How Effective Were the Financial Safety Nets in the Aftermath of Katrina?

FRB of Philadelphia Payment Cards Center Discussion Paper No. 06-01

21 Pages Posted: 3 Mar 2006

See all articles by Julia S. Cheney

Julia S. Cheney

Federal Reserve Bank of Philadelphia

Sherrie L.W. Rhine

Federal Deposit Insurance Corporation

Date Written: January 2006

Abstract

This paper describes the U.S. financial system's response to the destruction caused by Hurricane Katrina and examines how financial safety nets helped meet consumers' needs in the aftermath of the storm. Overall, we find that consumers who hold deposit accounts at financial institutions are less vulnerable to financial disruptions than individuals who do not have either a checking or a savings account (the unbanked). The federal banking regulators' and financial institutions' responses to Hurricane Katrina, the financial vulnerability of unbanked families to this unexpected catastrophic event, and how the American Red Cross, FEMA, and the Gulf States' relief efforts supplied financial assistance to Katrina's victims are also addressed. Finally, we present several strategies that can be pursued to further safeguard the U.S. population and the financial community against extraordinary events.

Keywords: Hurricane Katrina, Financial crises, Unbanked

Suggested Citation

Cheney, Julia S. and Rhine, Sherrie L.W., How Effective Were the Financial Safety Nets in the Aftermath of Katrina? (January 2006). FRB of Philadelphia Payment Cards Center Discussion Paper No. 06-01, Available at SSRN: https://ssrn.com/abstract=886121 or http://dx.doi.org/10.2139/ssrn.886121

Julia S. Cheney (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Sherrie L.W. Rhine

Federal Deposit Insurance Corporation ( email )

550 17th Street, NW
Washington, DC 20429
United States