Katrina: After the Flood

by Gary Rivlin

  On Thursday nights in Baton Rouge, the well-connected gathered at Gino’s, an Italian restaurant with a large bar area popular with legislators, lobbyists, and other local power brokers. Over copious glasses of wine on the second Thursday after Katrina, the mood was almost triumphant as good news finally started to arrive via newly revived phones. The French Quarter was dry. So, too, was the core of the central business district and Uptown—or at least the Uptown of old New Orleans. “Things have really started to turn for the better in the past forty-eight hours,” said Stephen Perry, a Gino’s regular and CEO of the New Orleans Convention & Visitors Bureau. Perry, who had served as chief of staff to Blanco’s predecessor, was hearing that power would be restored to the core city within three weeks. The water and sewer systems should be functioning in key parts of New Orleans by then as well. Perry predicted the Quarter could be ready to greet visitors in less than ninety days. In a town where tourism was the number one industry, the areas that visitors would care most about, including the Warehouse and Garden Districts, were the least affected by the flooding. That, Perry said, would provide the city a base on which to build.

  Uptown hadn’t escaped unscathed. Fallen trees and downed utility poles were everywhere. Falling limbs had destroyed much of the catenary that powered the streetcars that run up and down St. Charles. Many Uptown homes suffered roof damage. Yet optimism coursed through this well-heeled, mostly white crowd. A well-connected corporate attorney talked about the possibility of holding Mardi Gras that February as usual. An executive with a major oil company saw no reason his coworkers couldn’t be back at their desks inside a few weeks. He had been on the phone with his employees all day. Not a single person he spoke with owned a home that had taken on water.

  In many ways, the men and women gathered at Gino’s that night were McDonald’s peers. He served on the same boards and commissions and knew them from meetings of the Chamber of Commerce, where McDonald was the presiding officer. Like McDonald, most seemed to be doubling up in satellite offices or working at borrowed desks. “Alden is one of the city’s five or ten most prominent movers and shakers,” said Patrick Quinn, a prominent developer and hotelier in town who, along with his wife, a state senator representing the western and northern suburbs, had taken up temporary residence in Baton Rouge. Perhaps it went without saying that few, if any, other blacks were on Quinn’s list.

  The contrast was not lost on McDonald. In much of the western half of town, where the majority of whites lived, Katrina was proving a severe inconvenience more than a tragedy. Most of the white businesspeople at Gino’s that night were frustrated that they couldn’t get home, but they knew they would have a home and belongings, and a job, to which to return.

  McDonald, however, lived in the black half of town, where everyone he knew was staring into the abyss. Their homes and businesses were in ruins. “You’re looking at the television and seeing water up to the street signs,” said Arthur Johnson, an administrator in the New Orleans school district at the time of Katrina who lived not far from McDonald. “And we’re all thinking, We’ll never go back. There’s no reason to go back. Everything is gone.”

  RUSSELL LABBE AND JOE James were hailed as heroes for their water journey into New Orleans to retrieve the software and equipment Liberty so desperately needed. But another week of phone calls followed with the emergency-backup company, who always told McDonald and his people that the problem was on their end. In the months to come, no topic—not his interminable fights with insurance firms or utility companies or even a final bill on all the money the looters stole—irritated McDonald quite like his disappointments with a backup company that had him running the bank blind for nearly two weeks. Not until 4:00 p.m. on Friday, September 9, 2005—eleven days after the flood—was Liberty back on the interbank network.

  Initially, McDonald had put a $100 daily limit on all ATM withdrawals. But imagining his customers in hotels around the country, racking up expenses, he upped the daily maximum to $500 and hoped his customers had the money to cover the cash they were withdrawing. In a catastrophe, he was intent on playing Jimmy Stewart’s George Bailey and not Lionel Barrymore’s Mr. Potter. “A banker is someone who gives you an umbrella when the sun is shining and takes it away when it starts to rain,” McDonald said, repeating an unflattering adage about his profession. But he added, “We try not to be that banker.” The decision cost Liberty close to $1 million.

