Winner 2013 Webby Awards for Best Political Website
Top Banner, Site wide
Apr 18, 2014

 Choose a size
Text Size

Top Leaderboard, Site wide

The Energy Revolution Is In Reverse




The Divide


Truthdig Bazaar
The Mitfords

The Mitfords

By Charlotte Mosley
$26.37


Peace Be Upon You

By Zachary Karabell
17.79

more items

 
Report

Political Football Over Disaster Relief: Another Argument for Public Banking

Email this item Email    Print this item Print    Share this item... Share

Posted on Jan 4, 2013
The National Guard (CC BY 2.0)

New Jersey National Guard troops assist displaced residents in Hoboken in late October.

By Ellen Brown, Web of Debt

(Page 2)

For federal aid programs:

* Victims are required to first apply for loans before qualifying to apply for FEMA aid, placing the economic cost of the disaster on the individual victim.

*  Aid programs favor those who can take on debt, further exacerbating pre-existing inequalities among residents.

*  Federal programs are inflexible and fail to meet even basic individual and community needs.

Advertisement

Square, Site wide
*  Relief options are not clearly communicated or well understood. Policies are so complex that even lawyers are confused.

Except for temporary living costs, FEMA grants are accessible only after the homeowner, renter or business applies for an SBA loan.  If the applicant qualifies for a loan, he or she is not likely to be provided further FEMA aid. Disaster loans are made through FEMA on the basis of credit history, and favorable interest rates are available only if the applicant cannot get credit elsewhere. That means favorable interest rates are offered only if an applicant cannot qualify for credit through a commercial bank.  When the banks got in trouble themselves, the Fed dropped the Fed funds rate (the rate at which they borrow from each other) to nearly zero.  But no such relief is extended to disaster victims.

There is no FEMA money for small businesses other than loans, and businesses have difficulty taking on debt when they don’t know when they will be able to reopen. The small business application is reported to be at least 30 pages long, and is often difficult to complete because flooding has destroyed much of the required paperwork.

Many homeowners were strained by mortgages that were underwater prior to the storm, and their properties have now depreciated to the point of having no market value at all.  They have no choice but to try to rebuild, but how can they take on more debt?  The focus on lending, says the report, moves money from the victims of disaster into the hands of loan servicers, who make enormous profits off these loans.

A Better Model: Disaster Relief in North Dakota

That is the state of disaster relief in most parts of the country, but one state has developed a different model – North Dakota. North Dakota is the only state in the union to have its own state-owned bank. The Bank of North Dakota (BND) has a mandate to serve the public interest, and it has no shareholders other than the state itself.  That gives it wide-reaching flexibility in emergencies, allowing it to act quickly to catalyze and coordinate resources.

The BND’s emergency capabilities were demonstrated in 1997, when record flooding and fires devastated Grand Forks, North Dakota. The town and its sister city, East Grand Forks on the Minnesota side of the river, lay in ruins. Floodwaters covered virtually the entire city and took weeks to fully recede. Property losses topped $3.5 billion.


New and Improved Comments

If you have trouble leaving a comment, review this help page. Still having problems? Let us know. If you find yourself moderated, take a moment to review our comment policy.

Newsletter

sign up to get updates


 
 
Right 1, Site wide - BlogAds Premium
 
Right 2, Site wide - Blogads
 
Join the Liberal Blog Advertising Network
 
 
 
Right Skyscraper, Site Wide
 
Join the Liberal Blog Advertising Network
 

A Progressive Journal of News and Opinion   Publisher, Zuade Kaufman   Editor, Robert Scheer
© 2014 Truthdig, LLC. All rights reserved.