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Homeowners' Defense Act of 2007

Location: Washington, DC

HOMEOWNERS DEFENSE ACT OF 2007 -- (House of Representatives - November 08, 2007)


Mr. PUTNAM. Mr. Chairman, I offer an amendment.

The Acting CHAIRMAN. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 15 offered by Mr. Putnam:

Page 14, line 9, strike ``and''.

Page 14, line 14, after the semicolon insert ``; and''.

Page 14, after line 14, insert the following new subparagraph:

(C) the State or regional reinsurance program enters into an agreement with the Secretary, as the Secretary shall require, that the State will not use Federal funds of any kind or from any Federal source (including any disaster or other financial assistance, loan proceeds, and any other assistance or subsidy) to repay the loan;

Page 20, line 12, after the period insert the following: ``The Secretary may not accept any repayment of any loan made under this title that does not comply with the agreement for such loan entered into in accordance with section 202(b)(1)(C).''.

The Acting CHAIRMAN. The gentleman from Florida is recognized for 5 minutes.

Mr. PUTNAM. Mr. Chairman, it's good to be here joining my Florida colleagues on an issue of such great importance not only to the State of Florida, but to the whole country.

As we discussed during committee, I believe there is a role for a public-private partnership in managing risk. Whether it's a hurricane on the gulf coast, an earthquake or wildfire in California, tornadoes across the central plains, the truth of the matter is any catastrophe is a terrible experience for a State, a business, or certainly a family to endure.

But we're not here to just talk about any catastrophe. We're here to talk about mega-catastrophes, or mega-disasters, the kind of the scale and the scope that displace entire towns, entire regions for months, if not years.

This amendment, in my view, offers a commonsense protection for the taxpayers who are not affected by that particular disaster in holding participating States accountable for any liquidity or catastrophic loans that they may be eligible to receive should they experience this type of disaster that the private marketplace cannot cover, in which case they may seek this temporary financial assistance.

The amendment says that as a condition for a State to receive a loan, it is required to agree not to repay with Federal funds, and the Secretary of the Treasury has to enforce that agreement. If a State qualifies for a loan and then proceeds to get a liquidity or a catastrophic loan, they have to pay it back with State funds. They can't transfer Federal disaster money and then use that as a way of repaying what the Feds have given them. That is, essentially, double dipping.

[Time: 17:30]

I believe this amendment goes a long way to ensure that a State uses caution when entering into a loan for which that State is solely responsible for repayment.

Let me state clearly that this legislation we are debating is not meant to, nor should it ever, alleviate a State of its fiduciary responsibilities, nor should it replace the private marketplace. Rather, it is meant to assist in those times of extreme damage and ruin when a State or the private market cannot meet the State's or region's capacity. I encourage any State that decides to participate in the consortium or has a qualified reinsurance program to work beyond the bill's scope and promote greater mitigation, actuarially sound rates, and fiscal responsibility.

I recognize that some of my colleagues have concerns about this, but I believe we are all trying to find the right balance. I believe that the sponsors of this have done their very best to find that right balance and move this public policy forward to the House floor, and I appreciate that. One of the things that make our country great is the way we all rise to the occasion in solidarity with our fellow citizens who are suffering when a major disaster strikes. Rather than expect the Federal Government to save a State from all such liability, we should be encouraging those located in, high-risk, catastrophic areas to be better prepared for the inevitable. This legislation takes an important step forward toward that, and instead of expecting the Federal Government to take on that entire responsibility, we are working towards that partnership that allows for States to voluntarily participate in the program and finally bring them to the table as a true stakeholder.

Mr. Chairman, I yield back.


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