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Cap and Trade Revenue

Floor Speech

By:
Date:
Location: Washington, DC


Cap and Trade Revenue -- (Senate - May 07, 2008)

BREAK IN TRANSCRIPT

The Senator from Louisiana [Ms. LANDRIEU] proposes an amendment numbered 4706, as modified.

Ms. LANDRIEU. I ask unanimous consent that reading of the amendment be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment, as modified, is as follows:
(Purpose: To improve the Office of the Flood Insurance Advocate)

Strike section 131 and insert the following:

SEC. 131. FLOOD INSURANCE ADVOCATE.

Chapter II of the National Flood Insurance Act of 1968 is amended by inserting after section 1330 (42 U.S.C. 4041) the following new section:

``SEC. 1330A. OFFICE OF THE FLOOD INSURANCE ADVOCATE.

``(a) Establishment of Position.--

``(1) IN GENERAL.--There shall be in the Federal Emergency Management Agency an Office of the Flood Insurance Advocate which shall be headed by the National Flood Insurance Advocate. The National Flood Insurance Advocate shall--

``(A) to the extent amounts are provided pursuant to subsection (n), be compensated at the same rate as the highest rate of basic pay established for the Senior Executive Service under section 5382 of title 5, United States Code, or, if the Director so determines, at a rate fixed under section 9503 of such title;

``(B) be appointed by the Director without regard to political affiliation;

``(C) report to and be under the general supervision of the Director, but shall not report to, or be subject to supervision by, any other officer of the Federal Emergency Management Agency; and

``(D) consult with the Assistant Administrator for Mitigation or any successor thereto, but shall not report to, or be subject to the general supervision by, the Assistant Administrator for Mitigation or any successor thereto.

``(2) QUALIFICATIONS.--An individual appointed under paragraph (1)(B) shall have a background in customer service, accounting, auditing, financial analysis, law, management analysis, public administration, investigations, or insurance.

``(3) RESTRICTION ON EMPLOYMENT.--An individual may be appointed as the National Flood Insurance Advocate only if such individual was not an officer or employee of the Federal Emergency Management Agency with duties relating to the national flood insurance program during the 2-year period ending with such appointment and such individual agrees not to accept any employment with the Federal Emergency Management Agency for at least 2 years after ceasing to be the National Flood Insurance Advocate. Service as an employee of the National Flood Insurance Advocate shall not be taken into account in applying this paragraph.

``(4) STAFF.--To the extent amounts are provided pursuant to subsection (n), the National Flood Insurance Advocate may employ such personnel as may be necessary to carry out the duties of the Office.

``(5) INDEPENDENCE.--The Director shall not prevent or prohibit the National Flood Insurance Advocate from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena or summons during the course of any audit or investigation.

``(6) REMOVAL.--The President and the Director shall have the power to remove, discharge, or dismiss the National Flood Insurance Advocate. Not later than 15 days after the removal, discharge, or dismissal of the Advocate, the President or the Director shall report to the Committee on Banking of the Senate and the Committee on Financial Services of the House of Representatives on the basis for such removal, discharge, or dismissal.

``(b) Functions of Office.--It shall be the function of the Office of the Flood Insurance Advocate to--

``(1) assist insureds under the national flood insurance program in resolving problems with the Federal Emergency Management Agency relating to such program;

``(2) identify areas in which such insureds have problems in dealings with the Federal Emergency Management Agency relating to such program;

``(3) propose changes in the administrative practices of the Federal Emergency Management Agency to mitigate problems identified under paragraph (2);

``(4) identify potential legislative, administrative, or regulatory changes which may be appropriate to mitigate such problems;

``(5) conduct, supervise, and coordinate--

``(A) systematic and random audits and investigations of insurance companies and associated entities that sell or offer for sale insurance policies against loss resulting from physical damage to or loss of real property or personal property related thereto arising from any flood occurring in the United States, to determine whether such insurance companies or associated entities are allocating only flood losses under such insurance policies to the National Flood Insurance Program;

``(B) audits and investigations to determine if an insurance company or associated entity described under subparagraph (A) is negotiating on behalf of the National Flood Insurance Program with third parties in good faith;

``(C) examinations to ensure that insurance companies and associated entities are properly compiling and preserving documentation for independent biennial financial statement audits as required under section 62.23(l) of title 44, Code of Federal Regulations; and

``(D) any other audit, examination, or investigation that the National Flood Insurance Advocate determines necessary to ensure the effective and efficient operation of the national flood insurance program;

``(6) conduct, supervise, and coordinate investigations into the operations of the national flood insurance program for the purpose of--

``(A) promoting economy and efficiency in the administration of such program;

``(B) preventing and detecting fraud and abuse in the program; and

``(C) identifying, and referring to the Attorney General for prosecution, any participant in such fraud or abuse;

``(7) identify and investigate conflicts of interest that undermine the economy and efficiency of the national flood insurance program; and

``(8) investigate allegations of consumer fraud.

