Ingles

Community Development in Challenging Times
Remarks by
Ben S. Bernanke
Chairman
Board of Governors of the Federal Reserve System
at the
Federal Reserve Community Affairs Research Conference
Arlington, Virginia
As always, I’m pleased to join you at the Federal Reserve’s biennial Community
Affairs Research Conference. This meeting brings together researchers, community
developmentprofessionals, and public-sector officials to explore how best to strengthen
struggling communities. Needless to say, that endeavor is more crucial than ever. The
past few years have been very difficult. Weak economic conditions at the national level
have translated into hardships in many communities at the same time that communities
have fewer resources available for stabilization and revitalization.Considerable good
work is going on nonetheless, and I will offer a few examples of that today.
At the national level, the economy is recovering at a moderate pace. In particular,
the labor market has been gradually improving and the unemployment rate has declined
somewhat. But unemployment remains quite high, particularly among minorities, the
young, and those with less education. What’smore, long-term unemployment remains at
historically high levels. Nearly half of the unemployed have been out of work for six
months or more. The housing market is also holding back the recovery. The foreclosure
rate remains very high, and many homeowners who have avoided foreclosure find
themselves “under water,” meaning their mortgage debt exceeds the value of their homes.
Obviously, theproblems in the labor market and the housing market are not unrelated. In
particular, lost income from unemployment is causing many families to fall behind on
their mortgage payments.
The Challenges to Communities
As families have struggled, so have their communities. In some areas, for
example, high foreclosure rates have produced significant numbers of vacant properties,
depressing surroundinghome prices, attracting crime, and creating financial burdens for
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local governments. Thus, some community development groups now are simply trying to
hold onto past progress that they have made in building up the physical infrastructure and
human capital of their communities, while others have lost ground and are beginning the
process of rebuilding.
While the scale of the problems hasbeen exceptional, many of the problems
themselves are not new for lower-income families and communities that were already
struggling. People who were vulnerable to begin with--those with low incomes, few
assets, and less education--have had a more difficult time weathering the financial storm
or recovering from setbacks. The same is true for communities that were already
relatively poor, withfewer community assets and insufficient drivers of economic
growth.
To solve problems, we must first understand them. Like many of you here today,
the Federal Reserve has been engaged for some time in research and analysis of the
economic challenges faced by neighborhoods and communities as well as by individuals
and families. For example, in 2008, the Federal Reserve Banks and the Board ofGovernors, in partnership with the Brookings Institution, published a study of the effects
of concentrated poverty on communities.1 The communities studied included older inner
cities in the North, smaller cities in the South and West, Native American reservations,
“gateway” neighborhoods that are entry points for immigrants, and rural areas in
Appalachia and the Mississippi Delta. What thesediverse communities had in common
was that they did not share in our country’s general prosperity, even in good times.
Our research identified some of the barriers to economic progress shared by these
communities, including inadequate schools and workforce skills, lack of investment in
infrastructure and business development, and limited institutional capacity. Not
surprisingly, these...