricane season. And FEMA is 
not allowed to have people into mobile homes during a hurricane 
season. So here we are setting people up, and what are we going 
to do at that time if another hurricane comes in? One of the 
Governors had suggested that the mobile homes that could be 
anchored down and built stronger and also from his research, 
cheaper. And yet they can be picked up and moved on to other 
areas if need be.
    So I am looking forward to your testimony. All of us have 
an awful lot of questions. Mr. Baker certainly has been a 
leader on this, and mainly because those of us who have been 
there, we don't want the American people to forget what is 
going on down there. Yesterday, CNN, who has done a great job, 
said New Orleans is back. Well, New Orleans is kind of back. 
All of the hotels have cut back drastically. The businesspeople 
that have lost their homes can't reopen. They have no place to 
live. And these are all things that we need to look at and 
learn by our mistakes but let's go forward and correct those 
mistakes. Let's be prepared, we need to help these people. I 
know it is hard but it is 6 months, and we should have been 
doing a better job and we are capable of doing it.
    With that I yield back the balance of my time.
    Chairman Ney. I want to thank the gentlelady. And we will 
welcome again, Mr. Powell.

STATEMENT OF DONALD E. POWELL, FEDERAL COORDINATOR, OFFICE FOR 
                     GULF COAST REBUILDING

    Mr. Powell. Thank you. Good morning, Chairman Ney, Ranking 
Member Waters, and members of the subcommittee. I am pleased to 
appear before you today as the Federal Coordinator for the Gulf 
Coast rebuilding to discuss the progress we have made in the 
Gulf Coast region and the challenges and opportunities we face 
in recovery and long-term rebuilding efforts.
    As a former banker in west Texas, and more recently as the 
Chairman of the FDIC, I commend and appreciate the work done by 
this committee. Yours is a position of great importance to 
American financial security.
    A little more than 6 months ago, Hurricane Katrina tore 
through an area of the Gulf Coast equivalent to the size of 
Great Britain. A few weeks later, Hurricane Rita followed 
Katrina's path into the Gulf of Mexico, and then made landfall 
on the coast of Texas and Louisiana. In the aftermath of 
Hurricane Katrina, President Bush created the Office of the 
Federal Coordinator for Gulf Coast Rebuilding by Executive 
Order 13390 to be housed under DHS and the Secretary. And I was 
charged by the President with coordinating Federal support to 
the long-term building efforts.
    Let me begin by telling you it is a great honor to have 
been appointed by this President to this very important post. 
He is committed to doing whatever it takes to support the 
recovery and rebuilding efforts in the areas affected by this 
hurricane: Alabama, Florida, Louisiana, Mississippi, and Texas. 
Whole communities have been ravaged by Katrina and Rita, but I 
am confident that by working together, we will see a better and 
brighter tomorrow for our fellow Americans in these affected 
areas.
    My job is to work closely with the people on the ground to 
identify and prioritize the needs for the long-term rebuilding. 
I communicate those realities to the decisionmakers in 
Washington and advise the President and his leadership team, 
including Secretary Chertoff, of the most effective, 
integrated, and fiscally-responsible strategies for a full and 
vibrant recovery. The President has laid out clear guidelines 
which emphasizes that the vision and plans for rebuilding the 
Gulf Coast should come from the local and State leadership, not 
Washington, D.C. Rebuilding should not become an exercise in 
centralized planning. If Federal bureaucracies determine the 
path of rebuilding, local inside initiatives will be overrun 
and the local needs overlooked.
    In that spirit, each affected State has brought together 
their best and brightest minds to create a plan that meets 
their respective needs. Louisiana has formed the Louisiana 
Recovery Authority and Mississippi has formed the Mississippi 
Development Authority to formulate strategies to move forward.
    As the States develop their plans, we also encourage them 
to focus on the future. That can be difficult given the 
extraordinary immediate needs but there must be a long-term 
vision of where each State wants to be 5, 10 or 20 years from 
now and a path must be drawn. I will tell you that based on our 
planning meetings, I have every confidence that the Gulf Coast 
region will regain its economic and social vibrancy and be an 
important part of America's economic base.
    The President also emphasized the importance of being good 
stewards of the substantial amount of taxpayer money that has 
been, and will continue to be, spent on this effort. To date, 
the Federal Government has already committed more than $87 
billion for the recovery effort. And the President has 
submitted a request for an additional $19.8 billion in the 2006 
supplemental package, which would bring the total to well over 
$100 billion. That figure does not include the tax relief of 
the Gulf Opportunity Zone legislation, which will be 
approximately $8 billion. Of the money that has been set aside, 
approximately $53 billion has been obligated to date. In order 
to ensure that this money is well spent, responsible financial 
management practices and enhanced audit and investigative 
resources for the inspectors general of every Federal agency 
has been put in place to safeguard Federal spending.
    We also called on the oversight and accountability 
mechanisms of Congress to assist the fiduciary protection of 
the American taxpayer. Together, we must demand the highest 
standards of governance and accountability in the 
administration of the Federal investment. If Americans see 
their tax dollars being ill spent, their support, which is 
critical, will wane. It is my duty to ensure that any plans or 
strategies for rebuilding are conducive to the prudent, 
effective, and appropriate investment of the taxpayers' 
dollars.
    One of the tools we have established to leverage the 
expertise and resources of the Federal Government is a system 
of working groups. These working groups are staffed with policy 
and programmatic experts drawn from across the agencies and 
departments of the Federal Government.
    In our office, we often speak of the ``Triangle of 
Recovery.'' Its three sides are comprised of security, 
community, and economy. These working groups concentrate on 
subject areas that are central to completing this triangle. 
These eight groups are environmental management, public safety, 
housing, health care, education, critical infrastructure, 
community and faith-based organizations, and economic 
development.
    When I made my first trip to the southeast Louisiana 
region, I asked everyone I visited, ``What are the three most 
important issues you face?'' The answer time and time again was 
levees, levees, levees. The President has stated that public 
safety is the most critical part of long-term rebuilding in the 
area. People must feel that there is adequate hurricane 
protection before they can make their decisions to return, 
whether as a resident, a business owner, or both.
    We continue to work with House and Senate appropriators to 
get more funding for the Army Corps of Engineers to add flood 
gates and pumping stations to internal canals, selective 
armoring of levees, the initiation of wetlands restoration 
projects, and additional storm-proofing pumping stations.
    I receive regular updates from the Army Corps of their 
progress, and I recently walked the levees with General Strock. 
And I have confidence that the Corps is on the track to meet 
their deadline for pre-Katrina strength before the beginning of 
the next hurricane season.
    It will come as no surprise to this Housing and Community 
Opportunity Subcommittee that after the Administration made its 
commitment to rebuild the levees stronger and better, the next 
issue on the minds of the people of the Gulf Coast was housing. 
As I learn more about the unique flood issues of Louisiana, I 
learned that safety is not just about the levees and coastline, 
but also about homes. As we build the hurricane protection 
system stronger and better, we must also help the States to 
rebuild their housing stock in a safer and smarter manner, 
protecting the lives and assets of the people of southern 
Louisiana. That is why in the President's recent supplemental 
request he asked for $4.2 billion in community development 
block grants funds for States like Louisiana to address his 
plans for future flood mitigation measures to protect housing 
and critical infrastructure.
    The President, along with Congress, is also mindful of the 
renewal of the region's economy. There is a role for the 
Federal Government in helping to restore traditional industries 
of the region--tourism, seafood, and energy--as well as 
attracting new industries. At the end of 2005, the President 
signed into law the Go Zones Act. This legislation providing 
approximately $8 billion in tax relief over 5 years will help 
revitalize the region's economy by encouraging businesses to 
create new jobs and restore old ones. Simply put, this law 
renews businesses, rebuilds homes, and restores community.
    Furthermore, the SBA has adapted and wrapped up this 
capacity in order to provide loans and working capital to small 
businesses and families in the affected area. SBA disaster 
loans provide vital, low-cost funds to homeowners, renters, and 
businesses to cover uninsured disaster recovery costs, as well 
as loans for working capital needs of businesses affected by 
this disaster.
    Of particular interest to the House Financial Services 
Committee is that the financial services sector in the region 
is also doing its part to provide capital. When Hurricane 
Katrina and Rita hit the Gulf Coast, they impacted the 
operations of at least 280 financial institutions, including 
over 5,000 branches, with 120 of these institutions 
headquartered in the 49 counties and parishes in Alabama, 
Louisiana, and Mississippi designated by FEMA as eligible for 
individual and public assistance. Just like other sectors of 
the Gulf Coast economy, financial institutions' facilities and 
employees experienced damage and disruption. While financial 
results to date do not yet provide a clear picture of the full 
effects of the storms, recent data suggests that institutions 
may be reacting and adjusting to the effects of the hurricanes. 
All institutions remain well-capitalized or adequately 
capitalized and liquidity for most of these institutions also 
remain strong. While the prospects for the financial 
institutions most affected will depend in large measure on the 
revitalization of the communities these institutions serve, 
local bankers remain cautiously optimistic and are not 
predicting any bank failures.
    A big part of long-term economic security is workforce 
development. We want to help create as many jobs as possible in 
the Gulf Coast and prepare its residents to fill those jobs. To 
do this, we have set an ambitious goal that we are committed to 
achieving. This public/private initiative will train 20,000 new 
workers for careers in construction and skill trades by the end 
of 2009. We will continue to work to make the Gulf Coast a 
great place to invest, to do business, and to live.
    In conclusion, I want to assure each of you that President 
Bush is committed to rebuilding the Gulf Coast. The Federal 
Government will continue to facilitate and help strengthen, but 
not replace, State and local government or private initiatives. 
And we will help our fellow citizens meet the challenges of 
reconstruction and rebuild their lives and communities for 
years to come. The residents of this area and the President can 
agree on this: Failure is not an option. A tremendous amount of 
work is still ahead for us but we are encouraged by the 
progress made. We are proud of the work that has been 
accomplished today on both the State and Federal level. We look 