``(c) Authority of the National Flood Insurance Advocate.--The National Flood Insurance Advocate may--

``(1) have access to all records, reports, audits, reviews, documents, papers, recommendations, or other material available to the Director which relate to administration or operation of the national flood insurance program with respect to which the National Flood Insurance Advocate has responsibilities under this section;

``(2) undertake such investigations and reports relating to the administration or operation of the national flood insurance program as are, in the judgment of the National Flood Insurance Advocate, necessary or desirable;

``(3) request such information or assistance as may be necessary for carrying out the duties and responsibilities provided by this section from any Federal, State, or local governmental agency or unit thereof;

``(4) require by subpoena the production of all information, documents, reports, answers, records (including phone records), accounts, papers, emails, hard drives, backup tapes, software, audio or visual aides, and any other data and documentary evidence necessary in the performance of the functions assigned to the National Flood Insurance Advocate by this section, which subpoena, in the case of contumacy or refusal to obey, shall be enforceable by order of any appropriate United States district court, provided, that procedures other than subpoenas shall be used by the National Flood Insurance Advocate to obtain documents and information from any Federal agency;

``(5) issue a summons to compel the testimony of any person in the employ of any insurance company or associated entity, described under subsection (b)(5)(A), or any successor to such company or entity, including any member of the board of such company or entity, any trustee of such company or entity, any partner in such company or entity, or any agent or representative of such company or entity;

``(6) administer to or take from any person an oath, affirmation, or affidavit, whenever necessary in the performance of the functions assigned by this section, which oath, affirmation, or affidavit when administered or taken by or before an employee of the Office designated by the National Flood Insurance Advocate shall have the same force and effect as if administered or taken by or before an officer having a seal;

``(7) have direct and prompt access to the Director when necessary for any purpose pertaining to the performance of functions and responsibilities under this section;

``(8) select, appoint, and employ such officers and employees as may be necessary for carrying out the functions, powers, and duties of the Office subject to the provisions of title 5, United States Code, governing appointments in the competitive service, and the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates;

``(9) obtain services as authorized by section 3109 of title 5, United States Code, at daily rates not to exceed the equivalent rate prescribed for the rate of basic pay for a position at level IV of the Executive Schedule; and

``(10) to the extent and in such amounts as may be provided in advance by appropriations Acts, enter into contracts and other arrangements for audits, studies, analyses, and other services with public agencies and with private persons, and to make such payments as may be necessary to carry out the provisions of this section.

``(d) Additional Duties of the NFIA.--The National Flood Insurance Advocate shall--

``(1) monitor the coverage and geographic allocation of regional offices of flood insurance advocates;

``(2) develop guidance to be distributed to all Federal Emergency Management Agency officers and employees having duties with respect to the national flood insurance program, outlining the criteria for referral of inquiries by insureds under such program to regional offices of flood insurance advocates;

``(3) ensure that the local telephone number for each regional office of the flood insurance advocate is published and available to such insureds served by the office; and

``(4) establish temporary State or local offices where necessary to meet the needs of qualified insureds following a flood event.

``(e) Other Responsibilities.--

``(1) ADDITIONAL REQUIREMENTS RELATING TO CERTAIN AUDITS.--Prior to conducting any audit or investigation relating to the allocation of flood losses under subsection (b)(5)(A), the National Flood Insurance Advocate shall--

``(A) consult with appropriate subject-matter experts to identify the data necessary to determine whether flood claims paid by insurance companies or associated entities on behalf the national flood insurance program reflect damages caused by flooding;

``(B) collect or compile the data identified in subparagraph (A), utilizing existing data sources to the maximum extent practicable; and

``(C) establish policies, procedures, and guidelines for application of such data in all audits and investigations authorized under this section.

``(2) ANNUAL REPORTS.--

``(A) ACTIVITIES.--Not later than December 31 of each calendar year, the National Flood Insurance Advocate shall report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the activities of the Office of the Flood Insurance Advocate during the fiscal year ending during such calendar year. Any such report shall contain a full and substantive analysis of such activities, in addition to statistical information, and shall--

``(i) identify the initiatives the Office of the Flood Insurance Advocate has taken on improving services for insureds under the national flood insurance program and responsiveness of the Federal Emergency Management Agency with respect to such initiatives;

``(ii) describe the nature of recommendations made to the Director under subsection (i);

``(iii) contain a summary of the most serious problems encountered by such insureds, including a description of the nature of such problems;

``(iv) contain an inventory of any items described in clauses (i), (ii), and (iii) for which action has been taken and the result of such action;

``(v) contain an inventory of any items described in clauses (i), (ii), and (iii) for which action remains to be completed and the period during which each item has remained on such inventory;

``(vi) contain an inventory of any items described in clauses (i), (ii), and (iii) for which no action has been taken, the period during which each item has remained on such inventory and the reasons for the inaction;

``(vii) identify any Flood Insurance Assistance Recommendation which was not responded to by the Director in a timely manner or was not followed, as specified under subsection (i);

``(viii) contain recommendations for such administrative and legislative action as may be appropriate to resolve problems encountered by such insureds;

``(ix) identify areas of the law or regulations relating to the national flood insurance program that impose significant compliance burdens on such insureds or the Federal Emergency Management Agency, including specific recommendations for remedying these problems;

``(x) identify the most litigated issues for each category of such insureds, including recommendations for mitigating such disputes;

``(xi) identify ways to promote the economy, efficiency, and effectiveness in the administration of the national flood insurance program;

``(xii) identify fraud and abuse in the national flood insurance program; and

``(xiii) include such other information as the National Flood Insurance Advocate may deem advisable.

``(B) DIRECT SUBMISSION OF REPORT.--Each report required under this paragraph shall be provided directly to the committees identified in subparagraph (A) without any prior review or comment from the Director, the Secretary of Homeland Security, or any other officer or employee of the Federal Emergency Management Agency or the Department of Homeland Security, or the Office of Management and Budget.

