Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. The language is, in the case of any area that previously was not designated as an area having special flood hazards because the area was protected, it becomes designated as such an area, and it's all about flood. Here it is: the chargeable premium rate for flood insurance under this title shall be, et cetera. So if the gentleman would look at the bottom of the amendment, I'm trying to answer the question.

Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentleman, and I regret to say the entertainment value of what was not an exciting subject from the beginning appears to have gone down because the gentleman from Texas (Mr. Culberson) has left the floor. I thought his method of argument, which is the frequent repetition of error at increasing volume, added a certain panache to the proceedings. But since the last time he reiterated those errors, I thought it would be useful to correct them. First of all, this bill and this amendment not only doesn't add to the Federal Government's liability, it diminishes existing liability. The flood program was allowed to get deeply in debt. This bill with respect to flood says that there will be higher premiums and there will be fewer buildings in the floodplain areas. So it clearly reduces. It is supported in that respect by environmentalists and taxpayers. The wind part does add a new program. It adds a new program subject to the PAYGO rules, and it requires that it be strictly actuarially sound. Now, the gentleman from Texas could not seem to understand the basic distinction. He said, ``Well, the flood program was supposed to be actuarially sound and it isn't.'' True. That is why when we did the wind program, we wrote a much more specific and binding set of instructions that it be actuarially sound. The fact is that the flaws that led the water program to be in debt are corrected in this bill. That is not simply the opinion of the author, the gentleman from Mississippi, or this committee. It is CBO, the Congressional Budget Office's certification. So the notion that this adds to liability is simply wrong. It will reduce the outgo with regard to the water program. With regard to the wind program, it is actuarially sound, and in this bill, if it begins to run into deficit, the program cuts off. So an analogy between the wind funding and the water funding is flatly wrong. They are written differently. We have learned from our mistakes. And that is true of this amendment, too. The gentleman has offered an amendment that would increase coverage subject, again, to the very strict rules that say we will be actuarially sound. Now, I have no particular hope that this is going to sink in everywhere, but it does seem to me to be useful to have the fundamental facts out there on the record.

Mr. FRANK of Massachusetts. No, Mr. Speaker, I do not press the point of order.

Mr. FRANK of Massachusetts. I am opposed to the motion. I would press, instead, a point of logic, more appropriate here.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 1 minute to say that simply isn't true. That's not the causality. The notion that it was the Federal Government trotting them out is simply not accurate, and again, the phraseology of the gentleman is not that we should allow them to do it, we shouldn't let them walk away. I don't know any way to not let them walk away. Mr. Chairman, I yield the balance of my time to the gentleman from Mississippi (Mr. Taylor).

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I agree that we should have had an amendment that would have allowed us to debate whether or not to strike the wind addition. I would have vigorously defended it as I will do now. The problem is that we now give the insured and the people who administer insurance an impossible task. It is to evacuate a home on the notice of a hurricane and to return to that home some period of time later after there has been devastation from a hurricane and decide with some degree of certainty what damage was caused by water and what by wind, because the Federal Flood Insurance Program protects against water damage. Wind damage is under the auspices of private companies. In some cases, of course, the same company would be involved, and some of the adjusters would have an interest in whether or not it was water versus wind. The more it was water, the less they would have to pay. But even aside from that conflict of interest, it is inherently difficult, in fact impossible, to decide, if you go back and there is all this devastation, was it the wind that blew the roof off? Was it the flood that did it? Was the window broken by a wind-driven projectile? It is impossible to tell. We give people this impossible decision. Now, the way the wind program works under the bill, in the first place, it is not a complete expansion. You only would be eligible to buy wind insurance if you already have flood insurance. It will lead to no new insureds. That has to be very clear. No one who is not now taking out insurance, not just eligible, but taking out insurance, will be allowed to take this out, because it can only be an adjunct to your water policy. It is aimed at trying to avoid having this impossible arbitration between wind and water damage. Secondly, and CBO scores it this way, it is subject to PAYGO. The mandate in the legislation is that it has to be actuarially sound. And people have said, well, the previous flood insurance program wasn't actuarially sound. True. It wasn't subjected to that statutory mandate. It wasn't subject to PAYGO. We have in here language that mandates that the wind coverage be actuarially sound. CBO has certified, and as Members know, we don't always get from CBO what we think is the right answer, but in this case, CBO has certified that this meets PAYGO and that wind will be there. So what we are saying is that if you already have water and you are in an area where you are likely to have a combination of wind and water, we will allow you to buy wind as an adjunct so that, and you will have to pay the going rate for it, the actuarially sound rate, but then you will avoid this terrible, intractable problem of arbitrating wind versus water. Mr. Chairman, I reserve the balance of my time.