forward to working with the leaders in Alabama, Florida, 
Louisiana, Mississippi, and Texas in the days, weeks, and 
months ahead to assist in implementation of their respective 
visions while also serving as a good steward of the taxpayers' 
dollars that the distinguished members of this panel, along 
with your colleagues, have helped secure. With diligence and 
thoughtfulness, we will continue to work on behalf of all 
Americans to the further progress of building safety and 
security, restoring communities, and reviving economic 
development in the Gulf region.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Powell can be found on page 
49 of the appendix.]
    Chairman Ney. Thank you, Mr. Powell. The committee will be 
in recess until the bang of the gavel. I think we have one 
vote.
    [Recess]
    Chairman Ney. We will reconvene the subcommittee. The 
question I have is on the $4.2 billion because it has been 
talked about today, about percentages and how much money, of 
course, is spent by the government to implement money that is 
appropriated by the government. Do you have any ideas or would 
you want to give a guesstimate of what percentage you think 
would be good out of the $4.2 billion for administrative 
overhead, in other words, a cap.
    Mr. Powell. Mr. Chairman, part of our discussion with the 
folks from the LARA, Louisiana Recovery Authority, and from the 
people in Mississippi, was about the administrative costs 
capped at 5 percent. Part of that the marketplace will 
determine; some of that because they are going to outsource 
some of those administrative duties, but we think that it 
should not exceed 5 percent.
    Chairman Ney. Because, as you know, in States, State-
administered programs usually 5 percent is the magic number, 
sometimes 7 to 10.
    Mr. Powell. Right.
    Chairman Ney. So you would think 5 percent and that way if 
you do the calculations on $4.2 billion, the money would force 
the people administrating this to get the money directly to the 
people.
    Mr. Powell. Right.
    Chairman Ney. Just to make sure members have the 
opportunity to ask questions, I am going to go on to our 
ranking member.
    Ms. Waters. Thank you very much, Mr. Chairman. Chairman 
Powell, it appears that your responsibility is more long term 
than immediate. And so some of the issues that we are raising 
today relative to the siting of the trailers and other kinds of 
issues, these are not the issues that you are wrestling with. 
You are more concerned about long term development, business 
development, etc., okay, all right. I will try and direct my 
concerns in those areas. Let me deal with this discussion about 
labor and jobs and job development. If this is one of your 
areas, and one of your long term goals is to get workers 
trained and get them into jobs, how are you going to get people 
back who want to come back but who were basically given one-way 
tickets out? Many people want to return but they have no place 
to live. And the fact that not only do you not have the 
temporary housing but then you don't have rental units 
available or, as I mentioned, there is this discrimination 
against many of the people in the New Orleans area, so who are 
you going to train? When I was in New Orleans this last time, I 
was in a hotel and the hotel was full. It was full of FEMA 
workers. It was full of contractors. And the people who wanted 
jobs could not be there; they could not afford the cost of the 
hotel to stay there. They couldn't even get back. So what is 
this business about training workers? How are you going to do 
this? What is your plan?
    Mr. Powell. The President assembled a group of individuals 
about 60 days ago to speak to that issue. It is very important 
to the President and it is important to our office that we have 
a skilled labor force that can meet the demands of rebuilding 
in the Gulf Coast area. The people who met with the President 
came from an array of various entities, the private sector, 
labor, some former elected officials, the NAACP, the Business 
Roundtable, community colleges, educators, and that group is 
being coordinated with our office. We have talked about 
specifically how we train those people. As you know, the 
community college is a great vehicle to train an unskilled 
workforce. As I mentioned in my testimony, it is our goal to 
have 20,000 workers trained by the end of 2009. There is a 
pilot program that will commence--
    Ms. Waters. Who are you training, Chairman? Are you 
training the people who want to come back home and work or are 
they coming in from other places; who are you training?
    Mr. Powell. We are training the people who want to come 
back. We are training people who are there now who do not have 
skills. We are training people who are on the ground and then 
those people who have been disbursed for one reason or another, 
or other people who want to come into the area and have jobs. 
The people are working very diligently in coming up with that 
specific plan of how to treat those people--
    Ms. Waters. Mr. Chairman, I hate to keep interrupting you 
but I want to kind of get at it real fast because I only have 
so much time.
    Mr. Powell. All right.
    Ms. Waters. One of the things we are very concerned about 
is that you had contractors--many of these contractors were 
that first group of no-bid contractors, the Halliburtons, the 
Shaw groups, the Bechtel's, etc.--and we discovered that they 
were bringing in undocumented workers from Guatemala who were 
working jobs for less than the minimum wage. In one particular 
case, they were sleeping on the ground and even some of the 
contractors worked them and didn't pay them. Now they are doing 
the work with these contractors. These contractors are using 
American taxpayer money to do these jobs. How do you get to 
these problems? What do you do about contractors who hire 
undocumented workers for less than the minimum wage? And who is 
doing all of this training? SUNO, the college, the university 
there is laying off teachers and cutting back on classes. They 
have been devastated by all of this. So you have to unfold this 
for me and help me to understand, first of all, how you 
strengthen these educational institutions that should be a part 
of any training and development program for getting people? How 
do you stop contractors from hiring undocumented workers at 
less than the minimum wage? Who is doing this training? What is 
this grandiose plan?
    Mr. Powell. Well, first of all, the community colleges are 
committed. I have visited with them personally about their 
ability to train these people, and they have assured me that 
they can be part of training the workforce. And as it relates 
to the undocumented workers and paying them less than the 
minimum wage, we have in place, obviously, components of the 
Federal Government that look over those particular issues, and 
they are engaged in that process. Also, I would point out to 
you that the levee construction, there is something like $700 
million that has been to date, 85 percent of those workers are 
from local people, local people who are receiving pay.
    Chairman Ney. The time has expired, but please go ahead and 
wrap up your comments.
    Mr. Powell. Yes, that is fine. I am done.
    Chairman Ney. The gentleman from Louisiana, Mr. Baker.
    Mr. Baker. Thank you, Mr. Chairman. Before I return to the 
idea of an alternate structure for resolution, I just again 
need to emphasize the difference between what is available 
ultimately, between an allocation, an obligation, and then 
actually expended. Allocation, as I understand it, is into a 
category that is available for use. Once a contract is entered 
into in that allocation, it becomes an obligation. And when you 
write the check, that is actually the expenditure sort of 
steps. What I am talking about is only the allocation portion 
of the budget. And to date, Katrina-wide, this is not just 
Louisiana, I want to make clear, there is a total of about $25 
billion total allocation. In administrative costs, it is $6.3 
billion. In operational costs, which has to be broken down, 
part of it is things like ice and water, and the other part is 
more administrative in nature, in my opinion. Then we have 
several hundred million dollar categories in expenditures. The 
most important thing is that in the category of manufactured 
housing, which is where a lot of our people are looking for 
help, through this report, it has $5.3 billion allocated in 
manufactured housing, with actually $2.8 billion having been 
spent. That is the thing that I think our people need to 
understand. There are a lot more resources available that have 
currently been deployed and not only are the resources 
available, they have been approved by the Congress. They are in 
a category. They are in the agency. And we are working through 
it.
    To get to the complexity of using those resources, there is 
another chart--well, I can't find that quickly--that talks 
about the number of pads that are available for occupancy, the 
number of units deployed that are on pads, and I assume that 
means ready to go, and then another number which shows the 
number actually occupied. And as best as I can recall, this is 
an approximate number; there was a difference of those on pads, 
ready to go, and those occupied of somewhere in the range of 
10,000. So we have assets on the ground which administratively 
have not yet been cleared for occupancy by someone. So there 
are resources available to people, and we are trying to work 
through it.
    Not that people in Louisiana don't have a sense of humor, I 
don't know this to be a true story, I was listening to one of 
our talk radio shows and a guy called in and said that he had 
called FEMA about a trailer and she said, ``Give me your name 
and number.'' And he did and the lady said, ``Well, you are not 
eligible for a trailer.'' And he said, ``Well, that is amazing. 
I came home from work today and there was a trailer in my 
driveway but it is locked.'' And she said, ``Well, you are not 
entitled to the trailer. How did that trailer get there?'' And 
he said, ``Ma'am, I don't know. The trailer is locked and it 
looks like it is ready for occupancy.'' And she said, ``We are 
going to have to make an inquiry into this. Obviously, there 
has been some error here.'' He said, ``Well, wait a minute, my 
wife and I have asked for a trailer.'' And he said, ``Can you 
check in my wife's name?'' And she said, ``Yes, sir, that is 
correct. Your wife is entitled to a trailer.'' He said, 
``Great, can I send my wife to get her keys to her trailer?'' 
To which the response was, ``Well, I am sorry, sir, let me 
check.'' She said, ``I thought I was right. We haven't 
delivered her trailer yet.'' And he said, ``Well, ma'am, I have 
a trailer in the driveway.'' And she said, ``Well, that is not 
your trailer. I am going to have to do a little inquiry on 
this.'' He said, ``But I cannot even get in it, it doesn't have 
steps. The door is locked.'' So he hung up the phone and was a 
little worried about it. He said 2 days later he came home and 
there were steps to the trailer and it was still locked and 
still sitting there. So that is the kind of frustration. And 
the discussion was in a lighthearted manner; we understand the 
difficulty. But people need to know more clearly that there are 
sufficient resources. There is help coming. And maybe if we can 
hang in there, it will get done.
    More importantly for me though, is what you referenced in 
your opening remarks about a long-term resolution. I am very 
troubled today that with--I won't call it a plan, with the 
steps now being taken, we are 6 months into the recovery. We 
have people who perhaps have not paid their mortgage 
obligations. Although banks appear to be solvent in the region, 
most of the mortgages held are held by national organizations. 
And at some point foreclosures have to occur. When we get that 
effect of mortgage owners taking possession of disparate lots 
here and there, there is no market for that lot because they 
are surrounded by desolation of other landowners who haven't 
