Congress will soon consider a $200 billion bailout aimed at protecting waterfront real estate owners in Florida. Introduced by Rep. Ron Klein, Florida Democrat, the Homeowners’ Defense Act, known as the “beach-house bailout,” is nothing more than a targeted TARP-style taxpayer-funded bailout Mr. Klein is using to help his home state.
Florida has about 5 percent of the nation’s population but more than 50 percent of its total exposure to hurricanes and “at risk” waterfront properties. When private insurance companies tried to raise premiums on those at-risk homes, the state Legislature intervened and established price controls for the private insurers. However, price controls never work. Once its policy to protect its wealthiest taxpayers failed, the Florida legislature established a “public option” for property insurance – a government agency, the Florida Citizens Property Insurance Corp. (FCPIC) – to assess property.
The problem is that the FCPIC uses actuarially false data, resulting in an astoundingly low rate to undercut its private-sector competitors. The outcome is that Mr. Klein wants to force American taxpayers to pay for a targeted beach-house bailout for his state.
Taxpayers are not the only ones opposing this most recent bailout. Environmental organizations such as the National Wildlife Federation and the League of Conservation Voters oppose this bill as it sends mixed market signals to developers.
Mr. Klein’s beach-house bailout will not only continue to promulgate irresponsible and unsustainable policy, but will cost American taxpayers billions of dollars to bail out wealthy coastal property owners in the congressman’s home state.