``(3) INFORMATION AND ASSISTANCE FROM OTHER AGENCIES.--

``(A) IN GENERAL.--Upon request of the National Flood Insurance Advocate for information or assistance under this section, the head of any Federal agency shall, insofar as is practicable and not in contravention of any statutory restriction or regulation of the Federal agency from which the information is requested, furnish to the National Flood Insurance Advocate, or to an authorized designee of the National Flood Insurance Advocate, such information or assistance.

``(B) REFUSAL TO COMPLY.--Whenever information or assistance requested under this subsection is, in the judgment of the National Flood Insurance Advocate, unreasonably refused or not provided, the National Flood Insurance Advocate shall report the circumstances to the Director without delay.

``(f) Compliance With GAO Standards.--In carrying out the responsibilities established under this section, the National Flood Insurance Advocate shall--

``(1) comply with standards established by the Comptroller General of the United States for audits of Federal establishments, organizations, programs, activities, and functions;

``(2) establish guidelines for determining when it shall be appropriate to use non-Federal auditors;

``(3) take appropriate steps to assure that any work performed by non-Federal auditors complies with the standards established by the Comptroller General as described in paragraph (1); and

``(4) take the necessary steps to minimize the publication of proprietary and trade secrets information.

``(g) Personnel Actions.--

``(1) IN GENERAL.--The National Flood Insurance Advocate shall have the responsibility and authority to--

``(A) appoint regional flood insurance advocates in a manner that will provide appropriate coverage based upon regional flood insurance program participation; and

``(B) hire, evaluate, and take personnel actions (including dismissal) with respect to any employee of any regional office of a flood insurance advocate described in subparagraph (A).

``(2) CONSULTATION.--The National Flood Insurance Advocate may consult with the appropriate supervisory personnel of the Federal Emergency Management Agency in carrying out the National Flood Insurance Advocate's responsibilities under this subsection.

``(h) Operation of Regional Offices.--

``(1) IN GENERAL.--Each regional flood insurance advocate appointed pursuant to subsection (d)--

``(A) shall report to the National Flood Insurance Advocate or delegate thereof;

``(B) may consult with the appropriate supervisory personnel of the Federal Emergency Management Agency regarding the daily operation of the regional office of the flood insurance advocate;

``(C) shall, at the initial meeting with any insured under the national flood insurance program seeking the assistance of a regional office of the flood insurance advocate, notify such insured that the flood insurance advocate offices operate independently of any other Federal Emergency Management Agency office and report directly to Congress through the National Flood Insurance Advocate; and

``(D) may, at the flood insurance advocate's discretion, not disclose to the Director contact with, or information provided by, such insured.

``(2) MAINTENANCE OF INDEPENDENT COMMUNICATIONS.--Each regional office of the flood insurance advocate shall maintain a separate phone, facsimile, and other electronic communication access.

``(i) Flood Insurance Assistance Recommendations.--

``(1) AUTHORITY TO ISSUE.--Upon application filed by a qualified insured with the Office of the Flood Insurance Advocate (in such form, manner, and at such time as the Director shall by regulation prescribe), the National Flood Insurance Advocate may issue a Flood Insurance Assistance Recommendation, if the Advocate finds that the qualified insured is suffering a significant hardship, such as a significant delay in resolving claims where the insured is incurring significant costs as a result of such delay, or where the insured is at risk of adverse action, including the loss of property, as a result of the manner in which the flood insurance laws are being administered by the Director.

``(2) TERMS OF A FLOOD INSURANCE ASSISTANCE RECOMMENDATION.--The terms of a Flood Insurance Assistance Recommendation may recommend to the Director that the Director, within a specified time period, cease any action, take any action as permitted by law, or refrain from taking any action, including the payment of claims, with respect to the qualified insured under any other provision of law which is specifically described by the National Flood Insurance Advocate in such recommendation.

``(3) DIRECTOR RESPONSE.--Not later than 15 days after the receipt of any Flood Insurance Assistance Recommendation under this subsection, the Director shall respond in writing as to--

``(A) whether such recommendation was followed;

``(B) why such recommendation was or was not followed; and

``(C) what, if any, additional actions were taken by the Director to prevent the hardship indicated in such recommendation.

``(4) RESPONSIBILITIES OF DIRECTOR.--The Director shall establish procedures requiring a formal response consistent with the requirements of paragraph (3) to all recommendations submitted to the Director by the National Flood Insurance Advocate under this subsection.

``(j) Reporting of Potential Criminal Violations.--In carrying out the duties and responsibilities established under this section, the National Flood Insurance Advocate shall report expeditiously to the Attorney General whenever the National Flood Insurance Advocate has reasonable grounds to believe there has been a violation of Federal criminal law.

``(k) Coordination.--

``(1) WITH OTHER FEDERAL AGENCIES.--In carrying out the duties and responsibilities established under this section, the National Flood Insurance Advocate--

``(A) shall give particular regard to the activities of the Inspector General of the Department of Homeland Security with a view toward avoiding duplication and insuring effective coordination and cooperation; and

``(B) may participate, upon request of the Inspector General of the Department of Homeland Security, in any audit or investigation conducted by the Inspector General.