made a decision to rebuild because they don't know what their 
neighbor is doing. At some point, the bank decides to cut its 
losses and sell that off to some speculator who is hoping that 
a decade from now, this stuff is going to be worth something. 
But that is a very slow and costly spiral down. And how do we 
get back out at that point because at least at this moment the 
government's response is to do the trailers as a temporary and 
let the market work. There is no market. There is only a market 
for speculators to take foreclosed property at the end of this 
cycle. Even if one has his own assets and can rebuild his house 
on his lot, why would you do it when there is no value around 
you to support what you are going to spend in recovery?
    That gets me back to 4100 but a 4100-like proposal. I 
understand the objection to--well, I will rephrase that. I 
don't understand it but I know there is an objection to 4100 at 
the Federal level. If we were to construct a 4100-like box, 
with all the described powers and authorities in the previous 
proposal, at the State level, and I also understand the 
concerns about a State-administered program. This would have to 
be a free-standing, State-authorized corporation, run by free 
enterprise, accountable individuals, subject to all the public 
disclosures and transparency required, to acquire title, clean 
up property, and sell it back into the market. I still believe, 
I have not diminished my belief in the view that this is a plan 
that gets the markets back, gives people an opportunity to 
rebuild in an environment where they perhaps have a job and 
have decent homes that otherwise might not reoccur.
    The last point is if we do in fact decide to take property 
out of commerce and not allow people to rebuild their 
residences, I think it highly advisable to have some 
flexibility to allow alternate uses for that property besides 
wetland. Wetland may be the highest and best use but why can't 
a government entity utilize that for a public meeting space or 
a church, which only gets used a couple of days a week or 
whatever the local community thinks is okay, as long as that 
use is free of any claim on the Federal Government for any 
action that might occur if you do have another hurricane. But 
let's not lose half of the State to wetlands. The original 
Administration proposal to capture that $4.2 with hazard 
mitigation language added to the real hazard mitigation money 
equaled half of the entire $12 billion pot. That was making at 
the Federal level the decision to take half of the State that 
was damaged out of commerce. Just as a free market guy, I would 
love to be able to have the flexibility to decide how do we use 
that property? If it is not for residential use, aren't there 
are alternative uses that could be made and let the corporation 
administer those projects? At the end of this process, and I 
have now visited with a number of smart people from Wall Street 
elsewhere where I can find people to talk to me about 
capitalizing this corporation and doing it the right way, their 
private market interest in seeing this kind of approach move 
forward, you may not be able to commit today, I have been down 
this road, but I would like to know if this is a non-starter, 
if this is just something that let's save ourselves another 5 
months and go think of something else?
    Mr. Powell. Congressman, you talked about three or four 
issues, let me speak first of all to the mortgage issues and 
potential foreclosure. Our office has had a meeting in 
Mississippi, and we are scheduled to have one in Louisiana 
where we have asked the largest lenders in the marketplace to 
come and visit. And while the private sector has to do what the 
private sector has to do, and they have certain restraints, 
their shareholders' demands, etc., and so forth, we have 
pointed out to those lenders that there is some CDBG money that 
will be coming in, we hope, a very short period of time that 
will be in the hands of these people that will enable them to 
satisfy some mortgage obligations that they may not be 
otherwise able to do.
    The second issue is an issue that I believe is in the hands 
of the local people. The local people, I am sure, would be 
interested in your thoughts, I know they would be interested in 
your thoughts, I am interested in your thoughts about the 
private entity to administer the property. But that is a 
decision for the local people to make. I am happy to listen to 
your thoughts in more detail and understand it as we go forward 
but, again, that is a decision of the local folks.
    The mitigation issue--that, too, is a decision that the 
local people will be planning. In our negotiations with 
specifically the LRA, the $4.2 billion that is asked for in the 
supplemental has mitigation needs, we think legitimate 
mitigation needs that will be met. What happens to that so-
called ``green space'' is a decision for the local people to 
decide.
    Mr. Baker. But under the terms of the Stafford Act, if you 
use hazard mitigation-like remedies, and you acquire title as a 
State to that property, there is no option. It must be taken 
out of commerce.
    Mr. Powell. Yes.
    Mr. Baker. If we were to develop a plan, which contrary to 
the statute, and we were to recommend to the Administration 
using that property for what is the highest purpose, not only 
taking it out of commerce, but highest purpose and safe 
purpose, and it was a State-constructed plan, can I get you to 
the point where that would be something the Administration 
would likely accept, not knowing all the details, but State-
driven, flexibility on mitigation, and some sort of rebuild to 
get ownership of property. That is a State responsibility, not 
a Federal Government responsibility.
    Mr. Powell. And no recourse to the Federal Government.
    Chairman Ney. Mr. Powell, I am sorry, if could note the 
time has expired but you can answer the gentleman's question. 
And also frankly extra time should be allotted--
    Mr. Baker. I will wait another round. Mr. Chairman, I 
appreciate your courtesy and I have been way over my time, I 
will wait until the next round.
    Chairman Ney. But, Mr. Powell, why don't you answer the 
question.
    Mr. Powell. Yes.
    Chairman Ney. Thank you.
    Mr. Powell. The outline that you just described, I would 
add one thing to, with no recourse to the Federal Government. I 
think I would be happy to sit down and learn more about that in 
detail, again working with the State to see if there was a 
satisfactory plan that we could support as it relates to that 
mitigation.
    Chairman Ney. The gentlelady from California?
    Ms. Lee. Thank you very much. Let me ask you a couple of 
questions following up on the contract issue. First of all, 
when we were down conducting our hearings, I was really quite 
appalled to learn that, for instance, for debris removal, the 
prime contractor is paid about $43 per cubit foot. By the time 
it gets down to the person who actually does the work, they 
were down to about $7 a cubit foot. Now, you said that--and I 
understand now that contracts over $1 million must be approved 
in Washington, D.C. You indicated to Congresswoman Waters that 
you all are looking over the issues with regard to paying less 
than the minimum wage and contractors hiring undocumented 
workers for less than the minimum wage. If you all are 
reviewing this, you said you are looking at the issues and are 
engaged in it, but what are you doing? How in the world does a 
worker get $7 a cubit foot from $43? So that is the first 
question.
    The second question is now it is my understanding, Mr. 
Chairman, that over 900 individuals are still missing and 
cannot be located. And so I want to find out what you are doing 
to help the families locate these people. It has got to be a 
desperate, traumatic situation to have 900-some people still 
missing.
    Thirdly, when we were down there, and I had to write 
President Bush's letter and I think we gave you a copy, but 
there were so many unanswered questions that I had, for 
example, with regard to price gouging in the rental housing 
market and how in the world are we helping to address that 
issue?
    Also, with regard to food stamps, to ensure food stamp 
eligibility is unaffected by those accepting housing assistance 
through FEMA, expanding outreach efforts to the homeless to 
publicize the availability of Katrina-related assistance. I 
will give you a copy if you don't have this letter, but we 
outlined to the President these questions which surfaced during 
the hearing. And so I would just like for you to answer some of 
these questions now and then hopefully you will be able to 
respond, or the President will, in writing.
    Mr. Powell. Congresswoman Lee, as you know, I am 
sympathetic to all of those issues, especially the misplaced 
persons or the missing people and the price gouging of rental 
units. That doesn't come under our office. When I mentioned a 
moment ago--
    Ms. Lee. Well, it may not--you know what, I have to say 
every time it is like passing the buck, and we have heard that 
a lot. Well, the locals say it is the State's responsibility. 
The State says it is national. The Federal says it is locals. 
So it may not come under your office but what are you doing to 
help whomever should be responding to this?
    Mr. Powell. When I hear issues like this, what I do is that 
I call the appropriate party and tell them of the issues that I 
have heard about. I interact with people at FEMA. I interact 
with HUD. I interact with Justice. We interact with all those 
offices. So we take the thoughts that you have just expressed 
and the concerns you just expressed, and we convey those to the 
appropriate party. I know, for instance, that--
    Ms. Lee. And do you demand that they respond within 24 
hours?
    Mr. Powell. I don't think I demand that they respond within 
24 hours, I tell them that if I hear from you that there is a 
great deal of a sense of urgency as it relates to the specific 
issue, I know that Secretary Jackson has a team of people, 
because I have heard him in his testimony, I have heard him 
talk about the rental issue, the price gouging, looking at 
that, and I know that he doesn't tolerate that.
    Ms. Lee. But there has to be some accountability because it 
is continuing.
    Mr. Powell. Well, I think they accept accountability, and I 
think they understand it. But I am happy to convey your 
thoughts, and I will convey your thoughts to the appropriate 
party.
    Ms. Lee. You are the top person, Mr. Powell, if conveying 
my thoughts, conveying this committee's thoughts, but it is 
what are you doing to make sure that the rebuilding effort and 
that the people who were traumatized by this catastrophe are 
made whole and are allowed to come back. And during the 
interim, benefit from these jobs that are coming down the pike 
and have the transitional housing that they need, have the 
medications. You know there are 2,100 displaced now with HIV 
and AIDs. What are you doing to make sure that the States are 
coordinating those efforts to make sure that they receive the 
medications? I am asking what you are doing, not conveying 
thoughts.
    Mr. Powell. As I mentioned, we have eight working groups 
and we are in contact with every component of government to 
meet the needs of the people in the Gulf Coast area. But our 
primary focus is on long-term rebuilding issues, safety, 
housing, education, and health care--the private sector's role 
in those issues. But I am happy to convey your concerns to the 
appropriate parties.
    Ms. Lee. Mr. Powell, long-term rebuilding is fine but you 
have to have a short-term plan so people can survive.
    Mr. Powell. Yes, and that is the reason we spoke to the 
number one issue in the Gulf Coast, specifically Louisiana, 
safety, safety, safety. And that is the reason the President 
committed in the middle of December to rebuild and repair the 
levee system.
    Ms. Lee. And so yet the President is saying it is Congress' 
fault? This is unbelievable.
    Chairman Ney. The gentlelady's time has expired but if you 
