FEMA Incompetence After Hurricane Katrina: The Waste and Fraud Record
Hurricane Katrina became a byword for waste in federal disaster aid. The Government Accountability Office (GAO) later estimated that $600 million to $1.4 billion in FEMA’s individual assistance payments through February 2006 were improper or potentially fraudulent. Congress answered with the Post-Katrina Emergency Management Reform Act of 2006. In November 2026, Cameron Hamilton leads FEMA. The Senate confirmed him on August 7, 2026, and a Trump-appointed FEMA Review Council has proposed a redesign of the agency that mostly still needs Congress to act. Earmarks were also part of this 2006 post. Congress halted them under moratoria starting in 2011 and brought them back for fiscal 2022 as Community Project Funding in the House and Congressionally Directed Spending in the Senate. Today they come with public disclosure rules and caps, and they still flow through regular appropriations bills.
What the 2006 post argued
This page first ran in June 2006 and quoted the liberal blog Americablog. Americablog blamed the Republican Party for the waste. Republicans then held the White House and both chambers of Congress, and the blog argued that one party’s control of Washington left no one else to blame.
The blog listed what it saw as failures on international relations, the Iraq war, earmarks and members’ personal wealth. It argued that the “GOP has ruined FEMA” and that taxpayers would pay “a few billion dollars” for the damage. The post ended by urging readers to keep that record in mind at the polls in the November 2006 midterm elections. Those were the blog’s views, written in a heated election year. They were not findings of an audit or court.
Waste in Katrina aid was not a partisan finding. The New York Times story the blog quoted opened with a Republican senator, Susan Collins of Maine. She chaired the Senate Homeland Security and Governmental Affairs Committee and called the scale of fraud and waste “breathtaking.”
The Katrina waste and fraud tally (June 2006)
On June 27, 2006, The New York Times published a story by Eric Lipton titled “‘Breathtaking’ Waste and Fraud in Hurricane Aid.” The Times built its tally from government audits, criminal prosecutions and congressional investigations. It estimated fraud and waste at up to $2 billion. That was nearly 11 percent of the $19 billion FEMA had spent on Hurricanes Katrina and Rita by mid-June 2006.
These were the cases the Times highlighted, as quoted in the original post:
- Phantom hotel guests. A hotel owner in Sugar Land, Texas, was charged with submitting $232,000 in bills for victims who did not exist.
- Payments to prisoners. About 1,100 prison inmates across the Gulf Coast apparently collected more than $10 million in rental and disaster-relief aid. In congressional testimony, GAO separately reported payments to registrations that used the names and Social Security numbers of people held in federal and state prisons during the storms.
- Empty mobile homes. Officials ordered nearly half a billion dollars’ worth of mobile homes that sat empty. Auditors counted 10,777 manufactured homes, costing $301.7 million, parked unused on runways and open fields in Hope, Arkansas.
- An expensive shelter. FEMA spent $7.9 million to renovate the former Fort McClellan Army base in Anniston, Alabama, as an evacuee shelter. The work included a welcome center, clinic, gymnasium, mold cleanup and a fence near a firing range. The Times put the cost at about $416,000 per evacuee.
- Invented children. Prosecutors said an Illinois woman tried to collect federal benefits by claiming she watched her two daughters drown in New Orleans floodwaters. The children did not exist.
The Times noted that its count could grow because several inquiries were still open. It also observed that the numbers were drawing amazement even in Washington.
…read complete post at The End Of The World
What GAO found
GAO’s June 2006 testimony (GAO-06-844T) is the main official estimate. It found that about 16 percent of FEMA’s individual assistance payments, roughly $1 billion, went to registrants who used invalid information. GAO gave a 95 percent confidence range of $600 million to $1.4 billion and warned that the figure probably understated the real total.
GAO also found about $10 million in duplicate payments. These came about when 5,000 registrants each received both a $2,000 debit card and a $2,000 check.
The two figures measure different things. The roughly $1 billion is improper payments to individuals. The Times’ “up to $2 billion” also includes contracting and logistics waste, such as the unused homes in Hope.
What happened next
Congress rewrote FEMA’s rules. The Post-Katrina Emergency Management Reform Act of 2006 kept FEMA inside the Department of Homeland Security. It made FEMA a distinct entity there, set minimum qualifications for its administrator and added fraud controls to disaster aid.
Voters changed Congress. In the November 2006 midterms, Democrats won majorities in both the House and the Senate.