``(2) WITH STATE REGULATORS.--In carrying out any investigation or audit under this section, the National Flood Insurance Advocate shall coordinate its activities and efforts with any State insurance authority that is concurrently undertaking a similar or related investigation or audit.

``(3) AVOIDANCE OF REDUNDANCIES IN THE RESOLUTION OF PROBLEMS.--In providing any assistance to a policyholder pursuant to paragraphs (1) and (2) of subsection (b), the National Flood Insurance Advocate shall consult with the Director to eliminate, avoid, or reduce any redundancies in actions that may arise as a result of the actions of the National Flood Insurance Advocate and the claims appeals process described under section 62.20 of title 44, Code of Federal Regulations.

``(l) Authority of the Director To Levy Penalties.--In addition to any other action that may be taken by the Attorney General, upon a finding in any investigation or audit conducted by the Office of the National Flood Insurance Advocate under this section, that any insurance company or associated entity has willfully misappropriated funds under the national flood insurance program, the Director may levy a civil fine against such company or entity in an amount not to exceed 3 times the total amount of funds shown to be misappropriated.

``(m) Definitions.--For purposes of this subsection:

``(1) ASSOCIATED ENTITY.--The term `associated entity' means any person, corporation, or other legal entity that contracts with the Director or an insurance company to provide adjustment services, benefits calculation services, claims services, processing services, or record keeping services in connection with standard flood insurance policies made available under the national flood insurance program.

``(2) INSURANCE COMPANY.--The term `insurance company' refers to any property and casualty insurance company that is authorized by the Director to participate in the Write Your Own program under the national flood insurance program.

``(3) NATIONAL FLOOD INSURANCE ADVOCATE.--The term `National Flood Insurance Advocate' includes any designee of the National Flood Insurance Advocate.

``(4) QUALIFIED INSURED.--The term `qualified insured' means an insured under coverage provided under the national flood insurance program under this title.

``(n) Funding.--Pursuant to section 1310(a)(8), the Director may use amounts from the National Flood Insurance Fund to fund the activities of the Office of the Flood Advocate in each of fiscal years 2009 through 2014, except that the amount so used in each such fiscal year may not exceed $5,000,000 and shall remain available until expended. Notwithstanding any other provision of this title, amounts made available pursuant to this subsection shall not be subject to offsetting collections through premium rates for flood insurance coverage under this title.''.

Ms. LANDRIEU. Madam President, Senator Wicker, Senator Vitter, myself, and Senator Cochran to some degree have been working for months literally on this bill. It is a very important bill--as has Senator Nelson of Florida--a very important bill to Mississippi and Louisiana that felt the brunt of these last storms that we will be marking the third anniversary of this August, not too far from today, and in September for Hurricane Rita. As I was saying earlier this morning, thousands and thousands and thousands of homeowners are having a difficult time, the causes of which are very different. In some parts of the country people extended debt beyond what was wise and reasonable and find themselves losing their homes and in some instances it is partly their fault.

In some places, some consumers had bad deals thrust at them, and maybe through fraud or some other abuse they find themselves losing their homes. The people I represent didn't do either of those two things. The people I represent in Louisiana and along the gulf coast did nothing but basically play by the rules, have insurance if they were required to, didn't have insurance when they were not required, for the most part. There were some families who should have had insurance who did not, but that is another subject for another day. But the bulk of the people did exactly what they were supposed to do, and they are still going to lose their homes because of two reasons: The Federal levees that should have held didn't and the insurance paradigm we have established is not sufficient. That is what this bill is about.

To describe this in very clear graphics, I wish to put up this poster that shows why we are on the floor today: $17.53 billion; that is a lot of money. That is why this bill is on the floor today, because we have to ``reform the system'' because it is obviously not working. We set up a flood insurance program and for years it would basically break even because of the way it was structured. Then in 2004, it went into debt a little bit, $225 million. Then we went into debt a little bit more, $300 million, but still manageable. Then Katrina and Rita hit and the debt goes up to almost $20 billion. So make no mistake about it, that is why this bill is on the floor. This is a taxpayer bailout of $20 billion. At the same time the taxpayers are bailing out the insurance industry, I wanted to show you what the insurance industry profits are. Everybody--some Republicans and a lot of Democrats--has been on this floor talking about oil companies. I guess I can understand why oil companies are making profits, because prices are high. That is a whole other subject for another day. But I wonder how insurance companies can make profits when you are supposed to have a record loss. I understand profits when prices are high; I don't understand profits when losses are great.

There is something wrong with this system.

So, in 2005, the insurance profits went up to $48 billion. Katrina and Rita hit; they don't go down. The profits go up. Because it is basically a system where insurance companies just cannot lose money. People can lose money. People can lose their houses. Businesses lose their businesses. Businesses lose their contents and their markets. But for some reason, in this insurance bill we are operating under, insurance companies make money in the middle of a disaster. Some of my constituents, including myself, would like to know how this happens.

As to the National Flood Insurance Program, the GAO did a report that says: ``Greater Transparency and Oversight of Wind and Flood Damage Determinations Are Needed.'' They just issued this report. I would say so, since the taxpayers are going to pick up the $20 billion bill.

You heard the Senator from Florida, Mr. Nelson. They were so desperate in
Florida, the State had to sort of insure itself, which, thank goodness, Florida is big enough and maybe wealthy enough to do. It is very risky for the State of Florida to do that. If they have four our five hurricanes in one season, like they did a couple seasons ago, it could bankrupt the State. I am sure this debate went on in the Florida Legislature. But they were so desperate, they actually had no recourse because the Federal Government will not come up with a plan that will work for everyone.

