Congress has given the green light to another increase in the Federal Emergency Management Agency's borrowing authority to pay flood claims from Hurricane Katrina, but lawmakers are growing increasingly wary of this open-ended liability.

The House last week gave its approval to legislation increasing FEMA's borrowing authority to $20.8 billion to pay Katrina-related flood insurance claims, but not before several lawmakers called for any further increases to include significant reforms to the program.

Overall, FEMA has estimated that total flood claims from the 2005 hurricane season will be about $23.5 billion, likely meaning there will be another call for increasing the agency's borrowing authority.

The House bill, passed by a voice vote, differs from the Senate version, which increases the borrowing authority to $21.2 billion. House lawmakers amended the bill to reduce the limit and sent it back to the Senate with the hope that reforms of the National Flood Insurance Program will be added.

“I will not support a further grant of increased borrowing authority without dealing with the reforms,” said Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee.

Rep. Frank said reform efforts in the Senate appear to be more rhetorical than substantial. “Their preference for reform seems very abstract,” he said of the Senate.

Indeed, if future extensions of FEMA's borrowing authority do not include reforms aimed at reducing the flood program's need to borrow, members of Congress say they will balk at further requests.

“If this imperative reform effort falters, we will oppose any future increases to FEMA's borrowing authority that are not fully offset,” said Reps. Mike Pence, R- Ind., and Jeb Hensearling, R-Texas, in a letter to new House Majority Leader John Boehner, R-Ohio, and Speaker Dennis Hastert, R-Ill.

Reps. Pence and Hensearling said that with the overwhelming debt being incurred by the NFIP likely never to be repaid, it should be considered the same as any other federal spending program and require an offsetting cut elsewhere in the budget.

However, while reforms have been proposed (see “Checklist”), not everyone is on board. Rep. Candice Miller, R-Mich., for example, took issue with increased mandatory coverage requirements, noting the proposed change would require thousands of homeowners in her district to buy insurance when Michigan has already paid roughly $138 million in flood insurance premiums since 1978, with claims amounting to less than $38 million.

Increasing the subsidy those policyholders already provide, she argued, would be unfair. “If a private insurer tried to do that, they'd be dragged in front of our state insurance commissioner and have to beg to keep their license,” she said.

Special Reports /

Congress Growing Restless With Flood Claim Overflow

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