Katrina: After the Flood (35 page)

Their plan included a land bank funded with federal dollars. This newly formed entity would take ownership of abandoned properties that people couldn’t afford or didn’t want to rebuild. The homeowners
wanting to rebuild in, say, a more vulnerable section of the Lower Ninth could do so on their own using their insurance money—or they could choose a refurbished, like-size home through the land bank in a neighborhood the city wanted rebuilt. That would help guard against the jack-o’-lantern effect.

McDonald went further when he imagined the city focusing its resources on a community such as Pontchartrain Park, the first subdivision in the state of Louisiana to accept black homeowners when it opened in the 1950s. The residents of Pontchartrain Park tended to be older African Americans. Some couldn’t imagine living anywhere else, while others couldn’t fathom starting over. The Lower Ninth Ward also had an older population. What if New Orleans used redevelopment dollars, McDonald asked, to build a senior center in Pontchartrain Park? “Bring in an emergency health care center,” he said. “A dialysis center. A walkable grocery store. You make it nice—a rec center, a movie theater—and come up with a transportation plan.” Two things would happen, McDonald argued. The city would draw back residents of Pontchartrain Park who wanted to return. And officials would mollify some who felt the government was angling to seize their property.

McDonald’s proposal was included in the Bring Back New Orleans Commission’s final report. So, too, were ideas he contributed to its economic-development and education committees. “My hope at this point is that the leadership finally shows some leadership,” McDonald said in February, one month after the commission’s report had landed on Nagin’s desk. McDonald might even have spent more time feeling frustrated in the coming months if he didn’t have a bank to rebuild.

IF THE EARLY DAYS
of Liberty’s recovery had been about reconnecting with its customers, phase two, as McDonald took to calling it, was about taking stock. The bank’s biggest vulnerability was its home-loan portfolio, so McDonald created a team to track down every last mortgage holder. Once their computer systems were operational again, they could see what insurance companies a homeowner used. They requested copies of the policies, which they would use to coach property owners on what they needed to say to their insurer. If the initial offer from an insurer was
too low, someone with the bank would walk a loan customer through the appeals process. The bigger the settlement check for the homeowner, the less likely the bank would take a loss on a loan.

Reconciling the books proved painstaking as McDonald’s finance people sought to account for each check lost during the storm. The physical cleanup was endless. Liberty hired an outside crew to gut and clean its water-damaged properties, but the thankless job of sifting through waterlogged file cabinets, folder by folder, looking for any paperwork that had survived the flooding, fell to bank employees wearing protective gear. Another enormous job had them itemizing every last item damaged in the flood for the bank’s insurance company and accounting for storm-related expenses. McDonald or his people had been meeting with adjusters for months, he said in January, “but so far we haven’t gotten a single check for a single roof on a single building.”

Phase two was also about finding new business. Every day more longtime customers were closing accounts because they were living nowhere close to a Liberty ATM. McDonald anticipated the bank would be losing thousands more. McDonald initiated conversations with Walmart and other big-box retailers about in-store banking centers (he’d end up opening just two mini-branches in Walmarts) and pursued more business with large corporate depositors, such as Aetna and American Express, which were already Liberty customers. He also looked into the idea of opening strip-mall loan centers—storefronts that would make the kind of small-denomination loans Liberty specialized in earlier in its history. McDonald was thinking about Louisiana, but also Texas and Mississippi.

Mainly, though, McDonald focused on rebuilding his battered home-mortgage business, the biggest source of bank profits prior to Katrina. He hired someone to start spreading the word among mortgage brokers throughout the area that Liberty was offering 100 percent mortgage financing. His KIDs program—the CDs he sold at below-market interest rates—had brought in an extra $10 million in cash. That’s the money he’d use to fund these no-down-payment home loans. In less than three months, Liberty’s staff approved $10 million in home loans—a fraction of the $10 million a month they averaged prior to Katrina, but at least the bank was generating loan fees again and earning a higher interest rate on its money.