So Florida had a choice: They could either shut down every commercial business, shut down every homebuilder, completely stop the housing market in Florida, or they could self-insure themselves. It was a pretty desperate situation, so Florida went ahead and did that.

But let me explain, Louisiana is not a rich State, and we are not a big State. We cannot insure ourselves that way. If we had another Katrina, the whole State would go bankrupt and our kids could not go to universities, our hospitals would shut down. I know people think I am making this up, but it is the truth. We cannot assume that risk onto ourselves, and neither can Mississippi, and I would suggest neither could Alabama. Maybe California could do it, maybe New York could do it, maybe Texas could do it, and maybe Florida could do it because they are big States, but our little States would go bankrupt.

So our GAO says the insurance business needs some more transparency and oversight. I will tell you why. As shown on this chart, this is what is in the report. As you know, maybe by word of explanation, under the current system--as unbelievable as this might sound--you have the real estate agents who are in the private sector writing wind insurance for their companies, which they can make a profit on. It is private. They are writing the flood insurance policies. So it is ``write your own'' policy. So the same people who write the Federal, taxpayer-guaranteed flood program write the private program.

So right now--and this bill does not fix this; this bill does not do anything to fix this--right now, according to our own GAO, Government Accountability Office, which is completely neutral, not political:

In certain damage scenarios, the WYO [write your own] insurer that covers a policyholder for wind losses can have a vested economic interest in the outcome of the damage determination that it performs when the property is subjected to a combination of high winds and flooding.

Which, hello, most often happens in a hurricane. You have winds and water. So it always happens that way.

In such cases, a conflict of interest exists--

Let me underline ``a conflict of interest exists''--with the WYO insurer as it determines which damages were caused by wind, to be paid by itself. .....

So if a house is destroyed and the person comes in and says: This house was destroyed by wind 85 percent--if that is the case--then I have to pay it out of my pocket. If it is actually 85 percent flood, then the Government can pay it. The poor taxpayers can pick up this tab, so the insurance companies move their liability to the taxpayer.

I know, Madam President, as a former auditor, you can most certainly appreciate and understand this situation.

So it says:

In such cases, a conflict of interest exists with the WYO insurer as it determines which damages were caused by wind, to be paid by itself, and which damages were caused by flooding, to be paid by NFIP [the National Flood Insurance Program].

Which is basically the taxpayers.

Moreover, the amount WYO insurers are compensated .....

In addition to that obvious conflict of interest, which is not corrected in this bill, the insurers are compensated for servicing a flood claim, and it increases as the amount of the flood damage increases. So their compensation, their percentage is increased. So if the flood insurance is more, they get a little bit of a premium.

So this bill has been in committee being worked out through the House and Senate, it is finally on the floor, and this problem has not been corrected. So that is why I offer my amendment to try to correct some portion of it.

Let me show you one of the actual transactions we have uncovered. This is an actual blowup of a claim, the paperwork that was done. It talks about the flood that occurred on August 29. Damage appears to be the result of the general condition of flooding. The first inspection revealed an exterior waterline of 15 to 20 feet, an interior waterline of 8 to 12 feet. Damage was extensive. It lists this.

That sounds wonderful and great. That is kind of what one of these documents would look like. The problem is, the adjuster who turned in that document said--this is under oath in one of the court proceedings that is slowly moving through the courts--``I did not put those numbers in there.'' ``There was no house to measure a waterline.'' ``I did not prepare that letter.'' ``They didn't call me about that letter.'' ``That is the document that is sent to the Federal Government.'' This is an adjuster. We have blocked his name out because he would probably get in trouble if they knew he was sharing this information with us.

So, in other words, again, this is not complicated, because I know insurance can be complicated. I do not really like the subject very much, but I have had to learn more about it than I care to know because of what we are going through.

But we have a system which we are getting ready to vote on right now that allows the same insurance companies to write their own personal policies or their own business policies, and they do the Government a ``big favor'' by writing the flood insurance policies. They decide when their houses are destroyed, how much they have to pay out of pocket, if it was done by wind, or how much we have to pay if it was done by flood. These documents are barely ever audited, or this system is barely ever audited.

When we went and checked, as shown on this chart, this was the house that supposedly had a water line. Of course, you can see this address. There was no house. There could not possibly have been any measurement because there are no walls to measure. So this is just an example of hundreds that are coming out as these court cases move forward all along the gulf about the very serious problems related to the way the U.S. flood insurance program works.

Now, I know we need a flood insurance program. My State benefits tremendously from having one that is fair and equitable to the people who are paying the premiums, to the homeowners and businesses who rely on it. I also have an obligation to taxpayers generally in this country to support a program that is honest and fair. What I am suggesting is that the bill we are about to vote on--which is probably why I am going to vote no--does not do anything to change this.

So I am going to put up my ``$20 billion'' sign again. This $20 billion debt exists in large measure because of this system I have just described. Now, this bill is going to pass, and magically the Federal Government is going to just absorb the $20 billion so we kind of get back to even. The bill, then, generally said, to make up for that, we are going to raise rates. But do you know on whom they raise rates? Not on the insurance companies that have already made record profits. Do you know on whom they raise rates? People who cannot afford the rates today. In the underlying bill, they can raise rates 15 percent a year or 25 percent a year.

