U.S. News

Loans to be forgiven for hurricane-hit U.S. cities

WASHINGTON (Reuters) - The U.S. government will begin granting loan forgiveness to cities devastated by the hurricanes of 2005, citing their weakened financial conditions, Vice President Joseph Biden said on Friday.

“Today’s loan forgiveness announcement is just another example of our common-sense approach to rebuilding in the region -- we’re removing unnecessary bureaucratic hurdles and providing faster turnaround on assistance,” he said in New Orleans which was ravaged by Hurricane Katrina, according to a statement.

Following the one-two punch of Hurricanes Katrina and Rita, cities along the Gulf Coast in Alabama, Louisiana and Mississippi were granted special disaster loans to continue operating as they rebuilt. But some have struggled with financial problems associated with the storms and with the recession that began barely two years after the disaster.

Cities that had operating deficits for three full fiscal years following the storms can apply for the forgiveness.

“This administration continues to be deeply committed to do everything in our power to help New Orleans and the entire Gulf Coast not only restore their storied past, but build a better future,” Biden said.

Former President George Bush was criticized for a slow response to the disasters and President Barack Obama has taken steps over the last year to keep the region in the minds of Americans.

The loan forgiveness process will be published next week and will go into effect 60 days after, according to the Vice President’s office.

Reporting by Lisa Lambert; Editing by James Dalgleish