Dec 16, 2013|
Congress won't vote on the new flood insurance until 2014. This is the law that would make thousands of Louisiana homes unaffordable and unsellable. Is the delay good news or bad? We were joined Dr. Ivan Miestcovich, Director and Associate Professor of Finance and Director of the Institute for Economic Development and Real Estate Research at University of new Orleans.
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Automatically Generated Transcript (may not be 100% accurate)
Well we have done many shows on a big concern here in Louisiana and all. I think at about thirty states and around the country and that is flood insurance premiums going through FEMA. As yet to draw up new maps boom when they dude Barry is a threat to the premiums. Will become so high bid even those that can't afford them they won't be able to sell their belts when they get -- leave emitting. Won't be able to afford the premiums in the first place. Figures are but Warren have. Or about 400000. Plus people. And we do going to be affected and we just talked to a Michael Hecht -- -- we coups. Fighting as porous and congress. Should they've got about thirty states and drawing -- Mitt and the real fight over this escalation in premiums. And the house members of the routes in particular from the united promus. That they would vote on this -- for the into the year but none of the fury comes out the can be -- delay -- And we'll look at. The inability of the house who worked with the senate and vice Versa and all of the exhibit split. In the center aboard the Republicans -- pure roots because the Democrats have don't -- -- one of the rules concerning filibustering. Little can get down there. One of the the question remains is can this get done at all. As usual we go to the experts doctor Ivan microscope which rector -- -- professor. But -- and director of the institute for economic development and real state. Researcher at UN doctors always good to talk. Could it be -- -- so our -- so what are your thoughts on this what do you think this is a big deal is this just a little bump in the road. Garland on the war and that is if this is is coming out of Washington. I don't know if there's any anything it's the small little bump in the road the I really don't mean -- know quite honestly if if intercom radio -- it's businesslike congress runs his business you and I would be on the phone right now. I mean that's it really is unforgivable Fareed it's just one of those things that. It has been incredibly unfortunate. I mean there's the number one looked back at the beginning. This build bigger waters. Was. Really got it's it's not -- congress in many ways and lots of the people should've been on the lookout for really warrant and the bill had included -- originally. That. That it was going to be required as there are many red legislation's. Something of that nature that they would be -- economic impact analysis gone. By an independent third party to gauge what the result with the economic consequences were going to be. Of rolling out bigger orders on. Homeowners. And and property on this period below their -- -- -- commercial property you know the McCain difference. That study to mine now this boat built around for awhile now that the debt and that was both have been done. Within the first year I think maybe within the first six months after the legislation was passed. Quite honestly should have been done before the legislation was passed. But I don't believe that study has even been -- it. Soul goes so so we don't is nobody in congress knows nobody. It in at any level quite honestly note with a full possible ramifications of this. Bill could possibly be I I just know I hear anecdotally. And we covered this morning's somebody's. -- premium put somebody over a slight hill you know a flood insurance. It is somewhere north of 20000 miles a year. And a lot of people called in a lot of people Texas and and say. Those exact Richard talking about now and we're content to 20000 more. -- what is expected. A lot of what I see this senator Mike. A -- -- according crop Pope. A Republican from I don't rule -- accuse you and pronunciation. Bill in the house financial services committee chairman that are holding this -- and -- Both Republicans -- from a little -- From taxes. Because. Conservatives. In this state so it all the time we're for small government. Government is too involved. It's doing things it can report. Could this be something that that doesn't get mixed. Because conservative field that you know this is something that that it. It's more up to the private sector of the -- private -- there's this kind of venture it's. Well I don't know that can ultimately be you know where we're girls finger pointing goes and I don't think that's. Really probably scared to do I think one of the things that. It from the standpoint of you know the federal subsidy that's been behind what insurance. Since it's beginnings. -- a -- there is argument that's to be made that it should be phased out. I think the and so the intent of -- orders. May affect not have been destructive war or. Or is or directed at those places that are necessarily -- flood prone. But I think is possibly trying to roll it out and trying to remove the subsidy. Over five year period it was a little bit unrealistic that's where an economic impact study. Would've called a halt right away it would stop this particular bill its tracks. Before it got through the