When we ask the committee to please consider that the people of Mississippi and Louisiana and Alabama cannot afford higher insurance rates, couldn't we possibly consider some kind of catastrophic plan--because we might have hurricanes, but Memphis is going to have an earthquake someday, and Seattle is going to have a tsunami; in 1938, a hurricane 5 slammed into Long Island--we are told no. We cannot even consider such a thing.

So there are many things wrong, and I really cannot correct them. I tried to hold this bill up as long as I could, and everybody decided we needed to have a flood insurance bill, so I said: Fine. Let the bill come to the floor, but I am going to talk against it. That is what I plan to do.

So the purpose of this bill is for the taxpayers to eat $20 billion, to let insurance companies have record profits, and the end result is the people of Alabama, Mississippi, and Louisiana get rates raised every year from now until who knows. And I am supposed to just sit here and say this is a great bill the committee came up with?

So the amendment I am offering--which is not going to fix this bill, but it might fix one problem with this bill--is to establish an ombudsman.

Oh, and this is really ironic, what is in the underlying bill. In the underlying bill, there is a provision that establishes an office to register complaints. It is a flood insurance advocate section of this bill. If I had the section, I would read it. But in the underlying bill, there is a section that talks about that if anybody has a complaint, they could call a 1-800 number and complain.

Now, I have e-mails up to my ceiling in my office from people--not complaining, crying--not complaining, crying because they are getting ready to lose their business or lose their house. But they could, in the underlying bill, call a 1-800 number and make a complaint. But the language is so weak and flimsy, there is really not anything they can do other than complain.

So I have taken that section and strengthened it. That is what my amendment does. It does not just establish a complaint counter. It establishes an office that has some teeth. It establishes an ombudsman's office. We kind of took the language from some of our IG legislation which will allow the establishment of an office with some significant funding attached to it that can review and audit more carefully this National Flood Insurance Program.

I would hope the leaders of this committee would look carefully at this amendment and know that I offer it in very good faith. Again, I do not believe the underlying bill, in this provision just establishing an office to complain, is enough considering the gravity of the situation we are dealing with.

I offer this amendment in good faith. I offer it with Senator Nelson from Florida as a cosponsor.

It establishes an office that would conduct audits to ensure that only flood losses are being allocated to the flood insurance program. It ensures that write-your-own insurers are preserving the necessary documentation to justify their payments, to conduct any other examinations to protect the financial integrity of the program, and to prevent fraud and abuse and conflicts of interest.

Now, again, our Government Accounting Office has already established there is an inherent conflict of interest in the current program. So we are not guessing that there might be a conflict of interest; there is a conflict of interest. It says so according to the GAO:

In certain damage scenarios, the insurer that covers a policyholder for wind losses can have a vested economic interest in the outcome of the damage determination that it performs when the property is subjected to a combination of high winds and flooding. A conflict of interest exists, as it determines whether it says your house was damaged by wind.

So let me go ahead and pay your claim on it, or the insurer says: No, I think it was damaged by flood, which then the taxpayers can pay for, and my insurance company gets off Scot-free. And maybe, just maybe, that might explain why in the worst disaster in the history of the United States, at least recently, taxpayers have to pick up $20 billion and insurance companies file record profits.

Is there anything in this underlying bill that might suggest that we could watch the taxpayers' money a little more carefully? No. They put in an office, a 1-800 number where people might complain.

So instead of the 1-800 number where people might complain, I would like to put in an office where, if something is wrong, people can be criminally prosecuted. If there is fraud, people can be penalized with civil penalties and criminal penalties.

I know this is very tough language, but I am not suggesting this particular document suggests that there is any stealing or any crime. But there is something wrong in our system of justice where somebody goes into a grocery store and steals $100 and gets 3 years in jail, and we have companies that--``fudge'' is the word. They didn't really use the word ``steal,'' but they will fudge a little and take $20 billion out of the Treasury and they get nothing--not a slap on the wrist, not a fine. The only thing that happens is the poor homeowners and businesses get increased premiums. So that is one of the things this amendment does.

I hope my colleagues, whether they vote for the bill--I probably will not vote for the bill unless it is amended substantially, which it may be between now and the time we vote on final passage--but I hope my colleagues will look very carefully at this amendment that I offer with Senator Nelson. It establishes basically an IG ombudsman within this program to make sure the taxpayers don't pick up another $20 billion in costs.

I know people will say: Well, Senator Landrieu, if we don't have this bill, your people won't have flood insurance. Well, I understand that, but our people have--we are between a rock and a hard place. We need flood insurance, but we need flood insurance that we can afford. We would like to believe we have a flood insurance program that operates honestly. I am not sure that we do. So that is what this amendment does, amendment No. 4706.

AMENDMENT NO. 4705, AS MODIFIED, TO AMENDMENT NO. 4707

I have one final amendment to offer. If I can, I would like to send the amendment, as modified, No. 4705, to the desk.

The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.

The clerk will report.

The assistant legislative clerk read as follows:

The Senator from Louisiana [Ms. LANDRIEU], for herself, Mr. Pryor, and Mrs. Lincoln, proposes an amendment numbered 4705 to amendment No. 4707.

