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A conservative Republican congressman has proposed the federal government create a non-profit, federally-owned corporation, dubbed the Louisiana Recovery Corporation that would be authorized to buy out homeowners in the affected areas and to negotiate with lenders to pay off the balance of those mortgages.from LP Blog The official blog of the Libertarian Party
If passed, this House bill, proposed by Rep. Richard H. Baker, would make the federal government the largest landowner in New Orleans for at least a few years. This government corporation would be modeled after the Resolution Trust Corporation that was created by Congress in 1989 to bail out the savings and loans industry in wake of the S & L scandal. Baker's plan has even drawn support from liberal Democrat, Rep. William J. Jefferson who stated explicitly that he believes the bill's passage is important.
Some members of Congress are concerned with the potential cost to taxpayers from Baker's plan. The proposed non-profit corporation would offer to buy out houses from homeowners, at no less than 60 percent of their equity before Hurricane Katrina, while lenders would be offered up to 60 percent of what they are owed, according to the New York Times. The properties would then be sold to developers. The government corporation could end up spending up to $80 billion, according to current estimates. Baker admitted he could not promise that the corporation would break even financially. He added, "We'll pay back as much as possible."
A group of representatives were unsuccessful in mandating that the corporation break even financially by incurring revenues from developers. Rep. Jeb Hensarling (R - Texas), stated, "We need to ensure that taxpayers are not asked again two or three years from now to pay for the same disaster."
The passage of the bill is still uncertain. The Senate is expected to begin debate on the bill once Congress reconvenes. The White House has show some signs of support for the bill, with the president's Gulf Coast recovery czar, Donald E. Powell, stating, he "was more comfortable" with the proposal.