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Why FEMA has spent $4 billion to help destroy flood-prone homes

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Just an inch of floodwater can generate tens of thousands of dollars in property damage. Homeowners trying to move and start over after such a disaster might find a surprising buyer for their home: the government.

The Federal Emergency Management Agency, or FEMA, has spent around $4 billion assisting in the purchase of about 45,000 to 50,000 damaged homes since 1989, according to A.R. Siders, director of the University of Delaware’s Climate Change Science and Policy Hub, who analyzed FEMA’s data in 2019.

These homes have been marred by floods to the point where the homeowners decide to move away. To encourage homeowners not to sell to new buyers and stop what Siders calls “that terrible game of hot potato,” FEMA’s Hazard Mitigation Grant Program supports local and state governments in purchasing the homes, demolishing them and turning the property into public land, in what are called floodplain buyouts.

‘I have no regrets’

Andrea Jones accepted a floodplain buyout for her home in the Charlotte, North Carolina, area.

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Andrea Jones, 59, sold her home in the Charlotte, North Carolina, area in a floodplain buyout. Jones, who works in the wealth and investments department of a bank, purchased her home in 2006 for $135,000. Her home was appraised in 2022 at a value of $325,000.

Jones said her home never flooded but her street did.

“Within three years of me being in the house was the first time I experienced the heavy flooding. It came up to my mailbox,” Jones said. “You could not see the street. You could not see the beginning of my driveway.”

Commuting to her home, which was not in a flood zone when she bought it but was later rezoned into one, made her worry.

“At times when I would be at work and it’d be raining really hard and I’d be like, am I going to be able to get home? Am I going to be able to get to my house? Am I going to have to park my car up the street?” she said. “It just didn’t happen a lot. But when it did happen, it was scary.”

The image on the left shows the former home of Andrea Jones before it was demolished following a floodplain buyout. The image on the right is how the land looks now.

Courtesy: Andrea Jones

Jones put the proceeds from the sale toward the purchase of a new home, which she said is nicer, for $437,000. Since the home is more expensive and interest rates are higher, Jones said, her monthly mortgage is double what it once was.

Her new home is outside the floodplain and about a 10-minute drive from her former neighborhood.

“I miss the neighborhood; I miss my friends,” she said. “I miss seeing people walking their dogs, standing out, talking with them, having conversations … things like that.”

However, she said she feels more comfortable and has peace of mind living in her new home because she doesn’t need to worry about her street flooding.

“I wouldn’t go back. I have no regrets [about] having made the decision that I made,” she said.

How floodplain buyouts work

Floodplain buyouts help a homeowner move out of harm’s way and potentially help the community by creating open space and/or an area that can collect flood waters to protect the other homes in the region.

For FEMA’s floodplain buyouts, executed under the Hazard Mitigation Grant Program, 75% of the buyout funding is provided by the federal government, and the remaining 25% comes from state, local and community funds. In some instances, the 2021 Bipartisan Infrastructure Law can cover 90% of the buyout with federal funds.

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However, buyouts as a strategy can be controversial, experts say.

“It’s a bit of a mixed bag. I think in some cases they’re successful and in some cases they’re not,” said Mathew Sanders, senior officer for U.S. conservation at Pew Charitable Trusts.

Sanders said some communities may be apprehensive about taking on the responsibility of the deeded land. “There’s legal liability associated with owning property generally, and so it ends up, in some cases, being a fairly significant drain on local resources,” he said.

The Congressional Research Service found that, without full participation, floodplain buyouts can also lead to problems such as blight, community fragmentation, difficulty with municipal services and inability to restore the floodplain to be able to properly absorb water.

For homeowners, it can be ‘a long time to wait’

Of course, a buyout can be a huge advantage for a person who does not want to live in a floodplain but may not have the resources to abandon their home.

Even so, the buyouts can take a long time. On average, federal buyouts can take two to five years, though 80% of the FEMA acquisitions are approved in less than two years.

“That’s a long time to wait, if your home has mud in it and you’re trying to figure out whether to rebuild or not,” said Siders, of the Climate Change Science and Policy Hub.

Jones’ buyout was delayed by the pandemic, but once she started the process up again in May 2022, things moved quickly. She purchased her new home in January 2023.

How long the buyout takes often depends on which program is funding the buyout. In addition to FEMA, the U.S. Department of Housing and Urban Development and many state and local communities fund floodplain buyouts.

And all of this is happening as the U.S. is facing a housing shortage of at least 7.2 million homes, according to Realtor.com.

“We’re talking about a crisis of affordability in housing across the country, combined with the crisis of the climate change effects. How do we ensure that we provide for our population while making sure that they’re not in harm’s way?” asked Carlos Martín, director of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

Watch the video to learn more about how floodplain buyouts work and whether the U.S. should continue investing in buying and destroying homes facing flooding.

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Trump administration loses appeal of DOGE Social Security restraining order

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A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

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That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers. 

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

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The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

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Most credit card users carry debt, pay over 20% interest: Fed report

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Julpo | E+ | Getty Images

Many Americans are paying a hefty price for their credit card debt.

As a primary source of unsecured borrowing, 60% of credit cardholders carry debt from month to month, according to a new report by the Federal Reserve Bank of New York.

