The troubled U.S. flood insurance program would be temporarily extended for seven months under legislation introduced in Congress Thursday, buying time for lawmakers to work out deep disagreements over reforming the debt-burdened program.
The short-term extension would prevent the National Flood Insurance Program (NFIP) from expiring as scheduled on Sept. 30. Expiration could further unsettle already fragile U.S. housing markets.
With Texas recovering from Hurricane Ike and the Midwest from heavy flooding, Massachusetts Democratic Rep. Barney Frank introduced the extension bill in the House, saying it would give negotiators time to complete work on a permanent extension and “assess the implications of the 2008 hurricane season.”
“I am disappointed that a permanent solution is not before us, but we can and should extend the program while we work on that final bill,” said Frank.
It was unclear whether the Senate would agree to the extension, which would move into 2009 any final action on the program insuring millions of homeowners in flood-prone areas.
Big insurers with a stake in the issue include Allstate Corp., Nationwide Financial Services Inc., Fidelity National Financial Inc., Travelers Cos. Inc. and Hartford Financial Services Group Inc.
Congress has been unable to agree on whether to add wind damage coverage to the 40-year-old NFIP, and whether to forgive its $18-billion debt.
The program has been swimming in red ink since Hurricane Katrina slammed into the Gulf Coast in 2005. The devastating hurricanes of that year and 2004 revealed deep problems in the program, but efforts to fix it have been unsuccessful.
The Senate voted in May to extend the program until 2013 and forgive its debt. The House also has voted to extend the program, but added a controversial wind damage coverage clause to its bill and refused to forgive the debt.
On Tuesday, Alabama Sen. Richard Shelby, the senior Republican on the banking committee, said the House would be “making a mistake” if it did not back down and accept the Senate’s terms in negotiations over the program.
(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)
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