choose to make any further comments. Mr. Neugebauer.
    Mr. Neugebauer. Thank you, Mr. Chairman. I think when we 
have allocated, appropriated, whatever term you want to use, 
the $80 billion and people are saying, ``Nobody is helping 
us,'' we have a problem. And I want to talk about the problem. 
We can talk about what happened in the past, and I think we 
have but it doesn't do anything for the people to play the 
blame game.
    Mr. Chairman, if I understand one of the proposals out 
there is this $150,000 buy-out program, and so I want to just 
kind of walk through a scenario and have a little dialogue with 
you here. But if I understand that, if I lived in Louisiana and 
I decide to take the buy out, you are going to give me $150,000 
less whatever you have given me in other benefits, is that 
correct?
    Mr. Powell. Well, first of all, let me be sure that the 
plan is developed by the local people. This plan is originated 
and developed by the local people. We have had constant contact 
with the local people about specific issues, such as the number 
of houses that were damaged. So it depends upon where your 
house may be. This last $4.2 billion, there are some areas that 
for one reason or another, and they will be dictated by the 
flood plain and dictated by the certification of the levee 
system, that it is unsafe, that it is unsafe to build back. And 
so you will be reimbursed up to a maximum of $150,000 to your 
pre-Katrina value less any insurance or any FEMA money that you 
may have had as it relates to your housing needs.
    Mr. Neugebauer. So if my side is unsafe and it is 
determined, then I am eligible for the buy out if I have a slab 
left there and it is determined that it is not in the flood 
plain and I can build back, I can get some assistance but it is 
not--
    Mr. Powell. Yes, sir. The other issue is that it may be 
okay for you to rebuild but you will have to rebuild under the 
existing building code and under more stringent building 
conditions. So part of the money will be allocated to assist 
you in that mitigation part that will cost you marginally more 
money to rebuild because of the new building code. So some of 
that is also allocated.
    Mr. Neugebauer. Now, let's assume that I am one of those 
people who has an unsafe building site, and I am going to be 
eligible then for the $150,000. Is there any requirement on 
that money that I have to build back in New Orleans, or in 
Louisiana, or can I take that $150,000 and leave town?
    Mr. Powell. The plans in Mississippi and Louisiana, again 
that is the people's plan. In Louisiana, you can take the 
$150,000 and build where you may desire.
    Mr. Neugebauer. I think one of the things that I want to 
encourage you here is that if we are going to spend these kinds 
of Federal dollars to move New Orleans or Louisiana and all of 
those States away from a process of entitlement into 
empowerment, that we have to set some parameters on those funds 
so that those are reinvested in those communities because if 
you take let's say $10 billion, and $5 billion of that leaves 
the State or leaves the area, basically what you have done is, 
as the previous speaker said, you are going to have areas here 
that are going to have no taxable value. Those resources have 
left the State. And the very nature of CBG money is to rebuild 
areas or to maintain communities. And so I don't know if this 
plan is in concrete, but I think it would be--those people who 
sit on that board and that are overlooking those funds would be 
well served to look at controlling that investment and making 
sure it is going to help rebuild the community and not just 
enrich the folks.
    Mr. Powell. Yes, there is a penalty in Louisiana if you 
choose to rebuild outside. I think it is 30 percent, but I will 
pass on your thoughts.
    Chairman Ney. If the gentleman would yield for just a 
minute?
    Mr. Neugebauer. Yes, I would.
    Chairman Ney. Just to add further, there is also a penalty 
if you are in the flood plain and you had no insurance, it is 
30 percent off the top of the $150,000 so you go down to 
$105,000, less any FEMA reimbursements, then less the penalty 
that is the disincentive if you cut and run. And it has no 
relationship to the value of the property nor the debt owed. So 
if you had a person who owned his house outright, you can get 
cash and you can run at this point. But it is limited.
    Mr. Powell. Well, there is a disincentive, as you said, if 
in fact you were in a flood plain and you did not have flood 
insurance or that if you are going to build outside.
    Mr. Neugebauer. Well, I think the private sector would work 
with you there, and the gentleman was talking about the private 
sector, and there may be some areas that don't get redeveloped 
and that is okay. The good news is there are other 
opportunities within the New Orleans City limits. The City 
could annex some additional areas for rebuilding programs and 
stuff. But I think if you are going to try to restore order and 
an economic base to that community, you cannot have a policy in 
place that encourages folks to leave the area because when I 
hear the mayor and the Governor get on the national TV and 
after they have bashed the President for a good number of 
minutes, they do mention they would like for people to hang 
around. I think we ought to focus on policy that does help them 
accomplish that if they are in fact serious about that.
    And I appreciate the gentleman's comments.
    Chairman Ney. The gentleman's time has expired. Mr. Scott.
    Mr. Scott. Thank you very much, Mr. Chairman. A couple of 
questions, first of all, I want to get one thing squared away 
on the levees repair work. There have been some independent 
experts who criticized this levee work saying that it is being 
done with substandard materials and designs. Are you familiar 
with that?
    Mr. Powell. Yes, sir.
    Mr. Scott. What do say you about that; is that true? If it 
is not true, explain otherwise.
    Mr. Powell. We are briefed by the Corps of Engineers on a 
periodic basis, usually about once every 10 days or once every 
2 weeks. I was in New Orleans last week with General Strock and 
some of his associates at the levee breaches. I asked him that 
specific question. He was very adamant that the soil they are 
using is tested properly, and they believe that the designs and 
plans for rebuilding the levee system are adequate.
    Mr. Scott. Well, let me ask you, where is the criticism 
coming from?
    Mr. Powell. I think it is coming from various parts, some 
professors, some people--
    Mr. Scott. Some what?
    Mr. Powell. Professors.
    Mr. Scott. Professors.
    Mr. Powell. Yes, and some engineers. But when the question 
is asked of those people where the soil test was gathered, I 
don't think they have answered that question. I know the Corps 
has asked that question. Look, the Corps and all of us want to 
get it right. It is very important that we get it right. So 
where the soil, the tests they were talking about; we need that 
source.
    Mr. Scott. Are you familiar with the terms ``sandy soil?''
    Mr. Powell. Yes, sir.
    Mr. Scott. Are they being built on sandy soil?
    Mr. Powell. The Corps has assured me that they are using 
the appropriate soil and standards and plans to reconstruct 
these levees to the safest that engineering has designed.
    Mr. Scott. Okay, all right, I will leave that there. We 
just have to make sure that they are being built solidly.
    Mr. Powell. I agree with you, sir.
    Mr. Scott. We are 3 months, let's see, March, April, May, 
June, 4 months away from the next hurricane season, are we 
ready?
    Mr. Powell. Congressman, one of the questions, the first 
question I always ask when I am briefed, are we on time? And I 
always have to ask this as a banker, are we within budget? I 
ask those two questions. And I talk a lot about the whole 
safety issues. I mention in my testimony one of the first 
things when I had been down there a week that everything flows 
from safety, housing, jobs, infrastructure, community flows, if 
you don't feel safe, you don't feel like coming back. Business 
will not come. We had lots of discussion about that issue. The 
President was informed about that issue. He acted very quickly 
and asked for the $3 billion from Congress to restore, rebuild 
the breaches, and do some other enhancement work.
    I am not an engineer but I have four grandchildren who are 
precious to me. And I remember at one meeting listening to all 
the technical experts talk about I-walls, T-walls, armoring, 
pumping stations, wetlands, and all the things that we talk 
about when we talk about hurricanes protection, and I said, 
``If my son called me today and said we are moving to New 
Orleans, should I be concerned about my grandchildren's 
safety?'' And the answer of the five people that were there 
said, ``No, no, no, no, and no.''
    Mr. Scott. Okay.
    Mr. Powell. Then they said, ``There will be flooding, could 
be flooding but it would be manageable flooding. And that is 
the reason the evacuation program is essential.''
    Mr. Scott. Here is the rub on that question, we are 4 
months out from the hurricane season hitting again.
    Mr. Powell. Yes, sir.
    Mr. Scott. All of our global warming, all of our geological 
forecasting says we are in store for more of the same or even 
worse, with the warming of the Gulf waters, and especially the 
warming of those waters coming off of the western shore of 
Africa that feed into these storms. So if you got that, we are 
4 months out, these storms hit in September, August, September, 
which is 5 months down the road, and we are nowhere. It is 
devastation down there and we get hit again. That is what is 
very alarming to an awful lot of people. Not only have we not 
taken care of that hurricane, we have moved so slow, but here 
is the next season right on us and with all the forecasts 
coming, we are going to have more Category 3, 4, and 5 storms 
coming. I think that that puts even a higher sense of urgency 
or what we have got to do, and yet we are just grappling with 
it.
    My time is short but I did want to make that point. My 
other point is that Georgia--whom I represent--is second only 
to Houston, Texas, as far as evacuees coming to our State. In 
my District especially, I represent the growth counties in and 
around Atlanta.
    Chairman Ney. Can you start to wrap up, Mr. Scott?
    Mr. Scott. Yes, I will. My point is that we need to--could 
you give me some indication of what more we in Congress can do 
to help you? There has been a lot of criticism bandied about, 
the President blaming Congress, Congress blaming the President, 
what say you here now that we in Congress can do to help you 
get this problem moving, resolved?
    Mr. Powell. I think it is terribly important that the $1.4 
billion of hurricane protection that is in this supplemental be 
approved, as well as the $4.2 billion that is asked for in this 
supplemental for the people of Louisiana to be approved. I 
think it is essential, I think it is very, very important for 
hurricane protection and for housing mitigation in Louisiana.
    In reference to your earlier point, Congressman, we all 
have the same interest, I assure you that the President is 
committed to safety, and I assure you that the Corps is doing 
everything possible to complete the work order by June 1st. It 
is terribly important to the people there and to the American 
people and to this Administration and our office, that the 
Corps be done with that work prior to hurricane season. We are 
doing everything we can to make sure that the work is done. 
There are a lot of people, a lot of energy directed toward that 
area. As I mentioned, I meet with them every so often, as often 
as we can, and I always ask that first question, ``Are we on 
time?'' The Corps speaks as it relates that H100, H90 days, 
whatever, of the June 1st start.
    Chairman Ney. I am sorry, the gentleman's time has expired.
    Mr. Scott. Well, I know I speak for all of Congress that we 
in Congress will get you everything you need--