of the hearings in congress if that would have been an economic analysis behind -- so. You know he can basically be try to maybe phase it out over ten year period or fifteen year period. Then the that shocked at the system. Is is much less severe in fact it may be would need to be shocked because it would give. The market more time to react to the -- handled the a little. Actual actual risk that relate to float in flood prone areas so you know so so I think it's a matter of timing. And just a lack of information. With which to make decisions I think that's really would happen did it really thought about this this morning one of the things that. That is basically this legislation has -- but by default. Is helping at the federal government severely prohibits. In in lending and in in other things in one problem is we call red line essentially. They that this particular legislation. Has essentially red line neighborhoods or whole communities. That now have this. A little black cloud of big black cloud. Hanging over it that's is that you know these flood insurance rates are gonna through you know astronomically high. So -- what's gonna happen is people looking for a place to live lenders who are looking for places to make loans. Ought to take into consideration in a geographic sense which is exactly what the federal government doesn't want. Those people to do in terms of making decisions about where they make investments where they loan money and things of that nature. -- load is escalating. -- insurance rates because -- something all the bigger and bigger waters acts. And and so mirror is insurance goes up 1020000. Dollars a year. 400000. Plus people to be effective here in Louisiana. Five and a half million nationwide. End of what was -- house promised to vote honored to have been delayed than say there won't vote on -- until next year we have doctor. Jose but I'm sorry doctor -- much Covert. Doctor BT's is going to be with the success of our. He's professor economic. Development rules state resurgent you know. Doctor of the privatization. Issues could this be privatized could -- be turned over to the private sector and solve some of the problems. I don't I think maybe this is probably the first step in doing that. But it does so earlier. You -- catch. You can't turn this battleship on the time. It's something that has to be it has to be taken and it takes awhile to make that transition. To be able to then the layering and fear the various. Risk up premiums and also. To build. A -- a pool. A risk pool that's private sector can feel comfortable with the terms of covering itself with respect -- policies -- right so. It again it I don't think it's a five year horizon I think it's it's probably something longer than a five year -- to do that. I think the the way the big war it was structured. Was you -- it was probably. The intention was good I think the execution probably left a lot to be desired which is. But you know which is not -- do in in Washington so. I think that study that's where where it lies. In -- not quite sure you know what. One of the things I was thinking of as I was slipping toward the edge during the break. It may be some of the whole -- and get it but this thing. But wanna buy one of those Angel going into the kind of -- -- really really well this I believe they can help the lower their premiums a little bit. -- little bit adjustment. 400000 people close a collectors who region of the figures -- city. Over five million page -- look into your crystal ball what do you what do you think's gonna Alter remotely happen and in the meantime when we're waiting for the Alterman. To people -- paying these premiums. Well I think if they if they can keep their insurance in force. In their insurance premium comes news that it's not a matter of the you know if they. A wanna play him it's basically you know if you wanna keep your policy you must -- your policy could put a beltway so. And that they don't voluntarily pay if you've got a mortgage on your property. Then the lenders is. Is going to force plates you're insurance. The local flood insurance. So that one way or the other of that you know your your premiums -- going to be paid. Now none of that is is -- is a great scenario particularly for people who work. Who -- facing these really extraordinarily. Severe increases in premium. Because you know one thing that happens when you look at it Garland just got to the standpoint of the monthly payment that people were making. On the -- principal interest taxes and insurance to finance their home. Every hundred dollars and -- that they have to shift. Into paying a flood insurance premium. Is 100 dollars less that they can applied to principal and interest payments to service their debt. So what that means over time is that that's going to lower keep lowering the amount that people can afford to buy. He has certain neighborhoods to the point where those folks or -- or go to. People are going to be organized -- I'll wait for those areas. They -- their own mind in the just block those out is even being prospective locations for them to buy a piece of property. The bad news is the people who own property in those areas. -- in the face with a fairly steady decline of their property. The drug and secure building we're going to be calling often to continue a conversation about this mega important to. Hundreds of thousands of people are pretty sure it's time we have a good day YouTube.