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The Availability and Impact of Public and Private Funding Following a Natural Disaster

Natural disasters are shocks to income, wealth, and capital, and over the past few decades, according to federal statistics, the number of natural disasters where losses have exceeded $1 billion has been increasing. Homeowner’s insurance is essential for well-functioning property markets because it enables homeowners to cover the cost of repairs following a natural disaster. Yet home insurance is becoming more expensive, and some insurance companies are limiting plan offerings in some states.

In the aftermath of a natural disaster, community banks have the potential to provide liquidity to homeowners who are uninsured or underinsured. But community banks are less likely to have the capacity to lend after large-scale natural disasters, particularly if they are unable to raise sufficient capital. Do community banks play a unique role in lending in the wake of natural disasters? How has the decline of community banking affected post-disaster recovery and economic growth? On Wednesday, March 5, 2025, the Chicago Fed’s Economic Mobility Project held The Availability and Impact of Public and Private Funding Following a Natural Disaster, a virtual event during which Chicago Fed senior economist Daniel Hartley presented results from three of his studies.

  • In “Credit when you need it,” Hartley and his co-authors, analyze the impact of emergency credit access on households’ finances after a federally declared natural disaster and find that the provision of credit in a time of crisis has effects on consumption, particularly on additional car purchases. Their findings suggest that well-timed liquidity provided to households in need can have substantial and ongoing positive effects.
  • In “Natural disasters, local bank market share, and economic recovery,” Hartley and his co-author look at differences in post-disaster credit allocation and regional redevelopment based on the concentration of local banks following bank deregulation that drastically diminished the role of community banks. They note that savings, credit markets, and insurance are not always sufficient to smooth the negative financial consequences of a natural disaster.
  • In “Weathering an unexpected financial shock: The role of federal disaster assistance on household finance and business survival,” Hartley and his co-authors study the financial impact of FEMA individual assistance grants in the wake of a tornado.

The research presentation was followed by a moderated panel, where scholars and other experts on housing finance, insurance, and credit access discussed the impacts of the current insurance crisis and potential policy solutions to provide financial stability to homeowners affected by natural disasters.

The full transcript is available, The Availability and Impact of Public and Private Funding Following a Natural Disaster.

Wednesday, 03/05/25
11:00 AM
Opening Remarks and Introductions
Speaker
Kristen Broady, Director of the Economic Mobility Project, Federal Reserve Bank of Chicago
11:02 AM
The Impact of Public and Private Funding Availability Following a Natural Disaster
Speaker
Daniel Hartley, Senior Economist, Federal Reserve Bank of Chicago
11:18 AM
Panel Discussion & Audience Questions
Moderator
Stacey Vanek Smith, Senior Story Editor, Bloomberg
Panelists
Benjamin Keys, Rowan Family Professor, Professor of Real Estate, and Professor of Finance, Wharton School, University of Pennsylvania
Ralf Meisenzahl, Vice President and Director of Financial Research, Federal Reserve Bank of Chicago
Amine Ouazad, Associate Professor, Department of Applied Economics, HEC Montréal
11:58 AM
Closing Remarks
Speaker
Kristen Broady, Director of the Economic Mobility Project, Federal Reserve Bank of Chicago
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Speaker

Kristin Broady

Director of the Economic Mobility Project
Federal Reserve Bank of Chicago

Dr. Kristen Broady is a senior economist, economic advisor, and director of the Economic Mobility Project at the Federal Reserve Bank of Chicago. Broady is a nonresident senior fellow at the Brookings Institution, where prior to joining the Chicago Fed, she served as a fellow, performing research and analysis on areas including the impact of automation on the labor market, the racial wealth gap, returns to higher education investment, and the disparate economic impact of the COVID-19 pandemic.

Broady is an adjunct professor of economics at Spelman College and has served on the faculties of higher education institutions including the University of Chicago, Dillard University, and Howard University, and as a visiting faculty member at Jiangsu Normal University in Xuzhou, China. She served as a consultant for the Joint Center for Political and Economic Studies; a senior research fellow for the Center for Global Policy Solutions; a consultant for the City of East Point, Georgia; and as an HBCU consultant for season two of The Quad on Black Entertainment Television (BET). Broady earned a B.A. in criminal justice at Alcorn State University and an M.B.A. and Ph.D. in business administration with a major in economics at Jackson State University.

