Federal Disaster Relief Efforts Repeatedly Falter

Washington, D.C. is much better at creating disasters than it is at avoiding them or dealing with them once they occur.

Repeatedly, federal efforts to respond to hurricanes, floods and wildfires get hung up over unrelated political issues.

With the number and severity of natural disasters seemingly increasing each year, official Washington has responded in its usual way – with gridlock.

These days, policymakers in our nation’s capital cannot even agree on whether the disasters are the result of climate change or whether humans are causing the climate change.

“The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive,” Donald Trump said back in 2012. He’s now president of the United States and is still denying that climate change is a problem.

And when disasters do strike, efforts to help those directly affected get mired in politics and stall.

The flood insurance program is going broke. Direct disaster aid packages get stuck over such issues as funding for immigration control.

The Congressional Budget Office reported in April that the annual cost of natural disasters has reached $54 billion in the U.S.

Still, policymakers have been unable to do little but respond to the disasters on an incremental basis.

National Flood Insurance

The National Flood Insurance Program was created to provide affordable insurance to property owners and encourage communities to adopt flood plain management rules.

But authorization for the program has expired and congressional attempts to update it have failed.

Between the end of 2017 and the end of May 2019, 10 short-term authorizations that have allowed the program to continue have been enacted. The Congressional Research Service reported in May that NFIP claims for Hurricanes Harvey, Irma and Maria amounted to more than $10.1 billion as of Jan. 31, 2019, while NFIP claims for Florence and Michael amounted to more than $850 million as of that date.

“This haphazard approach to legislating puts communities at risk and undermines the health of our housing market,” House Financial Services Chairwoman Maxine Waters (D-Calif.) said in March, as the panel tried yet again to find a way to renew the program.

Committee ranking Republican Patrick McHenry of North Carolina has called for changes to the program that would include “better data, increased transparency, better technology and more innovation.” He has also noted that the program is seriously in debt and said he was concerned that Democratic changes to the program would simply forgive the debt without any assurance that it would not pile back up.

Meanwhile, credit unions are watching as a program that’s crucial to homeowners operates with fits and starts.

“It is vital that flood insurance premiums remain affordable so that families in those parts of the country where flood insurance is required are not deprived of the opportunity to own a home,” CUNA President/CEO Jim Nussle wrote in a March letter to lawmakers.

He said the solution is clear – reforming the federal flood insurance program and allowing it to operate alongside a healthy private flood insurance market.

NAFCU has also pushed for changes to the flood insurance program, while at the same time it is urging Congress not to let the program temporarily expire.

The NCUA has adopted rules that would allow credit unions to accept private flood insurance as long as it meets certain standards; that rule goes into effect on July 1.

Disaster Relief

Congress and the president generally provide disaster relief to communities on an ad hoc basis; when disaster strikes, Congress provides the money to help communities recover.

Or tries to.

Consider the most recent effort to provide $19.1 billion in direct relief in the wake of disasters in California, Georgia, Florida, Nebraska, Iowa, North Carolina, South Carolina, Hawaii, Texas, Missouri, Alabama and Puerto Rico.

The money was intended to help communities rebuild following hurricanes, wildfires and flooding. While none of the funds would have gone directly to credit unions, the money was intended to help rebuild communities devastated by the disasters.

For months, the legislation was bogged down by hot-button issues. President Trump demanded that the supplemental spending bill contain funds for border security, and he railed against any additional aid flowing to Puerto Rico, which is still recovering from the hurricanes that devastated the island.

Trump lost those two fights, but a House-Senate conference report was not passed before members of Congress left for Memorial Day. And so, the bill languished, as conservative Republicans objected to its passage by unanimous consent.

This scenario has played out many times, and efforts to establish a more efficient system for appropriating money to provide disaster assistance have failed.

NCUA Disaster Assistance

The NCUA provides disaster assistance to credit unions and has, with other financial regulators, developed guidance on how examiners should deal with financial institutions that have been affected.

For instance, in September, the agency said low-income credit unions that had been damaged by Hurricane Florence were eligible for urgent needs grants of up to $7,500 to restore operations.

The funds could be used to repair or replace property, machinery, equipment, fixtures and leasehold improvements. The funds could also be used to resume operations such as reconstructing data or reestablishing network systems.

And the agency encourages credit unions to be flexible in dealing with members affected by disasters.

In December 2017, four federal financial regulatory agencies, including the NCUA, attempted to provide uniform guidance on how examiners should deal with institutions affected by disasters.

“It is essential that the NCUA clearly understand the financial and operational condition of each credit union affected by a major disaster and the effectiveness of each credit union’s business continuity plan,” the NCUA said.

The guidance gives examiners the flexibility to consider whether problems at a credit union are the direct result of the disaster and then to deal with them.

In addition, administrative actions may not be necessary to deal with problems at those institutions “provided credit union management has implemented prudent planning and policies, and is pursuing realistic resolution of the issues.”

Trade Group Disaster Relief

While federal disaster relief efforts falter, credit unions take things into their own hands, Gigi Hyland, executive director of the National Credit Union Foundation, said.

“When a major natural disaster occurs, the National Credit Union Foundation works directly with state credit union leagues or foundations to assess the immediate need,” she said. The foundation has an online disaster relief center, CUAid.

“Through CUAid, credit union organizations can quickly support their fellow friends in need by helping them to recover quickly when disasters strike,” Hyland said. “Whether it’s a credit union employee, volunteer or board member, by helping those individuals to recover, they can get back to serving members at the time when they need it most.”

“NAFCU works hard to make sure we are available 24/7 for our members, especially during times of distress and need,” NAFCU EVP and COO Anthony Demangone said.

NAFCU has a disaster relief guide for credit unions. In addition, the trade group helps connect members with federal assistance and offers support for those credit unions.

“We are always exploring new ways to better assist credit unions in need of assistance,” he added.