My column for the week of 9/11 waved the flag, suggesting a nation that truly treasures its people and communities should cover their losses when terrorists (foreign or domestic) strike. That means accepting insurance industry proposals, now before Congress, to make Uncle Sam the reinsurer of last resort in terrorist incidents.
Now comes a reader, Gregory Squires, chair of George Washington University’s Sociology Department, suggesting the insurers owe us a quid-pro-quo. If they’re to get federal bailout or backstop in terrorism cases, he writes, the public deserves protections in return. Squires’ candidate: anti-redlining protections for property insurance. He’d require fully-detailed, Census tract information on property insurance policies granted, paralleling the disclosure and anti-discrimination requirements of the quarter-century old Home Mortgage Disclosure and Community Reinvestment Acts.
I’m strongly tempted to endorse Squires’ case. It’s true — HMDA and CRA have generated mortgage industry paperwork. But a study by Harvard’s Joint Center for Housing Studies says they’ve also generated more than $1 billion in new loans, opportunities for the American Dream, for residents of older neighborhoods across America. Newspaper publicity on banks’ past records spurred them to make minority and low-income area loans. Disclosure motivated partnerships between banks and community organizations. And the lending institutions have made good money off the loans.
There’s a regional rationale, too: Big income inequities weaken regions. As the Seventh Circuit Court of Appeals noted in a case brought by the NAACP, “No insurance, no loan; no loan, no house; lack of insurance makes housing unavailable.”
No one knows for sure just how much insurance redlining exists. But disclosure’s proven to be the perfect disinfectant, the gold-standard cure with mortgages. So why not insurance? Would the tradeoff for terrorism reinsurance be appropriate? Your thoughts?