By Denny Gulino
WASHINGTON (MNI) – Critics who accuse the Federal Reserve of
overstepping its charter with its suggestions on housing remediation
aren’t getting any traction with Fed Gov. Elizabeth Duke, who Tuesday
endorsed land banks and other ways to deal with eroding communities.
“Weak national economic conditions have caused particular hardships
in lower-income communities, and have stretched the federal, state, and
local resources available to address neighborhood stabilization and
revitalization,” Duke told a Seattle audience.
She recommended an “entrepreneurial” approach to neighborhood
stabilization and then community development, citing successful efforts
across the country.
Ever since the Fed issued its housing White Paper at the beginning
of January, surveying the economic problems caused by what has been
called a housing depression and listing some possible remedies,
congressional critics have accused the Fed of moving into fiscal policy,
exceeding its mandates and otherwise being an unwelcome intruder into
housing policymaking.
Duke, in her remarks prepared for the 2012 National Interagency
Community Reinvestment Conference, did not acknowledge the critics, but
did say one of the White Paper’s suggested remedies, land banks, are
being increasingly utilized.
Instead of leaving vacant properties alone, some communities, she
said, are managing them. “Land banks are typically public or nonprofit
entities, often with a limited lifespan,” she said. “The notion of a
land bank as opposed to a land trust,” she continued, “is that
properties are brought in and moved out of a land bank’s portfolio
rather than permanently preserved.”
While in the land bank portfolio, “foreclosed properties can be
physically rehabilitated, rented, sold to new owner-occupant or
responsible investors, or, in some cases, demolished,” she said.
That allows communities to “gain control of vacant properties and
keep them from causing problems for the surround neighborhood until
market conditions are more conducive to redevelopment or sale,” she
said.
Since regulators revised the definition of community development as
it relates to the law governing community redevelopment aid from
Washington, passed in 1977, new approaches to stabilization and
development are being found to be successful in many regions, she said.
Since the era of so-called redlining, in which some neighborhoods
were called off from mortgage lending by financial institutions, or
penalty interest rates and fees imposed, the field has matured, she
said.
Now stabilizing neighborhoods and rebuilding them involves
broad-based planning using databases of property information, matching
families with loans, encompassing transportation and the mobility of
workers and the jobs themselves.
“The foreclosure crisis that resulted from unsustainable lending
has persisted largely because of high unemployment rates,” she said.
“Any effort to stabilize and revitalize lower-income neighborhoods will
need to consider housing through the lens of access to jobs and
educational opportunities.”
Duke’s term ended Jan. 31 but she is staying on so that the Fed
Board has what’s considered a necessary minimum five members on duty.
The Senate Banking Committee is scheduled to vote on two Fed nominees
Thursday but it is still an open question whether the nominees can get
enough votes in the full Senate.
** MNI Washington Bureau: 202-371-2121 **
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