Comment by JumpCrisscross
13 days ago
> Public insurance. For housing
This is California’s FAIR plan [1]. It’s a wealth transfer from non-homeowners to homeowners, homeowners in low-risk areas to high-risk homeowners, and from low-value homeowners to rich ones.
That was one (corrupt) option. Another would have been to draw funds by taxing homeowners, specifically, and limiting payouts by fire risk, capping at a mean replacement cost, not per-house. That that's not what happened is an issue with the implementation, not the base concept.
> draw funds by taxing homeowners, specifically, and limiting payouts by fire risk, capping at a mean replacement cost, not per-house
This almost seems designed to maximise fury. You're still taxing low-risk homeowners to pay for high-risk damages. And when a catastrophe hits, you aren't paying enough to rebuild (or avoid bankruptcy, in which case you're just routing taxpayer funds to creditors). Add to that you've branded it a tax increase it's almost something the GOP would run as a false flag against a Democrat.
Also seems very likely to cause a financial crisis that the rest of America will end up paying for anyway. If you don't pay out enough to rebuild that particular lot, then the likely outcome will be an empty lot with a burned out husk on it. In most cases, this is worth considerably less than the remaining value of the mortgage. The homeowner then walks away from the mortgage, leaving the bank holding the bag. The bank has socialized this risk by selling the mortgage as an MBS that is sitting in somebody's money-market account. Cue 2008.