    Chairman Ney. Mr. Scott? Mr. Scott?
    Mr. Powell. Thank you, sir.
    Chairman Ney. Thank you, Mr. Scott. Your time is long 
expired. Mr. Barrett?
    Mr. Barrett. Thank you, Mr. Powell, for being here today. 
First let me say, I want to just echo Chairman Baker's 
comments. I am in a group called the Republican Study Committee 
and it is the rock-solid fiscal conservatives of this House, 
and I am not saying I speak for every one of them, but we have 
some major concerns about how we are spending our money. And we 
feel, there are a lot of us who feel, that the only way we are 
going to get this area recovered is to do a public/private 
partnership. So please take that back. This is coming from a 
lot more Members than are represented here today, so please 
take that back and make sure that is known. If we took a battle 
plan of the Gulf Coast area, percentage wise, how much of the 
area has been cleared or cleaned up, 10 percent, 5 percent, 20 
percent?
    Mr. Powell. In Mississippi, it is well over a half and in 
Louisiana it is about half. Mississippi should be done with the 
public debris removal by some time in the middle of June and 
80, 85 percent of the private debris will be removed then. 
Louisiana is more complex, it is much more complex, 
Congressman, in that you have certain areas because of court 
orders or because of this issue or that issue, it has not been 
done, plus the city was flooded for about 8 days. Also, in 
Mississippi, there was total destruction of some things. So 
Louisiana, it will take some time but I would say the public 
debris removal will be done some time in the middle to late 
summer, and at least 60, maybe two-thirds of the private.
    Mr. Barrett. I have heard horror stories, and I don't want 
you to respond to this, but I have heard a lot of people say 
that part of the reason the clean up is going so slow is 
because middle level managers don't have the authority to say, 
yes, do this or, yes, do that. If you could submit me something 
to tell me what is going on. I have got feedback that people in 
the government area are afraid to make a decision. That is the 
wrong answer. We need people to make a decision.
    Let's go to expense, overhead. Wilma, 19.1 percent 
overhead. Rita, 28.9 percent overhead. Katrina, 24.9 percent 
overhead. Mr. Powell, you come from the private sector, I was a 
small businessman. My daddy and I operated that store for 50-
something years. We would operate it less than 1 year if we 
operated it like that. What are you doing, what is your plan to 
make sure that we get our administrative costs in line with 
what is actually going on on the ground down there?
    Mr. Powell. Well, for a long-term rebuilding, specifically 
housing and some other infrastructure rebuilding, one of the 
first things we always talk about is overhead, administrative 
cost. And the chairman had asked me that question, the very 
first question, about what did I believe that the top number 
should be as it relates to administrative overhead, and I said 
5 percent. Clearly, we can do things better. There are some 
things that we can do that would be much better. One of the 
things is the administrative costs in all areas of the 
government. But I would say, Congressman, that Katrina/Rita was 
a complex, very complex hurricane that we haven't seen before. 
And, as I mentioned, we can do a lot of things a lot better but 
our office, when we are talking about long-term rebuilding 
plans, and we are working with the States and the counties and 
the parishes, one of the things we always focus on is 
administrative overhead.
    Mr. Barrett. And I hear you loud and clear, Mr. Powell. We 
have never experienced anything like that in our time but 5 
times the cost. And I think that reinforces our position with 
Chairman Baker, that to have some public/private partnerships, 
some folks who are actually trying to make some money on this 
thing and using their head.
    Last question, the President in New Orleans yesterday, I 
think, was quoted as saying that he wanted to give up to 
$150,000 to each homeowner who lost their residence to Katrina. 
That is about $4.2 billion. Correct me if I am wrong, we have 
got travel trailers to the tune of $92,278 already. That is 
about $43,076 per trailer. In South Carolina, Mr. Powell, that 
is a permanent home. And I am not being facetious and I am not 
trying to be ugly. We are going to give $150,000 and we are 
going to give these trailers. I see the papers, you see them 
to, I get the phone calls, ``What in the name of God's green 
earth are you doing? These things are sitting off somewhere and 
they are not being used.'' What is the rationale behind this? 
Tell me there is a plan and tell me what the thinking is?
    Mr. Powell. First of all, on the $150,000, that is a 
maximum. It is pre-Katrina value for a home that has been 100 
percent destroyed up to $150,000. So some people will get 
$60,000, some people will get $50,000, some people will get 
$75,000. So that is the maximum. And I might add there are some 
homes that far exceed the $150,000 but that is capped at the 
$150,000.
    The other issue of mobile homes and trailer homes and etc., 
and so forth, I know because we interact with the folks at FEMA 
and we interact with other members of the government, that 
there is a lot of work directed toward that particular issue 
you talked about and they do have a plan, they do have a plan 
that will speak to those things. But, again, our office we are 
more directed toward long-term recovery of the region.
    Mr. Barrett. One follow-up question, Mr. Chairman, because 
I know I am out of time, so if you said $150,000 was the cap, 
if that family got one of these trailers as a permanent 
residence with the underpinning and the whole 9 yards, that 
would count as a portion of their $150,000 or is this in 
addition?
    Mr. Powell. No, no, that is an intermediate RA, 
intermediate need. It would be $150,000 less any insurance 
proceeds that you may have, not the trailer.
    Mr. Barrett. Okay.
    Mr. Powell. The trailer goes back to the government.
    Mr. Barrett. So the trailer is considered--
    Mr. Powell. It is not owned by the individual.
    Mr. Barrett. It is just considered temporary housing.
    Mr. Powell. Yes, sir.
    Mr. Barrett. Thank you, sir. I appreciate your coming.
    Chairman Ney. Mr. Cleaver from Missouri.
    Mr. Cleaver. Thank you, Mr. Chairman. I have a number of 
questions, so I will try to ask them all quickly. But, first of 
all, having gone through many of the public housing units in 
New Orleans in the 9th Ward and seeing the condition and 
smelling them, smelling like the devil's breath obviously, 
something is dramatically wrong; what is the plan for public 
housing?
    Mr. Powell. Again, that is a plan that the local people 
have developed. And the plan for local housing, when you take 
into consideration the $6.2 billion that Louisiana has been 
allocated, and we are talking about Louisiana--
    Mr. Cleaver. Yes.
    Mr. Powell.--$6.2 billion that Louisiana has been allocated 
and the first CDBG money and the $4.2 billion that has been 
asked for in the supplemental and that totals roughly--and 
other mitigation money, in excess of $12 billion. In that plan, 
the Louisiana plan, there is $1.75 that is provided for 
rebuilding of affordable workforce rental housing that will 
speak to the low to moderate income tenants occupied 
properties.
    Mr. Cleaver. Thank you. You spoke of the President's 
supplemental budget.
    Mr. Powell. Yes.
    Mr. Cleaver. Do you have any indication why the Katrina/
Rita rebuilding was not in the President's budget?
    Mr. Powell. I am not sure if I understand. No, it is in the 
supplemental, the $4.2 billion plus the $1.4 for levee. And 
then there are some other hurricane relief monies in that 
supplemental also.
    Mr. Cleaver. So the fact that there is a proposed cut in 
the Community Development Block Grant, there is a proposed cut 
in elderly housing that is proposed--
    Mr. Powell. Oh, I see.
    Mr. Cleaver.--and housing for the poor in the budget.
    Mr. Powell. Yes, I just know again what Louisiana is 
planning to build as it relates to the hurricane devastation 
and that is almost $2 billion for low to moderate housing.
    Mr. Cleaver. Do you understand--
    Mr. Powell. Yes, I do and I am sure the Secretary of HUD or 
some other people would be happy to answer that question, and I 
will pass that on.
    Mr. Cleaver. I am also concerned--I am a former mayor, I am 
always concerned about the public hearings that are required by 
law for CDBG allocations and wondering whether or not that is 
going to be done or in some instances I think the legislation 
may say that the Secretary has the authority to waive or to 
stop a project, and I am hoping that is going to be in every 
dollar that is spent coming out of the Department of HUD for 
housing. I do think there has been enough blame going on, and I 
can't tell you how upset I am over the paper today, and it is 
not a Democrat--this is not just a Democrat expressing, as my 
colleague and I were going to vote from here and there was a 
discussion along the way, Democrats and Republicans are 
concerned. So I am not trying to blame--I don't want to do any 
blame thing, but what I do want to know, and I think my 
colleague, Mr. Scott, asked this question in another way, if 
you had your way, what could this Congress do to make this 
problem go away?
    Mr. Powell. I think it is terribly important that the 
supplemental--the monies asked for in the supplemental for 
levee protection, hurricane protection is critical to the 
safety of the people in New Orleans. And I would say, 
Congressman, I feel very strongly about the $4.2 billion for 
housing and also housing mitigation. I think that was a number, 
as I say coming from the bank and business, I would loan 
against. I think that, too, is very important together with all 
the other issues that the President has asked for as it relates 
to hurricane relief to meet the needs of the good people along 
the Gulf Coast. It is critically important that Congress 
approve the supplemental.
    Mr. Cleaver. Two other quick questions. One, HUD has what 
is called a 108 loan fund that does in fact allow for private 
entities to take advantage of the loan fund, and it is 
guaranteed by the city's CDBG budget. And, as a banker, you are 
saying you would loan against it. We have a program, it is 
being cut.
    Mr. Powell. Yes.
    Mr. Cleaver. I am sorry, that was an editorial. The 
question, I mentioned earlier my speech in Cambridge 2 weeks 
ago, if someone asks you that question, when can I go back 
home, what would you say?
    Mr. Powell. I would say that an individual who wants to go 
back home, that is the reason the CDBG money is critical. It is 
very critical to the rebuilding--
    Mr. Cleaver. No, I mean if they say when can I go back 
home? These people are up in Boston, Anchorage, Alaska, Kansas 
City, Houston, they want to know what--
    Mr. Powell. Yes, housing is a critical answer to that 
question, and I think it is very important. Some of them had 
homes, some of them were renters in housing, so housing is a 
very important thing. Number one, they want to feel safe. They 
want to feel safe that they can go home and that is the reason 
that the Corps of Engineers and the President has committed to 
rebuilding the levee system where people and business in both 
the public and the private sector will feel safe to come home 
and the person who is in Houston, Texas, or in Atlanta, 
Georgia, can come home.
    The second issue is housing. They have to have a place to 
live. And that is the reason that CDBG money that has been 
appropriated by Congress and in the supplemental of the $4.2 
billion is critical to the housing issue. Housing is critical 
so it is very important that it be approved, the supplemental 
be approved where housing stock can be replenished so that 
person can come back home.
    Mr. Cleaver. Thank you.
    Mr. Neugebauer. [presiding] Mr. Green of Texas.
    Mr. Green. Thank you, Mr. Acting Chairman. And, Mr. Powell, 
