Press Releases

For Immediate Release: November 5, 2003

Frank Decries Stalled Action on Flood Insurance Reform

WASHINGTON--Congressman Barney Frank, Ranking Member of the House Financial Services Committee, today expressed his extreme disappointment at Congress’ failure to move swiftly to enact much-needed reforms to the National Flood Insurance Program (NFIP).

“The first thing Chairman Michael Oxley and I did in this Congressional session was to work successfully to reauthorize the National Flood Insurance Program for one year,” said Rep. Frank. “We did that with the understanding that we would legislate reforms to the program. Our Committee did this and marked up a significantly improved bill. Now, near the end of the session, the legislation is stalled.”

The 34-year-old program, administered by the Federal Emergency Management Association (FEMA), provides affordable coverage against flood disasters for homeowners, renters, and business owners in floodplain areas. The program provides more than $600 billion in coverage for approximately 20,000 communities. Pending bipartisan legislation, H.R. 253, introduced by Reps. Doug Bereuter, (R-Neb.) Earl Blumenauer (D-Ore.), would reform and reauthorize NFIP through 2008. The bill was overwhelmingly approved by the Financial Services Committee in July. The program will expire on December 31, 2003 unless Congress approves the bill.

While H.R 253 would raise the premiums on loss-prone properties after four flood events it also protects homeowners’ rights by, in some circumstances, allowing states and localities to modify homes to prevent further losses or purchase residents’ homes to get them out of flood-prone areas. Residents who choose to stay in flood-prone areas without accepting one of these options would have to pay true risk-based rates for flood insurance on these properties instead of the subsidized reduced rates they now enjoy. These properties make up only 1% to 2% of NFIP coverage but cost taxpayers an estimated $200 million annually and account for at least 25% of claims.

Rep. Frank added, “It would be fiscally unwise and environmentally irresponsible to pass a long-term extension to the current program instead of revamping it.”

Groups supporting these reforms include America’s Community Bankers, the Association of State Floodplain Managers, the Coast Alliance, Council for Citizens Against Government Waste, Mortgage Bankers Association, the National Taxpayers Union, National Wildlife Federation, the Ocean Conservancy, Taxpayers for Common Sense Action, and U.S. PIRG.

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.