By Quin Hillyer at the Washington Examiner;
When the immediate rescue needs in post-Hurricane Harvey Texas finally diminish, Congress should consider a long-term relief strategy that President George W. Bush unwisely rejected after Hurricane Katrina.
The free-market-friendly idea inexplicably rejected by the Bush administration was pushed by conservative then-Rep. Richard Baker, R-La. It would have set up a “Louisiana Recovery Corporation,” essentially a revolving loan fund to promote redevelopment and home ownership in areas devastated by the storm. I described it back then as a way to “jump-start the housing market while bringing back whole neighborhoods at a time.”
In massively flooded areas, property values obviously decline precipitously – so nobody has effective equity against which to borrow for rebuilding purposes. A federal property-purchasing program, designed to help upgrades and re-sales, would send a surge of cash flowing through existing market institutions to encourage rebuilding.
In massively flooded areas, property values obviously decline precipitously – so nobody has effective equity against which to borrow for rebuilding purposes. A federal property-purchasing program, designed to help upgrades and re-sales, would send a surge of cash flowing through existing market institutions to encourage rebuilding.
After speaking to Baker back then, I described how it would work:
The semi-private LRC, overseen by a board appointed by President Bush, would borrow money from the U.S. Treasury, buy Louisiana properties, bring them up to new environmental and zoning requirements, and resell them to developers. The money earned from those sales would return to the Treasury, to be borrowed again for the next round of properties. It’s akin to the lines of credit many businesses use routinely. The taxpayers would get the bulk of their investment back — rather than just making direct grants never to be repaid — while the property owners, and the financial institutions that hold their mortgages, avoid foreclosures and crushing debts.
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[The full column is here.]