At the same time, credit card interest rates are “very high,” averaging 23% annually in 2023, the New York Fed found, also making credit cards one of the most expensive ways to borrow money.

“With the vast majority of the American public using credit cards for their purchases, the interest rate that is attached to these products is significant,” said Erica Sandberg, consumer finance expert at CardRates.com. “The more a debt costs, the more stress this puts on an already tight budget.”

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Most credit cards have a variable rate, which means there’s a direct connection to the Federal Reserve’s benchmark. And yet, credit card lenders set annual percentage rates well above the central bank’s key borrowing rate, currently targeted in a range between 4.25% to 4.5%, where it has been since December.

Following the Federal Reserve’s rate hike in 2022 and 2023, the average credit card rate rose from 16.34% to more than 20% today — a significant increase fueled by the Fed’s actions to combat inflation.

“Card issuers have determined what the market will bear and are comfortable within this range of interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

APRs will come down as the central bank reduces rates, but they will still only ease off extremely high levels. With just a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

Credit card debt?

Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, Schulz said. 

In fact, credit cards are the No. 1 source of unsecured borrowing and Americans’ credit card tab continues to creep higher. In the last year, credit card debt rose to a record $1.21 trillion.

Because credit card lending is unsecured, it is also banks’ riskiest type of lending.

“Lenders adjust interest rates for two primary reasons: cost and risk,” CardRates’ Sandberg said.

The Federal Reserve Bank of New York’s research shows that credit card charge-offs averaged 3.96% of total balances between 2010 and 2023. That compares to only 0.46% and 0.43% for business loans and residential mortgages, respectively.

As a result, roughly 53% of banks’ annual default losses were due to credit card lending, according to the NY Fed research.

“When you offer a product to everyone you are assuming an awful lot of risk,” Schulz said.

Further, “when times get tough they get tough for most everybody,” he added. “That makes it much more challenging for card issuers.”

The best way to pay off debt

The best move for those struggling to pay down revolving credit card debt is to consolidate with a 0% balance transfer card, experts suggest.

“There is enormous competition in the credit card market,” Sandberg said. Because lenders are constantly trying to capture new cardholders, those 0% balance transfer credit card offers are still widely available.

Cards offering 12, 15 or even 24 months with no interest on transferred balances “are basically the best tool in your toolbelt when it comes to knocking down credit card debt,” Schulz said. “Not accruing interest for two years on a balance is pretty hard to argue with.”

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The 60/40 portfolio may no longer represent ‘true diversification’: Fink

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Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink during the New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York City on Nov. 30, 2022.

Michael M. Santiago | Getty Images

It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink.

In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.”

“The future standard portfolio may look more like 50/30/20 — stocks, bonds and private assets like real estate, infrastructure and private credit.” Fink writes.

Most professional investors love to talk their book, and Fink is no exception. BlackRock has pursued several recent acquisitions — Global Infrastructure Partners, Preqin and HPS Investment Partners — with the goal of helping to increase investors’ access to private markets.

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The effort to make it easier to incorporate both public and private investments in a portfolio is analogous to index versus active investments in 2009, Fink said.

Those investment strategies that were then considered separately can now be blended easily at a low cost.

Fink hopes the same will eventually be said for public and private markets.

Yet shopping for private investments now can feel “a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink writes.

60/40 portfolio still a ‘great starting point’

After both stocks and bonds saw declines in 2022, some analysts declared the 60/40 portfolio strategy dead. In 2024, however, such a balanced portfolio would have provided a return of about 14%.

“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” said Amy Arnott, portfolio strategist at Morningstar.

If you’re willing to add more complexity, you could consider smaller positions in other asset classes like commodities, private equity or private debt, she said.

However, a 20% allocation in private assets is on the aggressive side, Arnott said.

The total value of private assets globally is about $14.3 trillion, while the public markets are worth about $247 trillion, she said.

For investors who want to keep their asset allocations in line with the market value of various asset classes, that would imply a weighting of about 6% instead of 20%, Arnott said.

Yet a 50/30/20 portfolio is a lot closer to how institutional investors have been allocating their portfolios for years, said Michael Rosen, chief investment officer at Angeles Investments.

BlackRock CEO Larry Fink: Infrastructure will be the largest growing sector in private capital

The 60/40 portfolio, which Rosen previously said reached its “expiration date,” hasn’t been used by his firm’s endowment and foundation clients for decades.

There’s a key reason why. Institutional investors need to guarantee a specific return, also while paying for expenses and beating inflation, Rosen said.

While a 50/30/20 allocation may help deliver “truly outsized returns” to the mass retail market, there’s also a “lot of baggage” that comes with that strategy, Rosen said.

There’s a lack of liquidity, which means those holdings aren’t as easily converted to cash, Rosen said.

What’s more, there’s generally a lack of transparency and significantly higher fees, he said.

Prospective investors should be prepared to commit for 10 years to private investments, Arnott said.

And they also need to be aware that measurement issues with asset classes like private equity means past performance data may not be as reliable, she said.

For the average person, the most likely path toward tapping into private equity will be part of a 401(k) plan, Arnott said. So far, not a lot of companies have added private equity to their 401(k) offerings, but that could change, she said.

“We will probably see more plan sponsors adding private equity options to their lineups going forward,” Arnott said.

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