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Katrina's Legacy
There is much to be learned from a hurricane such as Katrina. Emergency planning and emergency response are obvious lessons. The levee should have been higher and stronger. The cities and towns should have been better prepared. We can deliver lots of criticism with hindsight. But emergency preparedness is only part of the picture.
One lesson that Katrina drove home is that there is a huge difference in capacity to prepare and evacuate between those with high and low income. When it comes to a storm, the storm itself does not differentiate between the rich and the poor. But what the rich and poor can use to prepare for and respond to the storm does vary widely.
Some people, primarily those with sufficient resources, are high and dry and suffered minimal losses. Their homes will have some water damage and some shutters will need to be replaced. Their stories are interesting - some scary, some even funny.
But other people suffered total devastation. There are huge parts of New Orleans and other communities that now look worse than Baghdad. Buildings were destroyed. Homes and office buildings no longer exist. They simply aren't there any more.
The homes that were lost were not the fine old historic homes of New Orleans. Those homes were built on the higher ground. And they were built well, with hurricanes in mind. The homes that were lost were built for those with more limited resources. They were the low- and moderate-income members of the community. They were the small businesses.
Financial institutions were also hard hit. Many bank buildings were badly damaged or destroyed. But even more significant is the damage to the business. Not only has the business of banking been disrupted for an unknown period of time, the customers have lost what they otherwise brought to the bank.
Mortgages are now secured by water and mud. Cars securing loans are who-knows-where and probably won't ever run again. Business inventory securing a line of credit is dispersed and ruined. The customer base is being bused away and may never return. In short, the devastation is much greater that what we see in the pictures. The economic devastation is staggering. So far, we have only seen the beginning of the economic damage.
The damage is the result of the hurricane, inadequate preparation, and lack of concern for those least able to help themselves. The damage in New Orleans and in other places is a direct result of decisions made to ignore the risk to certain areas and for certain people. Perhaps the most egregious example is the decisions were made to defer improvements to the levee and to do something else with the money.
CRA is about doing the opposite. CRA is about putting money where it is needed and not just where it is easy. Hurricane Katrina exposed the dark side of making the easy decisions and ignoring the difficult ones. It demonstrated the reason for CRA. Katrina made it clear that our most vulnerable areas are the poorest areas. What Katrina also demonstrated is that the damage to the poorest areas increased the damage to other areas. In short, if the needs, including the credit needs, of our poorer areas were properly met, all of us would be better off.
It would be easy at this point for many of us to say New Orleans is a lost cause. Let's not put good money after bad. But here's the problem. New Orleans exists because it is important to the entire country. It serves as a harbor for every place the Mississippi reaches. In fact, the only other waterway for ocean-going ships east of the Rockies is the St. Laurence River and that freezes over in the winter. Since New Orleans is critical to the rest of the country, we should take proper care of it. And that's where CRA comes in. CRA means rebuilding the entire city and building it right this time.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 11, 10/05
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