  That was nothing compared to the bank’s other losses. A no-questions-asked, four-month grace period on any home, business, or auto in a flooded area might have been the right thing to do, but it also represented millions of dollars in checks the bank wouldn’t be cashing in the months to come. And even once January 1 came, then what? Could he expect most people to resume payments on properties and cars and businesses that had been wrecked in a once-in-a-lifetime flood? Pre-Katrina, Liberty generated $150,000 in loan fees and another $70,000 in charges from checking accounts every month. But the bank wasn’t originating many loans in the months after Katrina, and Liberty had suspended checking fees for most of its customers. The $100,000 a month the bank generated leasing out space in its headquarters also disappeared. Liberty had frozen interest charges on credit-card balances, representing more lost revenues, and there would be no late fees for four months. In the long run, it would be good for Liberty’s business that people carried larger balances on their credit cards, but first the bank needed to survive the short run. “Everywhere I look,” McDonald said six weeks after the storm, “I’m losing money.”

  Layoffs were inevitable. “I’m going to have to give severance packages and try to help people get to where they’re going to get,” he told a reporter around an hour after Liberty was back on the global financial grid. “I need to balance income and expense.” Eleven days after Katrina, he offered a few halfhearted words of optimism and then confessed, “I’m running against time.”

  He knew the regulators were watching him closely. State examiners in Baton Rouge were coming by his temporary offices, and another set were checking in from Dallas, where the FDIC has its regional office. “They understand we’re losing a certain amount of money now,” McDonald said. “But regulators are not going to let us lose too much before they step in.” Six of his eight branches in New Orleans had flooded. Several had been battered by looters, including one of the two that hadn’t taken on any water. The ground floor of his new headquarters was a complete loss, and what was happening with the rest of the building remained a mystery. If nothing else, he would need to replace every window. He had insurance on the building, but what his policy would cover and what it wouldn’t was another unknown.

  The Whitney, where the city’s blue bloods banked, was off the ATM network in the days after Katrina. So, too, were other local banks. “Regulators were worried about the whole system in New Orleans collapsing,” McDonald said. “But I think it’s fair to say they were more worried about me than anyone else.”

  It would have been an overstatement to say that as went this one bank, so would go New Orleans. But it didn’t seem too much of a stretch to claim that Liberty’s success and the future of the city’s black neighborhoods were entwined. McDonald would need a healthy black middle class if he hoped to revive the bank. In turn, the black middle class would need a bank like Liberty to help it thrive again.

  At the moment, it looked as if the French Quarter, the Garden District, and other parts of New Orleans precious to locals and visitors alike would survive. The prognosis for New Orleans East and Gentilly, however, and the smaller, black or Creole neighborhoods such as the Seventh Ward, St. Roch, and the Lower Ninth Ward, was far from clear. Dennis Hastert, the Speaker of the House of Representatives, was openly suggesting that at least some of these neighborhoods didn’t have a future. “It looks like a lot of that place could be bulldozed,” said Hastert, a Republican from Illinois, two days after Katrina. Through his own contacts in Washington, McDonald knew Hastert was speaking on behalf of many inside the Beltway. A grea
t deal of recovery money would be set aside for New Orleans, McDonald’s Washington contacts assured him, but it would be nowhere close to the multiple tens of billions the city needed to rebuild after the most expensive disaster in US history. After thirty-three years spent building Liberty into one of the country’s biggest black-owned banks, McDonald was asking himself whether he would outlast the bank examiners to celebrate a thirty-fourth.

  5

  THE SHADOW GOVERNMENT

  Mayor Nagin woke up early on Saturday morning. It was barely sunrise on his sixth day of presiding over a waterlogged city, and finally he had gotten four or five hours of sleep. Clots of people were still at the Superdome, but he was pleased to learn the buses had been running all night. Convoys of buses were finally starting to clear out the Convention Center, which would be empty of people by Sunday night.

  Sunday was the day Nagin started talking to the media. First up was Oprah Winfrey, who was due in the city at noon.