thank you again for visiting with us today. I consider it an 
honor to have the opportunity to ask you some questions. You 
have spoken about the levee system being rebuilt to pre-Katrina 
standards. Do you agree that the pre-Katrina standard was 
Category 3?
    Mr. Powell. I agree that the Corps of Engineers is on a 
mission to complete by the 1st of June, that they will repair 
all the breaches within the levee system, bring and correct any 
design flaws, number two, correct any design flaws, and bring 
the height of the levees back to pre-Katrina level. And when I 
asked the question if Louisiana is struck with another Katrina, 
would the city be safe and they have told me that once this 
work has been done, that the city will have some flooding but 
it would be manageable type flooding. Furthermore,--
    Mr. Green. Mr. Powell, if I may please because my time is 
limited, and I beg your forgiveness for interceding, but let's 
talk about ``Karita'' rather than Katrina. Karita, a Category 
5, hits Louisiana. We have rebuilt to Katrina standards. That 
is the concern that a lot of the residents and business persons 
have. They are not concerned as much as you might think about 
pre-Katrina standards. And I don't mean you in general, I am 
sorry, I meant in general, not you personally. We are looking 
at spending $100 billion rebuilding to pre-Katrina standards 
and on our watch having a Category 5 hit. On my watch, I have a 
duty to do everything that I can to make sure that we exceed 
pre-Katrina standards. My understanding is that pre-Katrina 
standards are Category 3. Category 3 is not enough. You have 
not commented on the pre-Katrina standard is. You are saying 
rebuild to the pre-Katrina standard. Can you say yes or no that 
the pre-Katrina standard was Category 3? Yes or no?
    Mr. Powell. As I have shared with this committee, that 
hurricane protection is very, very complex, very complex. And 
that is the reason there is, I believe, in excess of $200 
million that is part of the allocation to study should we go to 
a Level 5 protection and that study is underway now, and 
hopefully it will be completed in a relatively short period of 
time. But hurricane protection is very broad. It includes not 
only the height of the level but it includes pumping stations. 
It includes canals. It includes wetlands. It includes armoring, 
all those issues.
    Mr. Green. I understand. Let me just share this with you, 
if I may, because I have to go to another topic. Studies have 
been done, studies were done years ago that prognosticated 
exactly what occurred with reference to a Category 3, Category 
4, Category 5. If we continue to study this problem, something 
dastardly will occur on our watch that we may never be able to 
live with and within ourselves because there will be a greater 
disaster than we have suffered already if we get a direct hit 
with a Category 5.
    Now let me move quickly to something that you may not have 
a lot of authority with but I have to mention it because a 
serious problem is about to manifest itself, it is manifesting 
in fact as I speak, and that has to do with the voting rights 
of people from Louisiana. The process itself is going to cause 
many people who desire to vote not to have the opportunity to 
vote, the process. One part of the process that concerns me is 
candidates cannot connect with voters. FEMA has not released 
the list of candidates--pardon me, of voters where they are, 
addresses to candidates. If I campaign in my district to have 
an effective campaign, I can connect with voters. I can send 
them literature. I can write them. Those candidates in 
Louisiana don't have that opportunity because FEMA won't 
release the list of addresses of people who are scattered 
across the length and breadth of the country.
    The second part, we have the technology to allow people to 
vote wherever they are. In Houston, Texas, we have tens of 
thousands of people, we should have a polling place in Houston, 
Texas. There is no reason why people who live in Houston, Texas 
cannot vote in their election in Louisiana at a polling place 
on Election Day in Houston, Texas. The technology exists. We 
are failing the people who want the right to vote. It is not 
going to be an efficient effort on our part if we continue 
along these lines. How do you propose we make sure that 
everyone who wants to vote has the right to vote?
    Mr. Powell. As it relates to the list, I am sure that--and 
I will be happy to convey your concerns to FEMA about releasing 
that list, I am not sure what the reason is. There may be legal 
constraints on releasing that list or other privacy issues or 
other issues that I may not know about, but I am happy to do 
that.
    As relates to the election in Louisiana, the State, I 
believe, has jurisdiction on how they want to conduct their 
elections, and I am happy to convey your concerns and your 
thoughts to the leadership in Louisiana.
    Mr. Neugebauer. The gentleman's time has expired. I would 
advise that we are going to try to have another round if you 
are interested.
    Mr. Green. Thank you.
    Mr. Neugebauer. Mr. Powell, you appear to be of sound mind 
and body, you took the job, I don't know, I have to raise 
questions about that.
    Mr. Powell. My wife would question that.
    Mr. Neugebauer. Just so that you know my background, are 
they the ones--the Corps of Engineers, are they the ones doing 
the study on the flood control?
    Mr. Powell. I believe it is an independent study. I think--
    Mr. Neugebauer. But it is the Corps of Engineers?
    Mr. Powell. I will have to get that answer to you. We have 
in our district a little hole in the ground that is about 120 
feet deep full of spring water and the spring comes out. Well, 
somebody decided years ago from the city to make the bottom 
more attractive to scuba divers so they dropped some big rocks 
in. As you can imagine, the water flow began to eat away at the 
sides so they have been trying for years to get out. Well, we 
put $50,000 I think or maybe $100,000 in the budget a couple of 
years ago to get those rocks out of there. Now you or I could 
have gone out and gotten them out for 10,000 bucks. Some of you 
are familiar with the oil field equipment.
    Mr. Powell. Right.
    Mr. Neugebauer. So the year passed and I asked did our 
rocks go away and they said, ``No, we used the $50,000 to study 
them.'' And I said, ``Okay, are we going to get them out this 
year?'' And they said, ``Well, we need another $250,000 to 
study it this year.'' The fact that you have got 200 million 
bucks, Mr. Green is adequately asking about that.
    You say the highest protection or highest priorities for 
you is to approve the supplemental for hurricane protection. 
Have you looked at how much money previously was sent there to 
upgrade the systems and how much money disappeared out of the 
system? I hear quite a lot but I have never heard that 
confirmed, have you looked at the leakage out of the system? I 
am talking about leakage of dollars?
    Mr. Powell. Yes, you are talking about pre-Katrina.
    Mr. Neugebauer. Yes.
    Mr. Powell. Yes, I have not done a study on--
    Mr. Neugebauer. So my question is what assurance do I have 
as a person voting on this that the same thing is not going to 
occur?
    Mr. Powell. I think that is always in the uppermost part of 
my mind, I am a fiduciary and make sure that the taxpayers' 
dollars are spent as directed. As you know, there are many 
oversight bodies that look at not only the Corps but what is 
being spent down there. Inspectors General are engaged. There 
is an audit function that the Corps, I believe they call it the 
Triple A, an audit function that does nothing but look at the 
Corps' expenditures and their work and their progress for the 
integrity of the dollars that are spent toward that.
    Mr. Neugebauer. Just as long as you are aware that is a big 
question.
    Mr. Powell. Yes, it is.
    Mr. Neugebauer. I don't think you can address it.
    Mr. Powell. Right.
    Mr. Neugebauer. But I would think that if it does not get 
addressed, that the future supplementals can desperately be at 
risk, at least my particular vote.
    How much commerce is actually moving through the ports now? 
I know that is a big piece of not only--
    Mr. Powell. Yes, the port is open, it is 100 percent 
availability. There has been some slow down in the port because 
some people are looking at other alternative ports.
    Mr. Neugebauer. A slow down from what?
    Mr. Powell. It is probably about two-thirds back up as it 
relates to revenue stream.
    Mr. Neugebauer. Okay.
    Mr. Powell. Fifty to two-thirds revenue stream. There is 
another issue as it relates to--it is a deep channel issue 
there, it is a safety versus economy issue.
    Mr. Neugebauer. You mentioned the additional distribution 
of funds up to $150,000. What will determine what level of 
funding people are eligible for?
    Mr. Powell. I am sorry, I am not sure--
    Mr. Neugebauer. The President's suggestion that we give 
$150,000 to each homeowner, each person. You said that it would 
be a varying scale, from 60 to 70--
    Mr. Powell. Oh, I am sorry, I was just using that as an 
example.
    Mr. Neugebauer. I understand but--
    Mr. Powell. The pre-Katrina value, whatever your pre-
Katrina value was, independent from--
    Mr. Neugebauer. Is there going to be any screening based on 
what they brought in from their private insurance?
    Mr. Powell. Yes, sir, yes, sir, it will be less that. Yes, 
sir.
    Mr. Neugebauer. Are they going to have to give up their 
home to get that? In other words, if I have got a home that is 
30 percent damaged, given the number of trailers that are 
sitting in houses, I don't have a great deal of confidence that 
if I have a house there that is partially damaged, and I get 
the payment, I am not sure how the government makes sure it 
comes out okay, that I don't find a windfall out of that. And I 
think there is that point.
    Mr. Powell. Yes, that will be part of the Administration 
process, to be sure that you are only reimbursed for the damage 
that you actually received.
    Mr. Neugebauer. But let's say I have got a house worth 
$150,000 and the insurers all it a total damage, I got $150,000 
and the house still belongs to me. I can go in and maybe use 
the--
    Mr. Powell. The salvage value you are talking about, yes.
    Mr. Neugebauer. The frame--
    Mr. Powell. Yes, it would take that into consideration.
    Mr. Neugebauer. Are you going to use private--
    Mr. Powell. In other words, that would not be a total, that 
would not be 100 percent--
    Mr. Neugebauer. Are we going to depend on government 
agencies to determine these values or are you going to use the 
private sector to determine that?
    Mr. Powell. We have looked at FEMA numbers. We have looked 
at HUD numbers. And part of that will be obviously the onus of 
the administrator disbursing the money.
    Mr. Neugebauer. Again, my objection is that we have all 
sorts of stories of abuses, at some point we have to admit that 
the government may not have the capability to work in this sort 
of fashion. It has done a very poor job.
    Mr. Powell. Yes, I have had lots of discussion with the 
State leadership about that particular issue, and that is the 
reason the integrity of that administrator, it needs to be very 
transparent, subject to lots of oversight where everybody can 
watch what is happen.
    Mr. Neugebauer. The Chair would recognize Mr. Cleaver for a 
second round.
    Mr. Cleaver. Thank you, Mr. Chairman. One of the issues 
that you spoke of earlier was the fact that local banks 
remained optimistic and there is no prediction of bank failures 
in the region, is that accurate?
    Mr. Powell. Yes, that is my testimony, yes, sir.
    Mr. Cleaver. Are you that optimistic as well?
    Mr. Powell. The sense of recovery and the sense of coming 
back in the spirit of the people makes me feel very optimistic. 
The practical matter and the reality of it, it always goes much 
slower than what I would hope and what they would hope. A lot 
of that depends upon perhaps factors that are out of their 