Mr. FRANK of Massachusetts. I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, preliminarily, I recognize myself for 1 minute just to say that I want to be very clear that I regret the decision not to allow a number of amendments offered by members of the minority to this bill. And I will give them my word that as this legislative process goes forward, I intend to seek out opportunities to give them fair consideration. I must say, Mr. Chairman, I'm never happy when I see my colleagues on the Republican side being a little obstreperous, but when they're being obstreperous with good reason, I really find that hard to tolerate. So I did want to make clear my view and my hope that we can deal with that. Mr. Chairman, I yield such time as she may consume to the Chair of the Subcommittee on Housing, from which this bill came forward, who has done a great job all year on this legislation, the gentlewoman from California.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield an additional minute to the gentlewoman from Florida.

Mr. FRANK of Massachusetts. I will take back my time, Mr. Chairman, to say that simply isn't accurate today. Others know it better than I, but we've had insurance companies withdrawing from offering policies that are not covered by Federal flood insurance. The Federal Government covers only flood insurance. So I would repeat to him, his history is interesting; but he says we shouldn't allow them to walk away, and I don't know any way we can prevent them. Mr. Chairman, I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, to answer the direct question by the gentleman, no, I would not say this is the greatest development bill. But I would also say he says he was puzzled. Not as puzzled as I am in trying to figure out what in the world this had to do with the amendment we are dealing with. Maybe it is considered, I don't know, stuffy to deal with the amendment under consideration. I always prefer it as a method of debate.

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?

Mr. FRANK of Massachusetts. And the logic is this: we have a proposal that came forward, brought forward by the gentleman from Mississippi to add a program to the National Flood Insurance Program that says that if you have national water insurance, you can, at your option, add wind insurance. Remember, no new insured are eligible here. You have to have water and then you can get wind. The argument that the gentleman from Mississippi has made irrefutably on this House floor is that you simply cannot, days after a storm has damaged, try to sort out what was wind and what was water. Now, unlike the flood program, the gentlewoman from Minnesota is right, the flood program is in deep debt. We inherited, from our Republican colleagues, a flood insurance program that is hurting. They had control of that program, House, Senate and President; and it went into debt. As the gentlewoman says, we have a bill, and we had it last year in the House too, but not in the Senate, that makes it better. Everyone agrees that our bill, everyone who has read it agrees that our bill reduces the financial problems with flood, but it doesn't wipe them out. There's a large problem there. Billions of dollars. Here's the illogic. The gentleman from Mississippi has put forward a proposal for optional wind insurance which will have to be actuarially sound. When the flood insurance program was passed, there was no PAYGO. Flood insurance is hurting. They're supposed to be actuarially sound, but it's very loose. We have written into this bill, with regard to wind, requirements that it be actuarially sound, that it break even for the Federal Government, that the Congressional Budget Office certifies as perfectly good. So there is no argument possible that the wind program will add to the danger. CBO has certified that it is sound. So we have a new wind program that will be actuarially sound; CBO certifies that. And the bill says that if the program starts to run into a deficit, it cuts off. Automatic. We then have the water program, which the Republicans left us as their inheritance, which is deeply in debt. They are saying that the fiscally sound wind program that's in this bill, certified by CBO, cannot go into effect until we've solved the problem they left us in the water program. They are saying that. They don't have anything to say bad about the wind program. They're saying that you can't do the wind program until you've solved the water problem. And the water problem is billions. How would you solve it? Well, you'd substantially raise people's premiums. I should note, Mr. Speaker, that no one on the Republican side has proposed to try to make it actuarially sound. We are trying to get in that direction. But no one on the Republican side thinks it's reasonable to immediately wipe out that huge debt. They don't like the wind program. They don't want to take it on head on, so they have come up with this scheme which says, the fiscally sound, CBO-certified, actuarially-legitimate wind program can't go forward until we clean up the $19 billion problem they left us in the flood program. I do not think that is very logical. The gentleman from Mississippi, as I said, made the case for the wind program. So this becomes a case for the wind program. Here's the deal: you're told to leave your house because a hurricane's coming. You come back a few days later and there's devastation, and you have to figure out what was caused by wind and what was caused by water because if you have a wind policy from a private company, they will argue, in many cases, that water caused all the damage, and you are very hard pressed to find it out. If you then, instead, have a combined wind and water policy from the Federal Government, you then don't have to go through this metaphysical exercise. You simply get the payment for your damages. Now, that's the logical point that the gentleman from Mississippi put forward. And it is going to be, as CBO said, break even for the Federal Government. So here's the recommit: the Federal Government cannot go to the aid of people facing that dilemma of trying to decide wind versus water, which has been certified as fiscally neutral by CBO, until we solve the problem that we got in the water issue. It really is not a logical thing to do. It is simply a way to try to kill the wind program. A more straightforward way would have been to simply kill the wind program. I'm sorry they didn't get an amendment to do that. But they could have done that straightforwardly in the recommit. So I hope that Members will vote ``no.'' The only issue here is should we initiate a voluntary program whereby people who have Federal water insurance can also get wind insurance in a manner that is certified by CBO to add nothing to the deficit, to do nothing to hurt the Federal flood insurance program, but to be actuarially sound. I hope the motion is defeated.

