NYT Behind Louisiana Aid Package, a Change of Heart by One Man - New York Times

Intersting piece in the New York Times New York Times highlighting the work of the Bush administration recovery czar Donald Powell. It details Mr. Powell's shift from a policy that only homeowners with flood insurance would recieve federal housing help to an acceptance that a broader intervention was needed.

Mr. Powell's own idea of housing aid excluded thousands of homeowners, many of them poor, who lived in the flood plain but did not have flood insurance when Hurricane Katrina hit...But barely a week would pass before Mr. Powell did an about-face that turned many of his critics into fans, ...Mr. Powell announced that the president would seek $4.2 billion more for Louisiana to compensate homeowners — even those in the flood plain.

The rationale identified in the paper was that the government was partially at fault for the disaster through the failure of the levies. Therefore those who had relied on the levies, rather than flood insurance, should be helped as well.
Consistent with federal policy homes will be rebuilt in the flood plain but flood damage mitagation methods will be used. Interestingly it seems the federal government doesn't want to run people out the their homes no matter how flood prone or foolish the location may seem to others. The argument that rebuilding in locations that have been flooded in the past didn't seem to hold much political value, no matter how big the price tage. In this case the price tag is 4.2 billion of our tax dollars.