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Next Bailout: FEMA’s National Flood Insurance Program?

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  • Description

    FBN’s Gerri Willis on the National Flood Insurance Program’s financial crisis.

  • Duration 3:16
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If you're looking for the next government bailout beneficiary.

Look no further on the National Flood Insurance Program.

That's right the federal program operated by feedback.

Now we've been talking a lot about it this week.

But the program already -- eighteen billion dollars to taxpayers much of it left unpaid from Hurricane Katrina way back in 2005.

Only -- government program can get away with not paying its bills for seven years but the area have it.

And now the wheel keeps turning in -- will put a new call on insurance dollars or should I say taxpayer dollars.

According to the Wall Street Journal as of the end of August the flood program covered more than 236000.

Policies in New Jersey.

With 54 and a half billion dollars in exposure 54 billion.

If the program exceeds its twenty point eight billion in federally mandated borrowing cap well then they have to come cap -- hand the congress to ask for more money.

Likely you bet it is.

It's not just the debt that's a mess the National Flood Insurance Program encourages building in risky areas.

Because until very recently the government did not care one wit.

Whether customers build a house and a hurricane prone area only to see a blown down in the next storm.

Look at some people rebuilt with federal dollars over and over and over again.

Today there are some restrictions on that kind of taxpayer -- but it took years for the government to put even some limits on the spending.

Likewise the coverage is pretty darn cheap.

500 bucks and premiums a year for a typical policy and less than those areas that are less risky and prone to flooding.

This is a bargain a bargain born on the backs of taxpayers.

And remember not all of these people getting coverage or shrimpers and Louisiana are souvenir store owners and Florida summer wealthy folks who could afford private coverage -- -- can get it.

So you get the picture the government running a program.

Now I know what you're thinking hey this is the new normal if government doesn't provide a safety net to homeowners as we get more more hurricanes.

-- well.

But I can't tell the fundamental assumption is just not true in fact the number of hurricanes making landfall its shrinking.

Not growing.

If you order ranked hurricanes by the amount of damage they -- in their wake CNB would be its seventeen most damaging storm.

Since 19100.

-- -- -- and break the top ten.

Back in 1954 in 1955 think about this three storms made landfall Carol hazel Diane.

Each of those with cost twice as much damage is safe and Cindy if they occurred today and all in 112 month period we get an easy.

Some people believe -- we are actually in a hurricane drought consider.

The last cat three or stronger storm to make landfall was way back in 2005 Wilma.

So in the end maybe the government's time would be better served trying to prepare regions for storms.

Rather than ensuring that.

Surely the New York region could have been better prepared for sandy and ultimately were homeowners to bear the risk there might be -- building -- dangerous areas.

People choose to build in dangerous areas government doesn't force them to.

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