I’ve Made a Huge Mistake

Rep. Baker: “Come on, can’t you vote for this? It’s just a study.

Rep. X: “We just approved a big flood control project back home. I’d love to help you out. I’m sorry, I just can’t.”

The politics of flood insurance in less than 40 words, according to my recollection.


The bill in question was H.R. 4320 (109th Congress). As introduced, H.R. 4320 expanded mandatory flood insurance purchase requirements from the 100-year floodplain to the 500-year floodplain. The bill took fire from all directions.

Chairman Oxley, who included the mandatory purchase expansion at the Bush Administration’s request, retreated. He asked Rep. Richard Baker to offer an amendment to strike the 500-year floodplain standard from the bill and replace it with a study. The study would be conducted by FEMA, which would report results and policy recommendations to the committee.

Even the FEMA study was toxic and an acrimonious debate ensued with committee members openly questioning FEMA’s ability to conduct an impartial study. There was disagreement over what exactly should be studied and if the committee was interested in receiving policy recommendations.

The eventual outcome? By a vote of 34 to 31, which splintered party discipline among both Republicans and Democrats, a substitute study amendment was approved. Under the substitute, GAO, not FEMA, would examine a 500-year mandatory purchase requirement and report its findings, without policy recommendations, to the committee. The underlying bill eventually died and the study never conducted.


If a simple study on expanding flood insurance coverage requirements caused such acrimony and division in the Financial Services Committee in 2006, what changed in the intervening 6 years that led to the Biggert-Waters Act?  How did members get from arguing about a study to almost unanimously passing Biggert-Waters?

Senior members of House Financial Services retired or were defeated. Reformers moved up the line of seniority. The NFIP’s debt burden couldn’t be ignored. Industry was desperate for a 5-year NFIP reauthorization. Against this backdrop, Biggert-Waters became law of the land on July 6, 2012.

About 250 days later Rep. Steven Palazzo was the first to introduce legislation reducing most Biggert-Waters premium increases. All it took was half a year, barely enough time for the ink on Biggert-Waters to dry.

In what is by any measure a spectacular shift, the House is now set to eliminate some Biggert-Waters premium increases and slow down most others. The issue has become such a high priority that Majority Leader Cantor has personally intervened, committing to bringing legislation to reform Biggert-Waters directly to the House floor.

And this brings us back to the conversation between Rep. Baker and his colleague on the 500-year floodplain study amendment. Baker simply couldn’t convince members to go along with a study they thought might somehow lead to more properties being required to buy flood insurance. Now that members are facing this as a real possibility, they’re saying, “I’ve made a huge mistake.”

Is this all that surprising? No.


What I find most interesting in this story is the decision of Majority Leader Cantor to circumvent the committee process and bring a flood insurance bill directly to the House floor. The House Republican Conference prizes regular order and quite frankly, it is unusual for Leadership to interfere with an A-committee chairman’s jurisdiction.

There are political reasons for this interference that involve a Senate race in Louisiana. There are another 235 reasons in the form of cosponsors for Rep. Michael Grimm’s Biggert-Waters reform bill, too.

Here’s the thought I keep coming back to—why is it that Leadership and the Republican rank-and-file are unwilling to wait on Chairman Hensarling? One legislative disagreement does not a trend make or precedent set, but the fact still remains that Leadership has seized the reins on this issue.

Consider, too, that flood insurance is not the most controversial financial services issue facing House members at the moment. If members thought they are being lobbied aggressively on Biggert-Waters, they should wait until GSE reform is brought to a vote.

Biggert-Waters has been little more than a warm up for the housing finance industry. I don’t mean to oversimplify or drift into hyperbole, but this fight has strengthened industry relationships with rank-and-file Republican members in very basic, important ways. Industry roots in member districts have only grown deeper and lists to support a persistent, guided campaign of visits, phone calls, emails, and social media have been grown. It’s like how every member of Congress used to keep a very close eye on their yard sign campaign chair. It’s hard to understate the importance of voter lists and voter contacts.

Now, it’s a grave mistake to underestimate Chairman Hensarling and truthfully, the GSE reform fight was always going to make Biggert-Waters seem like child’s play. Further, I have to believe the Leadership’s intervention in Financial Services Committee jurisdiction is limited to this one issue. But that it occurred at all, and the implications for the next big housing vote—that’s the real story.

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