It's not enough to create financial products and housing, policymakers also need to think critically about the role education and jobs play in wider and sustainable homeownership levels, according to Federal Reserve Board Governor Elizabeth Duke.
Duke made that assertion while speaking at the 2012 National Interagency Community Reinvestment Conference in Seattle on Wednesday.
"The foreclosure crisis that resulted from unsustainable subprime lending has persisted largely because of high unemployment rates," Duke said. "Thus, in order to be successful, 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 said policymakers in the future will have to look at the role jobs play in ensuring a community can maintain current homeownership levels.
Duke added that neighborhood construction and a community's interplay with public transportation is another critical factor.
She pointed to a move that Dallas firm Lone Star Investment Advisors made in North Texas. The firm, which invests in Texas companies, noted that one of the businesses in its portfolio, PrimeSource Food Service Equipment, moved to a low-income area bringing hundreds of new jobs with it.
"I raise this example because it demonstrates what a little imagination can do to solve the problem of connecting people with jobs," Duke said. "Moreover, this double bottom-line approach to investments — making a profit while benefiting the community — makes this kind of activity attractive to bankers with CRA obligations and other socially-minded investors."