Homeowners' Defense Act of 2007

HOMEOWNERS DEFENSE ACT OF 2007

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Mrs. CAPITO. Mr. Speaker, valid questions have been asked about this, and this bill could make West Virginians and other taxpayers across America liable for what the bill says itself, hundreds of billions of dollars in loans and subsidized insurance to State insurance companies that are displacing the private sector and charging inadequate rates.

It is unclear how much this bill will actually cost the taxpayers. The Congressional Budget Office has said at least tens of millions of dollars if fully implemented, and it could have been higher by several magnitudes if they thought that States would actually use the provisions of the bill with any meaningful frequency. Now the manager's amendment has added up to 200 billion more dollars in taxpayer exposures that would not be repaid. There is no sunset on this bill, and this is a permanent liability for the taxpayers. The hard facts are that the bill itself recognizes that taxpayers could be asked to cough up enormous sums of taxpayer dollars.

Another consideration is the environment. The National Wildlife Foundation and the Florida Coalition for Preservation oppose this bill because they say it ``would result in continued encouragement of risky development in our Nation's coastal areas and floodplains. With more development in these environmentally sensitive areas, this bill could lead to more loss of life, property, and of wildlife habitat. The safety of our citizens should be the number one priority of any government program dealing with natural disasters.

The administration says that H.R. 3355 would ``displace the private market,'' ``clearly result in a subsidy for insurers, State insurance programs, and their policyholders,'' ``undermine economic incentives to mitigate risks,'' ``be fiscally irresponsible as the Federal Government could expect to face steep losses in certain years,'' and that ``financing these losses would require Federal taxpayers to subsidize insurance rates for the benefit of those living in high-risk areas.

Mr. Speaker, this amendment simply says, if we are going to put taxpayers on the hook for billions of dollars in loans Treasury will be forced to give under this bill, then we should also make a commitment that homeowners who do not live on the coast will not have to pay for this subsidy in the form of increased insurance rates. One group of taxpayers should not be compelled to cover the inherent costs of risky, high-priced coastal development for developers.

Without this amendment, homeowners, who are taxpayers too, would be hit twice. First, they would essentially guarantee these loans in the event States default, and according to Treasury, ``it is more than likely that there will be significant pressures to forgive outstanding debt in the case of a huge catastrophe'' and that ``taxpayers nationwide subsidize insurance rates in high-risk areas, which would be both costly and unfair.''

Second, the extension of these loans will implicitly subsidize high-risk areas at the expense of other homeowners. When a State repays these loans, it could assess a fee or tax on all homeowners in the State, including those who don't receive the benefit of this subsidy. Also, the State insurance companies that stand to gain from this bill squeeze out private insurers, meaning less competition for consumers, higher prices, and fewer choices.

On October 10, a Wall Street Journal editorial put it this way: Congress is volunteering ``middle-class taxpayers nationwide as the financial backstop for beachfront properties.''

Mr. Speaker, this bill does nothing to address the development and zoning that could be encouraged with these new programs. We can add mitigation and other requirements. The fact is, if the Federal Government is making something cheaper, you're probably going to buy more of it and do more of it.

Today, with this bill, we are giving a gift to coastal development and dysfunctional State agencies at the expense of Middle America. Homeowners all over the country have been hit hard lately; and for the millions of taxpayers who do not live in these areas, this bill would be another blow. My amendment simply ensures that we will be mindful of the vast majority of homeowners and taxpayers who, like West Virginians, do not stand to benefit from this bill at all.

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