U.S. Sen. Bill Nelson has asked the U.S. Treasury to provide assurances to private market lenders that any loans they make in Florida would be repaid at fair market interest in the event of a catastrophe.
Nelson, however, said obtaining such assurance might not be easy given the recession, according to The Associated Press.
Meanwhile, Nelson is also pushing his legislation that would provide federal aid to cover property losses in the event of major catastrophe in Florida.
Nelson’s bill would allow the federal government to step in with loans to the state’s Catastrophe (CAT) Fund, which has a hurricane catastrophe obligation of $28 billion, but the capacity to pay only $10 billion in claims.
The Atlantic hurricane season begins June 1.
State officials have been searching for solutions to the problem.
The federal legislation, sponsored in the House by U.S. Rep. Ron Klein, of Boca Raton, passed that chamber in late 2007, but was blocked in 2008 in the U.S. Senate by Republican lawmakers and President Bush threatening a veto.
Nelson said he thinks the legislation will enjoy support from the Obama Administration. Last year, then-Sen. Barack Obama was a chief cosponsor, along with then-Sen. Hillary Clinton, who is now Secretary of State.
Critics have claimed it would be a taxpayer bailout of Floridians who build houses where hurricanes can destroy their property or of Californians whose houses have been burned to cinders.
But Nelson said taxpayers nationwide are already paying the costs of recovery and rebuilding after natural disasters. For Hurricanes Katrina, Rita and Wilma taxpayers have put up some $94.8 billion.
“We need a more disciplined, structured plan for providing federal assistance following any major natural disaster,” said Nelson.
Nelson’s legislation would also allow multiple states to join together to help pay for each others’ disaster costs. That’s in addition to a provision that would provide them with low-interest federal loans when damages exceed the resources of a state-run catastrophe fund.
Besides the bill to establish a national backstop for state natural catastrophe insurance programs, Nelson said other legislation will be offered this spring, including bills to allow insurance companies (other than life insurance companies) to make tax deductible contributions to a tax-exempt policyholder disaster protection fund for the payment of policyholders’ claims arising from certain catastrophic events, such as windstorms, earthquakes, fires, or floods and allow individual and business taxpayers a tax credit for 25 percent for hurricane and tornado mitigation property expenditures, up to $5,000 for any taxable year.
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