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Speaker

Dan Hartley

Senior Economist
Federal Reserve Bank of Chicago

Daniel Hartley is a senior economist and economic advisor on the regional research team in the research department of the Federal Reserve Bank of Chicago. Prior to joining the regional team, he was a policy economist and a member of the Insurance Initiative. His primary research interests include urban economics, labor economics, and household finance. His current work focuses on neighborhood housing market dynamics, housing subsidy programs, household finance, and the effect of natural disasters on households and businesses. Prior to working at the Federal Reserve Bank of Chicago, he was an economist in the research department at the Federal Reserve Bank of Cleveland for almost 6 years.

Hartley holds a Bachelor of Science in electrical engineering from the Massachusetts Institute of Technology, an M.B.A. from the University of Chicago, a Master of Engineering in electrical engineering and computer science from the Massachusetts Institute of Technology and a Ph.D. in economics from the University of California, Berkeley.

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Panelist

Benjamin Keys

Rowan Family Professor, Professor of Real Estate, and Professor of Finance
Wharton School, University of Pennsylvania

Ben Keys is the Rowan Family Foundation Professor of Real Estate and Finance at the University of Pennsylvania's Wharton School and a Research Associate of the National Bureau of Economic Research.

Keys's recent research has focused on climate risk, housing, and mortgage markets; foreign investment in the U.S. housing market; and the geography of household financial distress. His research has been published in such journals as the Quarterly Journal of Economics, American Economic Review, Journal of Financial Economics, and Review of Financial Studies, and has been profiled in the Economist, Wall Street Journal, and New York Times.

Before joining Wharton, Keys taught at the University of Chicago and worked as a staff economist at the Board of Governors of the Federal Reserve System. He holds a B.A. in economics and political science from Swarthmore College and an M.A. and Ph.D. in economics from the University of Michigan.

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Panelist

Ralf Meisenzahl

Vice President and Director of Financial Research
Federal Reserve Bank of Chicago

Ralf Meisenzahl is a vice president and the director of financial research in the economic research department at the Federal Reserve Bank of Chicago. His research focuses on financial intermediation, linkages between finance and the real economy, and economic history. His work has been published in several academic journals including the Quarterly Journal of Economics, Review of Economic Studies, Journal of Financial Economics, and Review of Financial Studies. He currently serves as co-editor in chief of Explorations in Economic History. He is a member of the Executive Committee of the International Banking, Economics and Finance Association (IBEFA) and an editorial board member of the Journal of Risk and Insurance.

Before joining the Chicago Fed in August 2019, Meisenzahl served as principal economist at the Federal Reserve Board. He received a diploma in economics from University of Mannheim and a Ph.D. in economics from Northwestern University.

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Panelist

Amine Ouazad

Associate Professor, Department of Applied Economics
HEC Montréal

Amine Ouazad is an Associate professor at HEC Montréal‘s Department of Economics. His research was cited in Congressional hearings, in the Financial Times, Wall Street Journal, New York Times, CBS, Bloomberg, Politico, etc. He serves on the scientific and awards committees of the American Real Estate and Urban Economics Association, and the scientific committee of the Urban Economics Association. Previously he was an associate professor at Rutgers Business School, New Jersey, an associate professor at Ecole polytechnique, France, and an assistant professor at INSEAD, Fontainebleau. In April 2020, he was appointed DLA Piper Distinguished Visiting Professor of Economics at Johns Hopkins University. He was a Senior Fellow of Johns Hopkins’ 21st Century Cities Initiative.

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Moderator

Stacey Vanek Smith

Stacey Vanek Smith, Senior Story Editor
Bloomberg

Stacey Vanek Smith is a Senior Story Editor for Bloomberg Audio and Special Correspondent for Marketplace. She previously served as a correspondent and host for National Public Radio’s (NPR) Planet Money and founding host of NPR’s daily podcast The Indicator from Planet Money. Her work has appeared on NPR’s All Things Considered, Consider This, Morning Edition, Up First, How I Built This, and Rough Translation, as well as in the Washington Post, Time magazine, New York Times, The Awl, and People magazine. Smith is a graduate of Princeton University and holds a master’s in broadcast journalism from Columbia University. She was awarded the Ferris Teaching Grant from Princeton University in 2019 and taught a course in audio journalism.

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