Full Version: The Big Government Fix-It Plan for New Orleans
You may or may not remember Representative Richard Baker of Louisiana who infamously said of the Ninth Ward and other poor parts of New Orleans on September 10, 2005:
If you don't then that's ok, because he is pretty unknown even in his own district. He is now making news because of the plan he is picthing to Washington. Story.
The entire article is worth a read.
Questions for debate:
1. Is this the right plan to rebuild New Orleans? Why or why not?
2. Does this plan truely benefit homeowners or is it a boondoggle for developers?
3. Given Baker's previous comments, should his motives be questioned?
QUOTE
We finally cleaned up public housing in New Orleans. We couldn't do it, but God did.
If you don't then that's ok, because he is pretty unknown even in his own district. He is now making news because of the plan he is picthing to Washington. Story.
QUOTE
Representative Richard H. Baker, a Republican from suburban Baton Rouge who derides Democrats for not being sufficiently free-market, is the unlikely champion of a housing recovery plan that would make the federal government the biggest landowner in New Orleans - for a while, at least. Mr. Baker's proposed Louisiana Recovery Corporation would spend as much as $80 billion to pay off lenders, restore public works, buy huge ruined chunks of the city, clean them up and then sell them back to developers.
Desperate for a big-scale fix to the region's huge real estate problem, Louisiana officials and business leaders of all stripes - black and white, Republican and Democrat - have embraced this little-known congressman and his grandiose plan, calling its passage crucial. While the White House has yet to sign on, there are already signs that some Congressional leaders are interested in pursuing it; Mr. Baker said administration officials had not rejected it outright.
~snip~
Under his plan, the Louisiana Recovery Corporation would step in to prevent defaults, similar in general nature to the Resolution Trust Corporation set up by Congress in 1989 to bail out the savings and loan industry. It would offer to buy out homeowners, at no less than 60 percent of their equity before Hurricane Katrina. Lenders would be offered up to 60 percent of what they are owed.
To finance these expenditures, the government would sell bonds and pay them off in part with the proceeds from the sale of land to developers.
Property owners would not have to sell, but those who did would have an option to buy property back from the corporation. The federal corporation would have nothing to do with the redevelopment of the land; those plans would be drawn up by local authorities and developers.
Desperate for a big-scale fix to the region's huge real estate problem, Louisiana officials and business leaders of all stripes - black and white, Republican and Democrat - have embraced this little-known congressman and his grandiose plan, calling its passage crucial. While the White House has yet to sign on, there are already signs that some Congressional leaders are interested in pursuing it; Mr. Baker said administration officials had not rejected it outright.
~snip~
Under his plan, the Louisiana Recovery Corporation would step in to prevent defaults, similar in general nature to the Resolution Trust Corporation set up by Congress in 1989 to bail out the savings and loan industry. It would offer to buy out homeowners, at no less than 60 percent of their equity before Hurricane Katrina. Lenders would be offered up to 60 percent of what they are owed.
To finance these expenditures, the government would sell bonds and pay them off in part with the proceeds from the sale of land to developers.
Property owners would not have to sell, but those who did would have an option to buy property back from the corporation. The federal corporation would have nothing to do with the redevelopment of the land; those plans would be drawn up by local authorities and developers.
The entire article is worth a read.
Questions for debate:
1. Is this the right plan to rebuild New Orleans? Why or why not?
2. Does this plan truely benefit homeowners or is it a boondoggle for developers?
3. Given Baker's previous comments, should his motives be questioned?
I didn't find a lot of detail about the plan, so I can't comment directly on it. For myself, I have one criteria for any rebuilding effort in NOLA. I want whatever plan is passed to CLEARLY state how it will be paid for (such detail was missing from this one). This is, in fact, my criteria for ANY government program...and while it is seemingly a simple enough request (and one which ALL taxpayers should demand)...it is frequently unheeded, as I fully expect it will be with whatever NOLA rebuilding effort is passed. The plan should not only detail exactly how it would be paid for, but also what the long-term benefits for the government would be. This is also generally missing from all governmental programs, which is why long term benefits are seldom realized.
NOTE: borrowing money to get cash with no real idea of how that debt will be repaid does NOT constitute a plan. Trust me on this...I've run this by several local banks, and all have turned me down. go figure.....
Apparently they don't buy into government financing schemes, I'm not sure why not, it seems to work just fine from my end. 
.
NOTE: borrowing money to get cash with no real idea of how that debt will be repaid does NOT constitute a plan. Trust me on this...I've run this by several local banks, and all have turned me down. go figure.....
Apparently they don't buy into government financing schemes, I'm not sure why not, it seems to work just fine from my end. .
1. Is this the right plan to rebuild New Orleans? Why or why not?
No, it is not. From your NYT article:
Homeowners are highly unlikely to be foreclosed upon because the land is virtually worthless and foreclosing means the bank must fix up the property in order to sell it (as well as being liable for any hazards on the property).
The government is not likely to develop land after it buys it. What's it going to do with 1,000s of homes?
2. Does this plan truly benefit homeowners or is it a boondoggle for developers?
It probably would benefit homeowners. They would be able to recoup equity that they otherwise would not have. But at what cost? To me, this amounts to the federal government buying a lot of "swampland in Florida". Of course it benefits the sellers, but the buyer (the government) will likely to be left with large tracts of swampland.
3. Given Baker's previous comments, should his motives be questioned?
I don't think so. Baker claims that he has always wanted to clean up the low income housing in Louisiana. I guess this is his chance. Unfortunately, this plan is far too under-developed and sketchy. $80 billion is a lot of money to spend. At this point, there is no guarantee (or even guess) that property in NOLA will be developed by anyone, let alone by the federal government.
