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FDIC chairman to oversee Gulf Coast recovery

President Bush meets with Donald Powell, left, Tuesday in the Oval Office. Bush appointed Powell, who is chairman of the Federal Deposit Insurance Corp., to oversee federal disaster recovery efforts in the Gulf Coast.Ron Edmonds / AP
/ Source: news services

Donald Powell, the chairman of the Federal Deposit Insurance Corp. and a wealthy contributor to President Bush's presidential campaign, was assigned by the Bush administration on Tuesday to oversee the federal government's disaster recovery efforts on the Gulf Coast.

He will be in charge of coordinating long-term plans to rebuild the states hit by hurricanes Katrina and Rita in late summer. The sluggish federal response to Katrina, the first and most damaging of the two, has been widely criticized.

Powell, 64, will be the administration's point man for dealing with Congress, state and local governments, and private businesses on relief efforts. He has worked on economic development and housing issues — two central matters in hurricane rebuilding efforts — as a Texas bank executive, university administrator and chamber of commerce official, officials said.

"Don has the leadership, ideas and optimism that the residents of the Gulf Coast region deserve," said Homeland Security Secretary Michael Chertoff.

The top federal official overseeing day-to-day Katrina recovery efforts, Coast Guard Vice Admiral Thad Allen, will leave that post by year's end.

President Bush also created a special White House council to develop and review administration plans to help rebuild the region. Headed by National Economic Council Chairman Al Hubbard, it will be made up of Cabinet secretaries and other administration officials.

Lawmakers from Gulf Coast states had pleaded for a federal official to oversee reconstruction projects — in part to safeguard against improprieties in awarding lucrative government contracts.

Praise and criticism from lawmakers
Sen. David Vitter, R-La., who pushed the White House to create the post, said he was pleased the president named "a single, focused federal coordinator for the hurricane recovery effort." Louisiana's other senator, Democrat Mary L. Landrieu, said she welcomed "anything that can reduce the red tape, streamline operations and ensure accountability."

But Rep. Bennie G. Thompson, D-Miss., said state and local governments need more support from Washington to rebuild communities instead of "adding another layer of bureaucracy." And Sen. Edward M. Kennedy, D-Mass., called Powell's appointment "business as usual" for the administration because the longtime banker "has no disaster recovery experience."

"I find this terribly troubling — especially given the tragic missteps of Michael Brown," said Kennedy. He was referring to the former FEMA director who resigned in Katrina's wake amid questions about his experience to handle disasters. Qualifications for federal response officials have been fiercely scrutinized since Katrina.

Powell takes the reins as state and local officials are still struggling to get the region back on its feet.

Louisiana Gov. Kathleen Blanco said Tuesday that deep cuts will be needed to cope with $1 billion in lost tax revenue from the storms, and residents are still not allowed to return to some devastated neighborhoods in New Orleans.

Administration officials pointed to Powell's three decades in the financial services industry, including work as president and CEO of the First National Bank of Amarillo, Texas; chairman of the Amarillo Chamber of Commerce; and chairman of the Texas A&M University System's Board of Regents.

One of the "Pioneers" who raised at least $100,000 for Bush's presidential campaign, Powell has great personal wealth. He was praised by the banking industry when Bush appointed him to chair the FDIC in August 2001.

Considered to oversee Bush, Clinton fund
Powell traveled in early September to areas in Louisiana and Mississippi struck by Katrina to inspect damage to banking operations and services. Recently, he was considered to be an overseer of the private-donation fund for Katrina headed by former presidents Bush and Clinton.

In a message to FDIC employees on Tuesday, Powell said he was honored to lead the rebuilding effort though sad to leave the federal agency.

"I can look back with pride on our many accomplishments in each of our three major priority areas: stability, sound policy and stewardship," he wrote.

FDIC Vice Chairman Martin Gruenberg was to take over Powell's job until a permanent successor is named.

Congress has so far provided $62 billion for Gulf Coast hurricane recovery efforts, of which about $40 billion has yet to be spent.

Katrina, which hit Aug. 29, flooded New Orleans and devastated much of the Louisiana, Mississippi and Alabama coasts. Hurricane Rita arrived two weeks later, damaging parts of coastal Texas and Louisiana.

Meanwhile, two House Democrats accused Chertoff of failing to ensure that Homeland Security completed detailed catastrophic incident response plans before Katrina hit.

"Had you done so, perhaps the various federal agencies inside and outside your department would have responded in a more coordinated and effective manner," Reps. Henry Waxman of California and Charlie Melancon of Louisiana wrote to Chertoff.

Homeland Security spokesman Russ Knocke said the confidential portion of the National Response Plan was still being tested but would not have been activated for Katrina because it only relates to unexpected disasters.