control. But I know there is adequate liquidity, there is a lot 
of money, band deposits are 20 to 25 percent larger than they 
were pre-Katrina, so liquidity is not an issue. I know that 
bankers are willing to work with SBA. They are willing to work 
with some other programs to make sure that capital is injected 
into the economy. I attended a bank conference last week that 
the FDIC was the sponsor of and it brought together bankers in 
the area, bankers from outside of the area. They had workshops 
on how they could help each other. There were some innovative, 
very productive ideas to enhance the banks that may have some 
problems, some issues from participation to deposits to buying 
capital. Lots of very productive thoughts were brought forth at 
that workshop. And I was encouraged.
    When I go to the area, one of the things I always gravitate 
to because of my background is to go talk to the bankers, how 
is it committed to doing, what do you see, what kind of 
economic activities are occurring, what can we do to help you? 
And while there are clearly some challenges, and much work that 
needs to be done, I sense some optimism with those bankers.
    Mr. Cleaver. Does that include optimism for the minority 
banks, there may be three or four minority-owned banks?
    Mr. Powell. I touch base with those folks. Each bank has a 
unique set of challenges. There are some programs that they 
have availed themselves with. There are some larger 
institutions that are looking for ways to assist those 
particular banks. And it is my hope that 5, 6, 7, 8 years from 
now they will be stronger and better in serving those 
communities.
    Mr. Cleaver. When I go to a community, I gravitate to 
churches because I am a Methodist ordained minister. So one of 
the things, we met with a number of the clergy in the area, 
churches are just gone. I don't know what the legality is but 
are we able to assist churches?
    Mr. Powell. One of the things the President also assembled 
was a group of foundations, about 60 days ago, and charged them 
with the idea that government cannot meet all the needs. There 
will be some fill in the gaps, faith-based issues, childcare, 
senior citizens communities, libraries, all the things that 
government by law cannot meet those needs. And we assembled 
something like 20 foundations. We have a person in our office 
who is in constant contact with those foundations. The State of 
Louisiana and the State of Mississippi have submitted 
applications to those foundations to meet those needs. I am 
also familiar with the Bush/Clinton Katrina Fund, and at the 
assistance of this president, there have been something like 
$20 million allocated toward black churches in the stricken 
areas. So it is an issue that this Administration feels very 
strong about and we feel very strong about it in our office. 
And I am convinced that those foundations and the generous 
spirit of the American people will meet some of those needs.
    And I will say, Congressman, one of the contacts I talk to 
are various leaders and faith-based leaders in the area, and 
you are right that it is a center of hope. It is the center of 
the soul of those people, and we need to make sure that they 
are restored as well as other infrastructure.
    Mr. Cleaver. If the churches come back, the people will 
have a little more faith that the city will come back.
    Mr. Neugebauer. Mr. Green.
    Mr. Green. Thank you, again. Mr. Powell, permit me to share 
this brief vignette with you, and this actually occurred, I 
have some personal knowledge of it. A parent provided the funds 
for a party for a child and the child wanted to invite a 
certain person who was known to be disruptive at parties. And 
the parent said, ``No, that person cannot come to the party.'' 
And the child said, ``But it is my party.'' And the parent 
said, ``But I am paying for it.'' Now, I mention this to you 
because we are paying for the recovery in Louisiana, $100 
billion in the final analysis, perhaps even more. If we are 
paying for it and we recognize that people are about to have 
their right to vote circumvented, then we ought to do something 
about that. That is the role of the parent. That is the role of 
the Federal Government, to make sure that every citizen's right 
to vote is protected. We are about to witness citizens who want 
to have the right to vote not have the opportunity to vote, who 
want the right to vote, to exercise their right to vote and not 
have the opportunity to vote. So now in the key position that 
you are in, how can you help them with their right to vote, to 
merely explain that the local government has purview and 
control is really not enough because we have a lot that we can 
do as the parents who are funding the party.
    Mr. Powell. Congressman, I am sure it is the wishes of 
every local and State official in Louisiana that everybody that 
is entitled to vote be allowed to vote. And I am sure all of 
those issues were discussed. And I would also suggest that I am 
sure the Justice Department is aware of all of those issues and 
the court system is available. But the good people in Louisiana 
want every person that is eligible to vote be allowed to vote.
    Mr. Green. I was at a meeting with the Mayor of Louisiana, 
and he expressed concerns about this. He is one of the good 
people of whom we speak, and he has his concerns about whether 
people will have the opportunity to exercise their right to 
vote. The NAACP in Louisiana, they are among the good people of 
whom we speak, they are speaking of the possibility of 
litigation because they too are concerned about the right to 
vote. The right to vote is the most precious right, among the 
most, I suppose there are some others, precious rights that 
citizens have. If we see an injustice about to take place, we 
ought to do something to thwart that injustice. And I am just 
making an appeal to you that when you talk to the Justice 
Department, when you talk to the folk who can make a 
difference, talk to them about this because my understanding is 
satellites were not used so that people in remote locations can 
vote where you have a large cluster, Houston, Texas, for 
example, because it was thought that the people of Louisiana 
could not afford it. They are on a very limited budget. It is 
my belief that if we are paying for the party, we can require 
or at least encourage that some of this money that we are using 
and sending be used to have open, free, and fair elections 
because when this is all over and you see that the body 
politic, the face of it has changed, you are going to have for 
years to come people who are going to express disenchantment in 
ways that will cause us to have to respond. This is not right 
what is about to take place in Louisiana. It is just not right.
    I yield back.
    Mr. Neugebauer. The gentleman yields back. Mr. Powell, you 
had mentioned the job training for 20,000 people. Do you have 
an approximate cost range that job training is going to cost 
per person?
    Mr. Powell. I do not, Congressman, but I am happy to get 
that for you.
    Mr. Neugebauer. How much total funding are we talking about 
for that job training?
    Mr. Powell. I can't answer that specifically, I will get 
that to you.
    Mr. Neugebauer. Okay, and the reason I ask is because we 
have seen programs that send people back to work for 50 bucks.
    Mr. Powell. Right.
    Mr. Neugebauer. And programs where it takes $5,000, and I 
have again given the backdrop of everything that occurred in 
the application of funds.
    Mr. Powell. Cost is always a factor.
    Mr. Neugebauer. What are you doing to hold people 
accountable for the waste, the fraud, and the abuse that has 
occurred with relationship to this particular expenditure of 
funds?
    Mr. Powell. Our office, as you know, cannot--we do not have 
an investigative arm or we don't have an inspector general but 
I can assure you that it is part of our deliberation, part of 
our discussion, transparency, accountability, checks, and 
balances, are often mentioned words when we are sitting down 
talking to the good people in Mississippi, Louisiana, Alabama, 
and Texas.
    Mr. Neugebauer. If you were to guess at the combined waste, 
fraud, and abuse as a percent?
    Mr. Powell. I wouldn't--I don't know, Congressman, what 
that might be.
    Mr. Neugebauer. You had mentioned that one of the things 
that we, as a Congress, can do is approve this supplemental. 
How many more supplementals and how many more dollars do you 
think it is going to take because this is a question I am 
beginning to hear frequently in my District?
    Mr. Powell. Some of this will be going on for days, months, 
and years, so the FEMA money and etc., and so forth, I am not 
sure about. Long-term planning, I know that Texas has asked for 
some additional money and that Mississippi has asked for some 
additional money. The $4.2 billion in the supplemental is 
dedicated to Louisiana. I am convinced that the plan that 
Louisiana has brought forward, that will include expenditure in 
excess of $12 billion, which a majority of it is for housing, 
will meet their needs as it relates to housing. The levee issue 
is very important, and again that is the reason that the 
President has asked for the additional $1.4 billion in the 
supplemental. And depending upon other studies, there may be 
some needs for additional modifying some of the levee hurricane 
protection, wetlands, and all of that going forward. But I 
think the Louisiana is one that has been well thought out, one 
that we agree upon the number of units, and that the housing 
needs will be met under that $7.5 billion.
    Mr. Neugebauer. In the attachment that came with your 
presentation today, the second line item under one of the 
spreadsheets is flood insurance.
    Mr. Powell. Yes, sir.
    Mr. Neugebauer. $18.5 billion.
    Mr. Powell. Yes, sir.
    Mr. Neugebauer. We have had testimony in this committee 
that $23 billion in losses were suffered and were due to come 
out of the flood program, and I think we authorized that $23 
billion in additional loans. Is this $18.5 in place of?
    Mr. Powell. I think that is an in place of and in addition 
to what they said. It is whatever the contractual obligation 
is, it is to replenish the reserves in the flood insurance 
program.
    Mr. Neugebauer. There are no reserves to be replaced. We 
have the capability to generate $1 billion a year in premiums.
    Mr. Powell. Right, and they are gone.
    Mr. Neugebauer. It is actually an infusion of funds into 
that.
    Mr. Powell. Right, right.
    Mr. Neugebauer. The $150,000 payments, are those in 
addition to this $18.5 billion for flood insurance?
    Mr. Powell. Yes, yes, sir, that is all CDBG money. Yes, 
sir.
    Mr. Neugebauer. So you mean we are going to be out $18.5 
billion, which was the $23 billion estimate was what the flood 
damage appeared to be, and we are going to pay on top of that?
    Mr. Powell. Yes.
    Mr. Neugebauer. People can get money from--
    Mr. Powell. That is a contractual obligation under the 
flood insurance. Those are people who had flood insurance so 
that is a contractual obligation.
    Mr. Neugebauer. And you are saying you can get flood 
insurance from that contractual obligation as well as the 
$150,000?
    Mr. Powell. No, it is less insurance proceeds. It is to 
cap, a maximum of $150,000.
    Mr. Neugebauer. How many people are going to fall under the 
$150,000 max program?
    Mr. Powell. I will get you those exact numbers.
    Mr. Neugebauer. If you could.
    Mr. Powell. I will be happy to, yes.
    Mr. Neugebauer. Okay, well, our time has elapsed and they 
are urging us to finish our work before there is a mutiny. The 
Chair notes that some members may have additional questions for 
this panel which they may wish to submit in writing. Without 
objection, the hearing record will remain open for 30 days for 
members to submit written questions to those witnesses and to 
place the responses in the record.
    With no other comments, this hearing is adjourned.
    [Whereupon, at 12:56 p.m., the subcommittee was adjourned.]


