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Storm Brews Over Adding Wind Coverage to Federal Flood Program

By Jeffrey H. Birnbaum
Tuesday, March 25, 2008

Industries fight government all the time, but not usually over which of them can run an actual business.

But that's all changed when it comes to, of all things, wind.

Congress is seriously considering taking insurance coverage for wind damage away from private insurers. Lobbyists for the industry are battling to keep the business where it is.

The tug of war began in 2005 with Hurricane Katrina, which destroyed the homes of Rep. Gene Taylor (D) and some of his relatives and friends in Bay St. Louis, Miss. Taylor was and remains irate that he and others were compensated only for flood damage and not -- until they sued -- for the ravages of wind.

The result was tremendous personal hardship and federal expense. The government spent billions that Taylor says insurance companies should have paid to assist and relocate families. "It was unjust at every level -- for the individual and for society as a whole," he said. "Insurance companies tried to screw the nation."

Taylor wrote legislation that would add wind damage to the flood coverage that is already underwritten by the federal government. His proposal passed the House of Representatives last year as part of a broad renewal of the soon-to-expire National Flood Insurance Program. The plan, which is backed by Gulf-state lawmakers and House Democratic leaders, is pending in the Senate.

But there the Property Casualty Insurers Association of America is leading other insurance lobbies in an effort, so far unsuccessful, to blow away the wind provision. The Senate Banking Committee, at the urging of the Bush administration, did not add wind coverage and other enhancements

Taylor wanted to the flood insurance program.

The insurance industry is a powerful force. In the current election, finance and insurance companies' political action committees are the largest givers (other than labor PACs) to federal candidates, according to the nonpartisan CQ MoneyLine. The industries also rank second to health care in spending on lobbyists.

Faced with its fight over wind insurance, the property-casualty group is likely to hire even more lobbyists and to buy ads. "We are taking our case to the Senate in particular and highlighting the fact that adding wind coverage is unnecessary," said Paul M. Kangas, the group's top flood insurance lobbyist. "It's an integral part of a basic homeowners policy. To have the government step in where the private market is already is contrary to common sense."

The insurers have also attracted some surprising allies. The National Wildlife Federation and the Consumer Federation of America testified that they oppose adding wind coverage to the flood program because the expansion would, among other things, undermine the program's already precarious finances.

Taylor dismisses that complaint because his bill requires the wind insurance to be actuarially sound and thus theoretically cost-free for the government. The insurance lobby doubts that, and it may get its way in the end.

"This really is a people-versus-the-lobby issue," Taylor said. "It's going to be a very tough fight."

Not-So-Stock Conflict

A lot of people are upset about the financial markets' meltdown. But the Association of Community Organizations for Reform Now (ACORN) decided to complain in person.

Two weeks ago, about 200 members of the group, which represents low- and moderate-income families, stormed the eighth-floor offices in Washington of the nation's largest trade association for securities and bond traders. They occupied its reception area and several of its hallways for a short while.

"We clogged their office," ACORN spokesman Charles Jackson said proudly. "We chanted and made a lot of noise."

"I wouldn't call it a sit-in," said Christina Martin, spokeswoman for the Securities Industry and Financial Markets Association. "They came by the office, dropped off a letter and briefly spoke to Scott DeFife." DeFife is the group's senior managing director for government affairs.

ACORN's letter sought various changes in law that would help people facing foreclosure on their homes and also asked for a meeting with the association's leaders.

DeFife promised nothing on policy but is scheduled to meet with ACORN officials this week -- at their offices this time.

Homemaker Exception

Congressional candidate Todd Goldup is nothing if not innovative. Earlier this month he wrote to the Federal Election Commission and asked if he could pay himself a salary out of campaign funds even though he hasn't been earning any money otherwise.

Goldup, an independent who is running against freshman Rep. Kirsten Gillibrand (D-N.Y.), wrote that he is a "homemaker" and has "no earned income." But he notes that homemakers would lose income, in the form of child-care payments and travel expenses, if they could not tend to their homes while running for Congress.

Current regulations allow candidates, under certain conditions, to pay themselves either a congressman's wage or the amount they personally earned in the previous year, whichever is less. Goldup wants to know if he can get a homemaker's exception to that and pay himself as much as a congressman earns, currently $169,300 a year.

Goldup, 30, is an ex-Marine and a onetime electrical technician who has been a stay-at-home father of his two young children for three years. His wife is a registered nurse. Without income, he said, he could not stage a serious campaign.

The commission has yet to give him an answer, but there's no particular rush. Goldup said the amount he's collected so far is "hardly worth mentioning."

Hire of the Week

Veteran Washington spokeswoman Joann Donnellan has opened her own public relations shop called JD Media LLC.

Donnellan has been the mouthpiece for the National Center for Missing & Exploited Children and also helped design the campaign that established the Amber Alert system to locate abducted children. Until recently she was the traveling press secretary for the President's Commission on Care for America's Returning Wounded Warriors, co-chaired by former senator Robert J. Dol e (R-Kan.) and former health and human services secretary Donna E. Shalala.

Her initial clients include the National Rehabilitation Hospital and the Bipartisan Policy Center, which is led by former Senate majority and minority leaders.

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