  The early part of the Winfrey interview proved disastrous. At first the problem was Eddie Compass, the police chief, who, Nagin said, “verbally exploded in front of the cameras.” Compass himself had told the Guardian newspaper that his people had yet to substantiate any rapes at either the Superdome or the Convention Center. The article appeared the night before the Winfrey interview. There was also no evidence of the violent crimes that had supposedly been committed in either refuge. Yet Compass, who kept butting into Nagin’s conversation with Winfrey, blurted out, “We’ve got babies being raped.” The mayor asked for a small break and pulled his chief aside. “Pull yourself together!” he hissed. Yet Nagin proved no less reckless a spokesman for his city. “People in that frickin’ Superdome for five days,” Nagin told Winfrey, “watching dead bodies, watching hooligans killing people, raping people.” For days there had been apocryphal talk of slit throats and even the rape of a seven-year-old girl inside the Superdome. Now New Orleans’s mayor and its police chief were repeating unsubstantiated accounts of unspeakable crimes to the afternoon audience watching The Oprah Winfrey Show.

  Winfrey was dressed in jeans, a lime-green blouse, and rain boots. Nagin asked if she’d like to go inside the Superdome but immediately regretted the invitation. Too late to say no, he made Winfrey look at the camera and repeat after him, “I, Oprah Winfrey, promise not to hold the city liable financially or otherwise as a result of me going into this doggone stinky-ass Superdome.” All week Nagin had avoided talking to people inside the dome out of fear for his own safety, but now with Winfrey, walking into the empty facility, he was assaulted by a smell so malodorous, he said, “I could taste funk.” Tears filled Winfrey’s eyes as she scanned the dank building lit up by shafts of light from the big holes that Katrina had punched in the dome’s roof. “How could the richest country in the world let Americans suffer the way they did over the past week?” Nagin asked. The two hugged when they said their good-byes.

  Nagin sat down with John Donvan of Nightline after Winfrey. Immediately, Sally Forman knew she had made a mistake pushing the mayor into the spotlight when he was describing himself as “mentally and physically drained.” Donvan opened with a soft-ball question about Nagin’s house. The mayor’s home had not flooded and only suffered minor roof damage, yet she watched as the mayor told Donvan, “I know it’s gone. I don’t want to see it.” The mayor seemed surprised when Donvan asked if race was the reason it took so many days to come to the city’s rescue. Call it race or call it class, the mayor said, but “I don’t think this type of response would have happened if this was Orange County, California.” The mayor ended his Sunday with Scott Pelley of 60 Minutes, where his exhaustion expressed itself as pessimism: “When you see a city that you love so much and you see it devastated and almost dead, you wonder what the future looks like.”

  Nagin was up early the next morning talking with Matt Lauer, who spoke with him via satellite from the Today show studio in New York. The mayor gave Stone Phillips of Dateline a flyover tour of the city, then opened up to CNN’s Soledad O’Brien. “What the state was doing, I don’t friggin’ know,” Nagin told O’Brien. “But I tell you, I’m pissed. It wasn’t adequate.” Off camera, Forman was frantically slashing her finger across her throat, but the mayor ignored her. “She said she needed twenty-four hours,” the mayor continued, referring to the governor’s confrontation with the president on Air Force One. “And more people died.” When Diane Sawyer asked Nagin about Bush, the mayor gave the commander in chief the benefit of the doubt: “I don’t think the right information got to the president.”

  Sally Forman was with Nagin when she received the expected phone call from the governor, early Tuesday morning. The mayor and his communications director were on Canal Street. Post-storm, the media had parked satellite trucks, RVs, generators, and tents where normally streetcars would be running. Nagin and Forman were sitting under the big top NBC had set up, waiting for the mayor to talk live with Katie Couric. Nagin nodded an emphatic no when Forman mouthed that the governor was on the line. So Forman absorbed Blanco’s fury at being accused of making a decision that cost lives. “If the mayor wants to go toe to toe, I’ll go toe to toe with him,” Blanco warned. The governor’s voice was cracking, Forman said, and she thought Blanco might be crying (Blanco said she wasn’t). Forman mimed tears and gave her boss a pleading look. He wouldn’t take the phone.