Ms. LANDRIEU. I ask unanimous consent to dispense with the reading of the amendment.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment is as follows:

On page 10, strike line 3 and all that follows through page 10, line 16, and insert the following:

(c) Study on Mandatory Purchase Requirements.--

(1) IN GENERAL.--Not later than 6 months after the date of enactment of this Act, the Comptroller General shall conduct and submit to Congress a study assessing the impact, effectiveness, and feasibility of amending the provisions of the Flood Disaster Protection Act of 1973 regarding the properties that are subject to the mandatory flood insurance coverage purchase requirements under such Act to extend such requirements to properties located in any area that would be designated as an area having special flood hazards but for the existence of a structural flood protection system.

(2) CONTENT OF REPORT.--In carrying out the study required under paragraph (1), the Comptroller General shall determine--

(A) the regulatory, financial and economic impacts of extending the mandatory purchase requirements described under paragraph (1) on the costs of homeownership, the actuarial soundness of the National Flood Insurance Program, the Federal Emergency Management Agency, local communities, insurance companies, and local land use;

(B) the effectiveness of extending such mandatory purchase requirements in protecting homeowners from financial loss and in protecting the financial soundness of the National Flood Insurance Program; and

(C) any impact on lenders of complying with or enforcing such extended mandatory requirements.

Ms. LANDRIEU. Madam President, I send this amendment to the desk, which is actually on behalf of myself, Senator Lincoln, and Senator Pryor, that addresses the mandatory coverage requirements in the underlying bill. I hope my colleagues will not think again that this bill only affects the gulf coast because there are some provisions in this bill that are going to affect the entire country.

One of the provisions is, it is going to be mandatory as FEMA maps home and businesses located beyond levees and dams and floodwalls and other manmade structures into residual risk areas. Once these homes and businesses are mapped into such areas, the legislation would require them to purchase flood insurance.

Now, levees and dams don't just exist in New Orleans, although we have quite a few of them because we are a low-lying area. But we have 14,000 miles of Federal levees throughout the country along many rivers. In fact, I see the Senator from North Dakota, and he himself has had very significant experience with one of his towns being demolished, devastated, almost completely destroyed, I think it was maybe 15 years ago, when their levees broke. So he is well aware.

Whether you are in Michigan or Illinois or Missouri or in many places where there are levees and dams, there are 14,000 miles of Federal levees, 79,000 dams, and 22 percent of all counties and parishes have a levee. So it is one out of every four that will be affected by the underlying bill; that is, once FEMA finishes mapping the whole United States, which they are doing and which we need to do. We need to have better maps using new technology to try to determine who is near sea level and who is above sea level and who is at risk. I have no problem with that. But this bill will mandate that everybody behind those levees pays insurance.

So my amendment will basically establish before that requirement goes into place--and, again, it may be necessary--that there be adequate study about the issue. The amendment strikes the mandatory purchase requirement. In its place, it requires the GAO to study the cost, the regulatory, financial, and economic impacts of extending the mandatory purchase on the cost of home ownership, the actuarial soundness to this program, to the local communities, insurance companies, and local land use; the effectiveness of sending such a purchase requirement in protecting homeowners from financial loss and protecting the financial soundness of the program.

Now, I know this was debated in committee. I am not sure that it has gotten a lot of coverage, but my phone has been ringing off the hook from other Senators who are just waking up and saying: Well, Senator, I thought this flood insurance program only affected those places along the coast, and now I am realizing this flood insurance ``reform'' bill is going to raise fees--not necessarily taxes but premiums--on thousands and thousands and thousands of homeowners and businesses throughout the country.

We may have to do that. We may have to do that. But let's do it after GAO has studied and laid out what the impact and ramifications are, and let's do it in a system that is fair so it is not just the homeowners who have to pay premiums, the taxpayers who bail them out when there is a problem, and insurance companies that can't lose money under the current system. That is basically the system that we have.

So, again, 43 million people are affected by the underlying bill with this new provision. Twenty-two percent of all counties in the country, and in our case parishes, have levees; 79,000 dams and 14,000 miles of Federal levees.

So these are the two amendments that I offer. This has been done in a package with Senator Wicker and Senator Vitter. We have offered a package of amendments trying to fix and expand wind coverage to this bill, to lift the coverage limits.

Again, a big problem with this bill is it has not kept pace with inflation and only covers homes valued up to $225,000. That might sound like a lot, but it is not keeping pace with inflation. Our amendment would lift the coverage to homes over $325,000.

Then my ombudsman amendment and this mandatory coverage reprieve would be the other amendment.

Mr. DORGAN. Madam President, I wonder if the Senator would yield for a question.

Ms. LANDRIEU. Yes, I will.

Mr. DORGAN. The last amendment that the Senator sent to the desk, my understanding is that it is an amendment very similar to something I was intending to offer, but I am not certain I understand your amendment, so if I could just work through it with you.

My concern about the underlying bill with respect to the mandatory coverage areas is that it requires the expansion of areas of special flood hazards to include areas of residual risks, including areas that are behind levees, dams, and other manmade structures.

Is your amendment designed to strike that provision?

Ms. LANDRIEU. It doesn't strike the mapping requirement. It doesn't strike the mapping requirement, but it strikes the mandatory coverage provision until there is a study done about what the economic impact will be to people living behind those levees and dams.

Mr. DORGAN. But, if I might inquire further, is it the intention of the amendment to provide that there shall not be mandatory requirements on all of these levees, dams, and other manmade structures, which the underlying bill would require?

Ms. LANDRIEU. Yes, it does. That is the intent of the amendment.

