[ryan606]

"The other issue I see is that for some reason Houston didn't require all of these people to have flood insurance."

Banks require homeowners in flood plains with mortgages to maintain flood insurance. The problem is if you don't have a mortgage, you don't necessarily need insurance. However, perpetual Federal Government bailouts of homeowners creates moral hazard, and the expectation that Government will make you whole regardless of insurance, and thus bigger risks for all.