                            A P P E N D I X



                             March 9, 2006


[GRAPHIC] [TIFF OMITTED] T0178.001

[GRAPHIC] [TIFF OMITTED] T0178.002

[GRAPHIC] [TIFF OMITTED] T0178.003

[GRAPHIC] [TIFF OMITTED] T0178.004

[GRAPHIC] [TIFF OMITTED] T0178.005

[GRAPHIC] [TIFF OMITTED] T0178.006

[GRAPHIC] [TIFF OMITTED] T0178.007

[GRAPHIC] [TIFF OMITTED] T0178.008

[GRAPHIC] [TIFF OMITTED] T0178.009

[GRAPHIC] [TIFF OMITTED] T0178.010

[GRAPHIC] [TIFF OMITTED] T0178.011

[GRAPHIC] [TIFF OMITTED] T0178.012

[GRAPHIC] [TIFF OMITTED] T0178.013

[GRAPHIC] [TIFF OMITTED] T0178.014

[GRAPHIC] [TIFF OMITTED] T0178.015

[GRAPHIC] [TIFF OMITTED] T0178.016

[GRAPHIC] [TIFF OMITTED] T0178.017

[GRAPHIC] [TIFF OMITTED] T0178.018

[GRAPHIC] [TIFF OMITTED] T0178.019

[GRAPHIC] [TIFF OMITTED] T0178.020

[GRAPHIC] [TIFF OMITTED] T0178.021

[GRAPHIC] [TIFF OMITTED] T0178.022

[GRAPHIC] [TIFF OMITTED] T0178.023

[GRAPHIC] [TIFF OMITTED] T0178.024

[GRAPHIC] [TIFF OMITTED] T0178.025

[GRAPHIC] [TIFF OMITTED] T0178.026

[GRAPHIC] [TIFF OMITTED] T0178.027

[GRAPHIC] [TIFF OMITTED] T0178.028

[GRAPHIC] [TIFF OMITTED] T0178.029

[GRAPHIC] [TIFF OMITTED] T0178.030

[GRAPHIC] [TIFF OMITTED] T0178.031

[GRAPHIC] [TIFF OMITTED] T0178.032

[GRAPHIC] [TIFF OMITTED] T0178.033

[GRAPHIC] [TIFF OMITTED] T0178.034