  The conversation ended when the connection was lost, causing Forman to utter an audible “Thank you, Jesus.”

  “MAN, I GOTTA GET out of Dodge.” Ray Nagin made it no secret how badly he needed a break that second week after Katrina. Thousands of Guardsmen were now patrolling New Orleans, along with another twenty-two hundred soldiers from the Eighty-Second Airborne Division. The city was safe and he wanted to see his wife and kids, who had flown to Dallas the day before the storm. In the command center that the city and Entergy were still operating on the fourth floor of the Hyatt, he asked Dan Packer, Entergy’s CEO, for a ride to Dallas on Entergy’s corporate jet. On Thursday, September 8, ten days after the city flooded, Nagin flew to Dallas, forcing Packer to make the trip as well given a company policy that an Entergy officer be aboard. “I was very much in need of rest and recuperation,” Nagin wrote of his decision to leave New Orleans for five days after Katrina.

  The mayor’s time in Dallas was uneventful. His two boys, Jeremy, twenty-one, and Jarin, eighteen, were there, as was his daughter, Tianna, who was six. The mayor caught up on sleep, but otherwise they spent their days like other well-off New Orleanians needing to relocate, at least temporarily. The Nagins went to the mall to buy the mayor some new clothes. They visited potential schools for Tianna and found a town house that would serve as their temporary home base. Nagin told his wife that the family should figure on staying there for “at least the next six months.”

  The mayor did have city business in Dallas. Just before leaving New Orleans, Jimmy Reiss had phoned. Reiss was an important ally and Nagin’s RTA chief, but he was also the one who told the Wall Street Journal that New Orleans would become “demographically” different after the storm or he and the other old-line families wouldn’t be moving back. Now Reiss was insisting that Nagin make time to meet with him and other members of the Business Council. The mayor’s being out of town made everything simpler. Dallas had an operating airport and hotels with working toilets. That Saturday, the mayor drove himself to the giant Loews Anatole Hotel just north of downtown Dallas for what he later described as “my meeting with the shadow government” of New Orleans.

  RAY NAGIN WAS NINE years old in 1965 when Hurricane Betsy battered New Orleans. His family stayed in New Orleans through Betsy, he wrote, because “we just couldn’t afford to leave the city for an unplanned ‘vacation.’ ” Levee failures after Betsy caused mass flooding in the Lower Ninth and other parts of the city, but not in the Seventh Ward, where the Nagins lived.

  Nagin’s father worked as a bricklayer and a truck mechanic. Eventually, he’d secured a job as a garment cutter and earned extra mone
y moonlighting as a City Hall janitor. The mayor described his mother as a homemaker who did seamstress work to supplement the family’s income. The future mayor would be born at the city’s Charity Hospital in 1956. His parents named their only son Clarence, but only Nagin’s wife, Seletha, seemed to call him that. Officially, he was C. Ray Nagin, but to most everyone he was Ray.

  The Seventh Ward was a community of cottages and shotgun houses filled with the city’s barbers, waiters, and factory workers. The Nagins were a religious family, Catholic, and Nagin was an altar boy at the church a block from their house. That’s also where Nagin attended elementary school. He earned good grades without having to work too hard. Mainly he focused on athletics. His curveball won him a baseball scholarship at Tuskegee University, where Nagin earned a degree in accounting. After graduation, he bounced around in various jobs that sent him first to Los Angeles and then to Dallas. In 1985, at age twenty-nine, he landed a good-paying job that brought him back to New Orleans as a controller for Cox Communications, the cable company.

  Nagin flourished at Cox. Its books were in horrible shape when he arrived, Nagin said. Somehow the franchise was losing money despite having a monopoly and ninety thousand customers. Nagin was steadily promoted and was soon a Cox vice president, overseeing its New Orleans operation. While at Cox, Nagin launched a live call-in show on the community-access channel and served as cohost of this once-a-month program that gave unhappy Cox customers a forum to complain. There he learned the skill of talking to the general public via a television screen—or, as he put it, “honed my skills on ‘romancing the camera.’ ”