No, it is not. From your NYT article:
QUOTE
Mr. Baker's fellow conservatives, in Congress and out, are worried about the huge scale of his proposed intervention. In the House Financial Services Committee, several members tried unsuccessfully to limit the proposal's spending and duration, or to require that it break even. "It is irresponsible for Congress to write a blank check, drawn on the account of American taxpayers, bound only by the imagination of politicians," said Representative Jeb Hensarling, Republican of Texas. "We need to ensure that taxpayers are not asked again two or three years from now to pay for the same disaster."
Homeowners are highly unlikely to be foreclosed upon because the land is virtually worthless and foreclosing means the bank must fix up the property in order to sell it (as well as being liable for any hazards on the property).
The government is not likely to develop land after it buys it. What's it going to do with 1,000s of homes?
2. Does this plan truly benefit homeowners or is it a boondoggle for developers?
It probably would benefit homeowners. They would be able to recoup equity that they otherwise would not have. But at what cost? To me, this amounts to the federal government buying a lot of "swampland in Florida". Of course it benefits the sellers, but the buyer (the government) will likely to be left with large tracts of swampland.
3. Given Baker's previous comments, should his motives be questioned?
I don't think so. Baker claims that he has always wanted to clean up the low income housing in Louisiana. I guess this is his chance. Unfortunately, this plan is far too under-developed and sketchy. $80 billion is a lot of money to spend. At this point, there is no guarantee (or even guess) that property in NOLA will be developed by anyone, let alone by the federal government.
Amlord...
All of these are the very reasons I think it is absolutely imperative that any NOLA rebuilding program incorporate very clear statements of exactly how it would be paid for, and what the long term benefits to the government (ie, the taxpayers paying for it all) would be. Sadly, I am quite sure neither will be the case...the government just doesn't think in terms of sound financial practice. Why should they, when they can simply write checks...which, even more importantly, then lead to votes?
2. Does this plan truly benefit homeowners or is it a boondoggle for developers?
That depends on which group of homeowners is being referred to. Homeowners of the NOLA rebuilding program? Absolutely. How could government provided housing do anything but benefit the homeowner? Homeowners in the rest of the country who are paying for this? Nope, don't see it. Boondoggle for developers? I'm sure whoever gets the contracts will make a tidy profit, but I don't see that being the major impetus behind this (but would be more than happy to find a rope and tree available if this proves incorrect).
3. Given Baker's previous comments, should his motives be questioned?
Sure. He's a politician after all....that should automatically lead to his motives being questioned, shouldn't it? That doesn't automatically imply that his motives aren't good...but you shouldn't just give $80 billion to someone who has made such statements without questioning them, should you? As Amlord stated, Baker has always said he wanted to clean up the area, so it seems reasonable that he just sees now as his chance. Besides, imagine how many votes $80 billion should be able to buy you (hmmmm...maybe now we've hit upon the true motivation).
All of these are the very reasons I think it is absolutely imperative that any NOLA rebuilding program incorporate very clear statements of exactly how it would be paid for, and what the long term benefits to the government (ie, the taxpayers paying for it all) would be. Sadly, I am quite sure neither will be the case...the government just doesn't think in terms of sound financial practice. Why should they, when they can simply write checks...which, even more importantly, then lead to votes?
2. Does this plan truly benefit homeowners or is it a boondoggle for developers?
That depends on which group of homeowners is being referred to. Homeowners of the NOLA rebuilding program? Absolutely. How could government provided housing do anything but benefit the homeowner? Homeowners in the rest of the country who are paying for this? Nope, don't see it. Boondoggle for developers? I'm sure whoever gets the contracts will make a tidy profit, but I don't see that being the major impetus behind this (but would be more than happy to find a rope and tree available if this proves incorrect).
3. Given Baker's previous comments, should his motives be questioned?
Sure. He's a politician after all....that should automatically lead to his motives being questioned, shouldn't it? That doesn't automatically imply that his motives aren't good...but you shouldn't just give $80 billion to someone who has made such statements without questioning them, should you? As Amlord stated, Baker has always said he wanted to clean up the area, so it seems reasonable that he just sees now as his chance. Besides, imagine how many votes $80 billion should be able to buy you (hmmmm...maybe now we've hit upon the true motivation).
Questions for debate:
1. Is this the right plan to rebuild New Orleans? Why or why not?Not much detail on the whole plan. IMO we should not rebuild until we can be sure the next category 4 storm will take it all out. That may never happen
2. Does this plan truely benefit homeowners or is it a boondoggle for developers?Certainly developers will make money but the people who the houses are built for will be the biggest beneficiaries. What other choice is there? Certainly the “government” cannot do this.
3. Given Baker's previous comments, should his motives be questioned?
I would question the motives of any politician who is spending that much taxpayer money. And just where is the money to be found. IMO we should not pay to put people back into New Orleans. It is clear that the city and state have mis- appropriated money in the past that if spent on the levies could have prevented this disaster. Why reward these idiots with 80 billion $ of the taxpayers money. Let’s move New Orleans 20 miles inland.
1. Is this the right plan to rebuild New Orleans? Why or why not?Not much detail on the whole plan. IMO we should not rebuild until we can be sure the next category 4 storm will take it all out. That may never happen
2. Does this plan truely benefit homeowners or is it a boondoggle for developers?Certainly developers will make money but the people who the houses are built for will be the biggest beneficiaries. What other choice is there? Certainly the “government” cannot do this.
3. Given Baker's previous comments, should his motives be questioned?
I would question the motives of any politician who is spending that much taxpayer money. And just where is the money to be found. IMO we should not pay to put people back into New Orleans. It is clear that the city and state have mis- appropriated money in the past that if spent on the levies could have prevented this disaster. Why reward these idiots with 80 billion $ of the taxpayers money. Let’s move New Orleans 20 miles inland.
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