Earmarks were banned, then brought back. Earmarks were a theme of the 2006 post. Congress stopped them under moratoria starting in 2011. In 2021, House Appropriations Chair Rosa DeLauro (D-Conn.) and Senate Appropriations Chair Patrick Leahy (D-Vt.) brought them back for fiscal 2022 under new names and rules. Each request has to be posted publicly with the sponsor’s name. Members must certify they have no financial interest in the project, and for-profit recipients are barred. The House caps the total at one half of one percent of discretionary spending.
Earmarks now fund some disaster work too. The Consolidated Appropriations Act, 2026 (P.L. 119-75) included $189,713,659 for 125 congressionally directed FEMA Pre-Disaster Mitigation projects. The same law included $3.6 billion for HUD Economic Development Initiative Community Project Funding grants and 746 Agriculture Department earmarks worth $931 million.
For fiscal 2027, House Appropriations Chair Tom Cole (R-Okla.) opened the request portal on February 25, 2026. Each House member could submit up to 20 Community Project Funding requests across the eight bills that allow them. No full-year fiscal 2027 bills have been enacted yet. A stopgap law, P.L. 119-103, funds agencies at largely current levels through December 11, 2026.
FEMA is under review again. The FEMA Review Council approved its final report on May 7, 2026. It called for a “transformed,” leaner FEMA and a review of workforce needs. It dropped an earlier draft’s 50 percent staffing cut and took no position on whether FEMA should stay inside DHS. Hamilton was confirmed on August 7, 2026, as part of a package of nominees. He had been removed as acting administrator in May 2025 after telling Congress that FEMA should not be eliminated. He has described FEMA as “an important backstop for catastrophic and extraordinary events,” with states and local governments taking on more responsibility. Most of the council’s proposals need legislation.
FAQ
How much Katrina aid was lost to fraud and waste?
GAO estimated that $600 million to $1.4 billion in individual assistance payments through February 2006 were improper or potentially fraudulent. Its point estimate was about $1 billion. The New York Times put total fraud and waste at up to $2 billion, nearly 11 percent of the $19 billion FEMA had spent on Katrina and Rita by mid-June 2006.
What happened with the mobile homes in Hope, Arkansas?
FEMA bought manufactured homes for evacuees that it could not place. Many could not legally go into flood zones. Auditors counted 10,777 unused homes, costing $301.7 million, parked on runways and fields in Hope, Arkansas. The homes became one of the best-known symbols of Katrina waste.
Who was to blame for FEMA’s Katrina failures?
Americablog and other critics on the left blamed the Republican administration and Congress. Republicans also criticized the response, including Senator Susan Collins, who led hearings on it. Investigations by GAO and Congress pointed to weak verification of applicants, poor contracting and logistics planning, and FEMA’s position inside DHS. That led to the 2006 reform law.
Are earmarks still banned?
No. Congress halted earmarks under moratoria starting in 2011 and brought them back for fiscal 2022. In the House they are called Community Project Funding, and in the Senate Congressionally Directed Spending. Every request is published with the sponsor’s name, and the House caps the total at one half of one percent of discretionary spending.
Can earmarks pay for disaster projects?
Yes, for some projects. The fiscal 2026 appropriations law, P.L. 119-75, funded 125 congressionally directed FEMA Pre-Disaster Mitigation projects totaling $189,713,659. Those projects go through FEMA’s grant rules, including eligibility and cost reviews, before money goes out.
Who runs FEMA in November 2026?
Cameron Hamilton is FEMA administrator. The Senate confirmed him on August 7, 2026, the first Senate-confirmed administrator of President Trump’s second term. He leads the agency while Congress weighs the FEMA Review Council’s May 2026 recommendations.
Sources
- Government Accountability Office, “Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially Fraudulent Individual Assistance Payments” (GAO-06-844T), June 2006
- Congressional Research Service, “FEMA Review Council: Final Report” (IN12693), Congress.gov
- Congressional Research Service, “Overview of Continuing Appropriations for FY2027 (Division A of P.L. 119-103)” (R49353), Congress.gov
- Congressional Research Service, “Agriculture and Related Agencies: FY2026 Appropriations” (R48564), Congress.gov
- Congress.gov, Nomination PN961-2, Cameron Hamilton, 119th Congress
- House Appropriations Committee, “Cole Releases FY27 Programmatic Language and Community Project Funding Guidance”
- FEMA, “FY 2026 Pre-Disaster Mitigation Congressionally Directed Spending”
- HUD, “Fiscal Year 2026 Economic Development Initiative / Community Project Funding Grants”
- The New York Times, Eric Lipton, “‘Breathtaking’ Waste and Fraud in Hurricane Aid,” June 27, 2006
About this article
- Fact-checked before publication.
- Published · Updated
