Baker's plan is nebulous, agreed.
Nevertheless, there are several factors to consider.
~ Federally guaranteed flood insurance.
~ Federally guaranteed mortgage insurance (Fannie Mae, Freddie Mac, on FHA and VA loans, especially the new "no equity loans).
~ Federally guaranteed SBA loans.
~ Federally guaranteed student loans (this may be miniscule).
~ What will it do to the economy if 1% of the population defaults on credit cards and car loans and files Chapter 7?
We need top notch number crunchers to figure this out ASAP.
The government and the financial institutions have swallowed bigger frogs than that without as much as a hiccup. I don't know where they get the money. I guess it ends up in that figure with too many zeroes to count, the national debt, and the financial institution just charge the rest of the card holders with still higher interest rates.
Lenders have been awash in money and making all kinds of deals to make loans on houses, cars, and credit cards. I don't see New Orleans as a major deal. They probable have as many forclosures and defaults every year as N.O. would present.