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Editorial: More misconceptions about the federal insurance program reform

Last Modified: Monday, December 02, 2013 5:16 PM

A recent opinion piece in the online addition of the Wall Street Journal underscores the hurdles Louisiana’s congressional delegation and business leaders face in addressing myths regarding the federal flood insurance program.

Written by R Street, a non-profit policy research organization that says it supports free markets and limited, effective government, the op-ed states that the federal flood insurance program is ‘‘a classic example of powerful government aiding the powerful, encouraging the affluent to build mansions near the shore.’’

It said the effort to reform the flood insurance program and end federal subsidies is being fought by ‘‘beachfront homeowners and housing lobbies.’’

Angry yet? You might want take blood pressure medication over this view: ‘‘But thanks to the bipartisan Biggert-Waters reform signed by President Obama in July 2012, the federal insurer is slowly raising its rates to actuarially sound levels.’’

Obviously, the author who spewed this fiction never invested one scintilla of research before sitting down at the keyboard.

The problem is such pabulum fuels misconceptions about the federal insurance program reform, ignoring the devastating effect it would have on business and home owners in low-lying states like Louisiana.

‘‘Beachfront property’’ and ‘‘mansions near the shore’’ are few and far between in Cameron and Calcasieu parishes. Nor can any hint of such figments of the author’s imagination be found in New Orleans’ 9th Ward or adjacent to the 17th Street Canal in Metairie — two areas that suffered some of the worst flooding after Hurricane Katrina when levees, built by the federal government, gave way and drowned entire neighborhoods and hundreds of their inhabitants.

Affordable flood insurance is a necessity of life for property owners not only in Louisiana, but low-lying, flood-prone areas around the country.

The notion of the flood insurance program ‘‘slowly raising its rates’’ falls under the heading of a bald-faced lie.

Homeowners in Louisiana have been shocked when they’ve received their flood insurance premiums. In one case, a homeowner whose residence was valued at $90,000 received a flood insurance bill for $14,155. In another, a homeowner’s flood insurance premium went from $400 annually to more than $24,000.

These rate hikes are intolerable and anything but ‘‘slowly raising’’. If enacted, these onerous rate hikes will not only force many homeowners to abandon their homes, it will make the property unsellable. That, in turn, will cripple the lenders who hold the mortgages. This man-made tsunami of misery would devastate economies in several regions in the nation.

Members of Louisiana’s congressional delegation and a bipartisan coalition are doing their best to right the wrongs fostered by the Biggert-Waters Flood Insurance Reform Act. Even U.S. Rep. Maxine Waters, one of the authors of the reform bill, has acknowledged the serious harm it would inflict if left as is.

But their degree of difficulty to make necessary changes is doubled when a respected publication like the Wall Street Journal publishes such malarkey.

• • •

This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Mike Jones, Jim Beam, Crystal Stevenson and Donna Price.

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