Madam President, there are many Senators who feel as though this is a very abrupt requirement. They are not sure of what the outcome of these premiums might be to people who are already struggling with higher costs. And because there is no estimate to my knowledge, we thought it would be better to offer an amendment that would basically require a study so more discussion can be had, and then perhaps later we could insist on mandatory coverage or phase it in as is appropriate. But is that the Senator's concern?

Mr. DORGAN. Madam President, I believe I looked at the amendment, and it does not strike what is in the underlying bill--all of section 7--which I was intending to do with my amendment. I didn't quite understand the consequences of striking just a portion of it. But if the Senator from Connecticut who is on the Senate floor--when the Senator from Louisiana concludes, I would like to make a couple of comments about the reason for my concern about this matter, and perhaps we can visit. If our amendments have exactly the same impact, there is no reason for me to offer mine.

Ms. LANDRIEU. I would be happy to. I appreciate the Senator raising it. I will review the way this amendment is structured. But, again, I would be happy to work with the Senator so we could offer something together because there are many Senators who are concerned, and rightly concerned, about this particular section.

If the Senator would allow me to finish, I will be happy to yield the floor for further discussion because I am about ready to finish my remarks. There are no votes scheduled. There are other amendments that are going to be offered. But, again, a package has been put together by several Senators, both Republicans and Democrats.

I have to say again, in conclusion, I don't like the underlying bill. I did a great deal to keep this bill bottled up in committee for over 2 years. But I have been convinced the better way to proceed is to have this bill come to the floor, which is what I allowed with Senator Vitter and Senator Wicker, as long as we can offer amendments and have some time to air our grievances. The chairman of the committee and the ranking member of the committee have been men of their word and allowed us to do so.

So at some point, Madam Chair, I would request that the Senate vote on these amendments together as a package, but individually the one regarding wind, the one regarding the increased coverage, the one regarding the ombudsman, and the amendment regarding the mandatory coverage, and then the additional coverage options. So there are five amendments in this package that we have been working on. At some point, when that can be agreed to, we can move this bill forward.

In the meantime, I will be happy to work with my colleague from North Dakota to see if the language he has suggested is the same as ours. If not, perhaps we can modify our amendment to accommodate that, or perhaps he will offer the amendment with our acquiescence.

With that, I yield the floor to my friend from North Dakota.

BREAK IN TRANSCRIPT

Ms. LANDRIEU. Will the Senator yield?

Mr. DORGAN. Yes.

Ms. LANDRIEU. I don't know how this will be resolved. I certainly can appreciate that, and I agree with the Senator, because one size doesn't fit all, which has been part of the problem with this bill--that it is pushing everyone into a one-size-fits-all requirement. It is not the appropriate response to our situation. I hope the Senator will consider either modifying the amendment I have laid down, or I would be happy to actually support a narrower amendment that any communities that can establish that they have created protection that is over and above the average, which is 100-year flood protection, might not be subject to this requirement.

As the Senator knows--because he is chairman of the Appropriations Committee that funds levees in the country, so he most certainly is one of the leading experts--the standard in America right now is not sufficient, and it is 1 storm out of 100. Very few communities can boast of being as protected as his community can. I suggest that most certainly I would not object as the main author of the amendment, but there are several cosponsors. I am sure we could work something out.

BREAK IN TRANSCRIPT

AMENDMENT NO. 4705, AS FURTHER MODIFIED

Ms. LANDRIEU. Mr. President, I ask unanimous consent that amendment No. 4705 be modified further with the changes at the desk and that Senators DORGAN, LINCOLN, and PRYOR be added as cosponsors.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment, as further modified, is as follows:

On page 9, strike line 12 and all that follows through page 10, line 16, and insert the following:

(c) Study on Mandatory Purchase Requirements.--

(1) IN GENERAL.--Not later than 6 months after the date of enactment of this Act, the Comptroller General shall conduct and submit to Congress a study assessing the impact, effectiveness, and feasibility of amending the provisions of the Flood Disaster Protection Act of 1973 regarding the properties that are subject to the mandatory flood insurance coverage purchase requirements under such Act to extend such requirements to properties located in any area that would be designated as an area having special flood hazards but for the existence of a structural flood protection system.

(2) CONTENT OF REPORT.--In carrying out the study required under paragraph (1), the Comptroller General shall determine--

(A) the regulatory, financial and economic impacts of extending the mandatory purchase requirements described under paragraph (1) on the costs of homeownership, the actuarial soundness of the National Flood Insurance Program, the Federal Emergency Management Agency, local communities, insurance companies, and local land use;

(B) the effectiveness of extending such mandatory purchase requirements in protecting homeowners from financial loss and in protecting the financial soundness of the National Flood Insurance Program; and

(C) any impact on lenders of complying with or enforcing such extended mandatory requirements.

Ms. LANDRIEU. Mr. President, if this amendment does not pass, significant portions of many States will be required to have flood insurance which has never been required before. The underlying bill says everywhere there is a dike, a dam, or a levy, regardless of the situation behind the dike, dam, or levy, regardless of how strong the dike, dam, or levy is, you will be required to have flood insurance. That is a very different jump from where we are today. Our amendment strikes that language and instead says there shall be a study and evaluation to make better determinations.

This is a tough issue because we were behind levees that broke. It would have been a good idea, but this is a tax and fees on people without the appropriate study. That is what our amendment does.


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