The Liberty mortgage team completed its assessment of its loan portfolio shortly after Christmas. An astonishing 98 percent of its home-loan customers carried flood insurance. Staffers cheered when the mortgage department announced that very few homeowners had allowed their flood insurance to lapse, but McDonald reminded them that only meant moving on to the next battle: “Now the question will be, did they have
enough
coverage?” The bank would also have to be patient, McDonald said, as he reminded everyone of the drawn-out battles they were all waging with their own insurance companies. The bank was buying new furniture and computers without being certain their insurance would reimburse them. They were spending tens of thousands more on the cleanup. Three times a week they were refilling the generators that kept the air circulating inside the bank’s headquarters—at $150 a pop.

They had also gotten bad news from Washington. McDonald’s friends in high places had tried but failed to include language that would have required the feds to rely at least in part on smaller community banks such as McDonald’s when disbursing the billions in recovery funds that would slosh through the Gulf Coast. Liberty would be on its own in its search for new business, as would every other community bank across the region.

Yet McDonald was feeling optimistic. The new year saw McDonald back in a jacket and tie. The bounce had returned to his step as he worried less about survival and focused more on rebuilding. He opened a branch in Gentilly, a middle-class black neighborhood, and people were starting to make loan payments again now that the four-month moratorium the bank had granted to customers in flooded parts of the city had ended. Not everyone was making regular payments again, but most were, and even most of the delinquents had worked out a payment plan. It felt like the bank’s earliest days: most people up-to-date on a loan, the rest wards of the bank with whom they needed to work one-on-one.

The best news of the new year was a call in early January from Russell Labbe telling McDonald the lights were again on at the bank’s headquarters. Labbe had installed new circuit breakers in the building over the holidays and arranged for a city inspector to sign off on his work. Entergy was able to power them up only a few days later. “We were the only light out there for miles,” Labbe said. The elevators weren’t working
(and wouldn’t until after $350,000 in repairs), but at least they could turn off the generators. They were already working with BellSouth to restore the all-essential T1 line that would allow them to connect to the wider world with the new computer that had for months been sitting idle on the third floor.

ALONG THE REST OF
the Gulf Coast, people stared at piles of sticks that had once been their house, or they were looking skyward to thank the force that had saved them. In a waterlogged New Orleans, everything was ambiguous, starting with the question of whether to rebuild. A flooded home meant endless conversations with insurance adjusters and no clear answers about how much money could be expected. People worried about what their neighbors might do. Would they walk away from the moldering eyesore that once was home? Every decision seemed to depend on at least ten unknowns. Were there schools? Did they still have a job? What might the federal government do about the levees? Would there be the medical facilities for the sick parent they were caring for? For themselves? Could they count on adequate fire and police protection?

Only 17 of New Orleans’s 122 public schools opened that January. All were charter schools staffed with a mix of seasoned teachers and newcomers to both New Orleans and the profession. More than fifty private schools had reopened by the start of the year, along with a large portion of the city’s network of Catholic schools. (Tulane and the University of New Orleans had reopened, and both Xavier and Southern University’s New Orleans campus—two historically black colleges—were offering classes to any student able to get back to the city.)

Regular garbage pickup had resumed, but trucks came by once a week, not twice a week as before Katrina. Most of the refrigerators had been removed, but that only meant they were piled high in a landfill somewhere else in the city. The RTA was still running less than half its pre-Katrina routes, and even some of those were only partially restored. The green streetcars weren’t running up St. Charles, and the RTA had limited railcars operating on a small section of Canal Street. The only line they had fully restored was Riverfront—a route used primarily to
move tourists between the Quarter, the Aquarium, and the Convention Center. Before the storm the RTA had averaged around 125,000 daily riders, but that number was barely cracking 10,000 in January. “We needed more riders to pay for more drivers,” explained Bill Deville, who had been named the RTA’s “executive director for recovery” after the storm.

