The thing being called into question here is the ethics of the NO and LA government, and it is pretty clear it stinks. Our system falls apart without highly ethical people in positions of power - LA fails, and cannot be saved by the US government throwing money into this pit.
I think a lot of places would fail your "highly ethical people in power test". Unless you think N.O. and Louisiana leaders and government are the only ones with ethical problems among our politicians. In fairness I don't think that is what you believe and frankly I don't trust most of them, no matter where they are from. I would urge the feds and anybody else to completely control where any money given to Louisiana is spent. Audit it till the cows come home as far as I'm concerned.