Today, by a vote of 50-9, the Financial Services Committee approved H.R. 4100, the Louisiana Recovery Corporation Act.  The legislation, introduced by Capital Markets Subcommittee Chairman Richard H. Baker (LA) on October 20, 2005, would offer financial stability to property owners and facilitate community rebuilding in hurricane-ravaged Louisiana.

The Louisiana Recovery Corporation Act would establish the Louisiana Recovery Corporation (LRC) that will work with willing property owners to purchase residential and commercial property, relieving hurricane victims of their mortgage obligations up to $500,000 and transferring title to the LRC.  Bonds issued by the Treasury Department would fund the acquisitions.  The LRC would then make necessary infrastructure repairs before selling the property to private developers through a competitive bidding process.  

Rep. Baker said, "This is a major step toward providing urgently needed financial options to tens of thousands of Louisiana citizens who right now face terrible choices, between continuing to pay the house note on a destroyed home they will never live in again or accepting foreclosure and an impaired credit record.  It's also a step toward rebuilding communities through the maintenance of a functioning market system, safeguarding a lending industry that will be essential for financing recovery efforts, and utilizing private sector resources to provide a fiscally responsible return on the taxpayer's investment.  I thank Chairman Oxley and Ranking Member Frank and all my committee colleagues who joined in telling the people of Louisiana that we're doing all we can and as quickly as possible to assist them in their time of need."

Following Hurricanes Katrina and Rita, tens of thousands of Louisiana property owners face uncertainty about whether they can or should rebuild.  For those with mortgages, the 90-day forbearance period most banks granted borrowers has or will soon expire.  Those who own their property outright also are in doubt about insurance and other payments being sufficient to rebuild.

The LRC would be comprised of a seven member-board.  Four board members would be appointed by the President and three would be nominated by the Governor of Louisiana.  This board will oversee the redevelopment of Louisiana damaged by the Hurricanes based on plans made at the local level.  

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Committee Approves Baker’s Louisiana Recovery Corporation Act