Cassandra Wall’s sister Tangee, who had moved into her Warehouse District condo after Thanksgiving, started to work on her home by early March. She wasn’t waiting on permission from the city or advice from the federal government. Her insurance company would pay what it would pay, and if that didn’t prove enough, there might be a Road Home check. Her niece—Petie’s oldest—was getting married that November. The ceremony would take place in an Uptown church and the reception would be at the Jackson Brewery in the Quarter, but Tangee was intent on hosting the wedding party at her home.

“You have to remember that we made a commitment before we left Baton Rouge that we were coming back,” Petie said. “We didn’t care how we were going to put it back. Even if it meant living in it half-built and spending whatever money we could save up to pay a guy to put up a wall, and then next month, saving a little more to pay him to put up another.” To help make rebuilding feel like a cause, their group, Eastern New Orleans United and Whole, printed up black, white, and green lawn signs for people to put in front of their vacant homes:
I AM COMING HOME! I WILL REBUILD!

Cassandra, however, wasn’t ready. She was as angry as any of them at the way residents of New Orleans East had been treated. But to her that was a reason for them to stay in Baton Rouge rather than rush into the unknown. FEMA had still not issued the new flood maps that would tell residents and businesses how high they would need to rebuild after Katrina.
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The agency had issued the new maps for Mississippi in November, but as January became February became March,
New Orleans and the rest of southern Louisiana still waited. Cassandra feared if her family started working on their home, they’d learn they needed to spend another $100,000 they didn’t have lifting it to qualify for flood insurance. They had remodeled shortly before Katrina. Maybe that was part of Cassandra’s hesitation about coming back. On the Sunday before Katrina, they had pulled away from a freshly painted, peach-colored, two-story home with terra-cotta trim, surrounded by a white picket fence. It had then sat in six feet of fetid water in the September heat.

Cassandra had the FEMA identification number she would need whenever she needed something from that agency. She had her flood-zone number, which would be crucial once FEMA released its revised maps. And of course she had the claim numbers and the various phone numbers for her insurance carriers. Like many in New Orleans, she carried both a homeowner’s and a flood policy, which meant working with two separate entities. The company that carried her flood insurance sent an adjuster to her house “in a timely fashion,” she said, and two months later she and her husband had their check—$30,000, the maximum their policy paid out. She had the opposite experience with her homeowner’s policy. Katrina had ripped off parts of her roof, which meant not just flood damage but extensive water damage on the second floor. She was frustrated by how long it had taken her insurer just to get someone to her house. That first adjuster lost the photos he had taken and then apparently his job. She would need to start over again with a second one, who offered her $30,000 on a $150,000 policy. That was the start of a fight that lasted nearly two years. (Ultimately, their policy paid closer to $100,000.)

Cassandra figured she made at least ten trips into New Orleans to meet with adjusters or others about the house. That was about all the glimpse of life in New Orleans East she needed. The traffic lights weren’t working. There were no streetlights. The big Home Depot was open, as were a few car dealerships along the I-10 and a couple of fast-food places, with a few trucks serving Mexican food to the work crews. But that was about it. “What are you going back to?” she asked her sisters. In March, the couple bought a home in Baton Rouge not far from their hotel. Cassandra made up some flyers to advertise her tutoring
service. Any more big decisions would be put off until the people in charge started making up their minds.

THE CITY WAS STILL
in emergency mode and still producing weekly situation reports. The news wasn’t always bad. By January, the city was claiming New Orleans was home to around 158,000 people—about one-third its pre-Katrina population. Government-issued trailers were starting to show up in the most damaged communities. But taken as a whole, the reports were a snapshot of a city still far from recovery. The city was now estimating that Katrina had created 50 million cubic yards of storm-related debris. As of early February, 6 million cubic yards had been removed—12 percent of the total. Countless cars still sat abandoned around the city.
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Streets were still barricaded. That winter and through the spring they were still finding the occasional corpse.