As Seen in today's NYTimes:
HERE -
[Paraphrased]
For Sale: One major American city, in need of repairs. This prime real estate is being offered to DEVELOPERS ONLY - for further inquiries, please contact the Republican National Committee's corporate contributions office.
Representative Richard H. Baker, a Republican from suburban Baton Rouge who derides Democrats for not being sufficiently free-market, is the unlikely champion of a housing recovery plan that would make the federal government the biggest landowner in New Orleans - for a while, at least. Mr. Baker's proposed Louisiana Recovery Corporation would spend as much as $80 billion to pay off lenders, restore public works, buy huge ruined chunks of the city, clean them up and then sell them back to developers....
So...here we go...
Desperate for a big-scale fix to the region's huge real estate problem, Louisiana officials and business leaders of all stripes - black and white, Republican and Democrat - have embraced this little-known congressman and his grandiose plan, calling its passage crucial. While the White House has yet to sign on, there are already signs that some Congressional leaders are interested in pursuing it; Mr. Baker said administration officials had not rejected it outright.
The passage of the bill has become increasingly important to Louisiana because the state lost out to the greater political power of Mississippi last month when Congress passed a $29 billion aid package for the Gulf states region. The package gave Mississippi about five times as much per household in housing aid as Louisiana received - a testimony to the clout of Gov. Haley Barbour of Mississippi, a former Republican National Committee chairman, and Senator Thad Cochran, chairman of the Appropriations Committee.
Louisiana officials say they were forced to go along with the appropriation, because they may not have received an aid package at all otherwise...
Okay, there's the rig and the vig. Here's the gig:
Under his plan, the Louisiana Recovery Corporation would step in to prevent defaults, similar in general nature to the Resolution Trust Corporation set up by Congress in 1989 to bail out the savings and loan industry. It would offer to buy out homeowners, at no less than 60 percent of their equity before Hurricane Katrina. Lenders would be offered up to 60 percent of what they are owed.
To finance these expenditures, the government would sell bonds and pay them off in part with the proceeds from the sale of land to developers.
Property owners would not have to sell, but those who did would have an option to buy property back from the corporation. The federal corporation would have nothing to do with the redevelopment of the land; those plans would be drawn up by local authorities and developers.
Now, the way I see, the developers have already calculated how much equity that home-owners have - on average - in various areas that have been intentionally neglected in the so-called federal recovery effort. And the banks - lenders - have already calculated how much they want to recovery from loans on properties across the same areas. So...if lenders have done their calculations and are for this...and developers have done their calculations and are for this...
How much ya wanna bet that there's a bias that's built into this proposal that'll mean that developers profit, lenders do alright, and the profit in the process comes off the backs of the little guy, the home-owners.