Mr. FRANK of Massachusetts. As the gentleman knows, I was opposed to the Rules Committee's decision to keep out several Republican amendments. I now regret that even more because if the gentleman had a real amendment to argue for, he wouldn't be making these badly strained irrelevant arguments on this particular poor little amendment. It really doesn't deserve all the rhetoric it's getting.

Mr. FRANK of Massachusetts. First, Mr. Chairman, I hope the gentleman from Texas will remember this problem about spending when we again debate the proposal to spend hundreds of billions of dollars sending a manned spaceship to Mars, which I have been opposed to, and I hope he will join me in that unnecessary expenditure and oppose it. Secondly, CBO says he is wrong. The wind part is written, unlike the flood part, to require actuarially sound policy premiums to break even, and CBO certified that it's there. So the notion that this is adding trillions or even billions to our debt is simply wrong, according to CBO.

Mr. FRANK of Massachusetts. In the first place, the flood part environmentalists strongly support because it restricts where people can go and raises the fee. As to the wind part, it's not a subsidy.

Mr. FRANK of Massachusetts. Mr. Chairman, it might be superfluous, but I would want to point out that the speech we just heard has no bearing whatsoever to the amendment that is pending.

Mr. FRANK of Massachusetts. His point about the flood insurance not being actuarially sound is right; but in this bill, because it is subject to PAYGO, we have a more stringent standard. So it is not totally valid to say, oh, look, it was supposed to be actuarially done. The wind program here is written to a much stricter standard.

Mr. FRANK of Massachusetts. Mr. Chairman, the gentleman is welcome. I reserve the balance of my time.

Mr. FRANK of Massachusetts. First of all, I agree. I thought he was talking about the Federal Government when he said ``we.'' And he is right, States have some power; the Federal Government does not. But even there, I believe he overstates the States' powers. And in fact, particularly in the Graham-Leach-Bliley bill, we gave some insurance companies the power to leave States, which we shouldn't have done. But States can be required, if they are going to do something, to do other things. But they can leave altogether, and the State insurance commissioners generally don't have the power to do that.

Mr. FRANK of Massachusetts. But not according to CBO, I would say to the gentleman.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield 4 minutes to the gentleman from Oregon (Mr. Blumenauer).

Mr. FRANK of Massachusetts. Mr. Chairman, I yield such time as he may consume to the gentleman from Mississippi (Mr. Taylor).

Mr. FRANK of Massachusetts. Mr. Chairman, I submit the following exchange of letters regarding H.R. 3121. National Association of Realtors', Washington, DC, September 26, 2007. House of Representatives, Washington, DC. Dear Representatives: On behalf of the more than 1.3 million members of the National Association of REALTORS' (NAR), I ask for your vote in favor of H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007, when it is considered by the House of Representatives on Thursday, September 27. The National Flood Insurance Program (NFIP) offers essential flood loss protection to homeowners and commercial property owners in more than 20,000 communities nationwide. The bill, as written, will help protect homeowners, renters and commercial property owners from losses sustained from flooding. NAR strongly supports the following changes to the NFIP contained in the bill including: Extending the NFIP for five years; Ensuring that the 100-year flood maps are updated as expeditiously as possible; Increasing coverage limits to $335,000 for residential and $670,000 for commercial properties; Supporting education of tenants about the availability of flood insurance while providing flexibility to property owners and mangers in the manner of providing such notice; Adding coverage for living expenses, business interruption, and basement improvements; Extending the pilot program for mitigation of severe repetitive loss properties; and Studying the impacts of eliminating subsidies on homeowners, renters and local economies. It is critical that flood insurance remain accessible for all individuals who own or rent property in a floodplain. I urge you to vote in favor of H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007, on Thursday. Sincerely, Pat V. Combs, ABR, CRS, GRI, PMN, 2007 President, National Association of Realtors'