WASHINGTON - The rate of home foreclosures in the United States has become a "national crisis," Cleveland Federal Reserve President Sandra Pianalto said Friday.
She also said the challenges facing the housing market cannot be overcome by a single program or government entity, in prepared remarks to a luncheon hosted by the Neighborhood Housing Services of Greater Cleveland in Cleveland, Ohio.
"In fact, housing market issues pose a significant headwind to our economic recovery," Pianalto said.
"We all know too well that foreclosures and abandoned properties have been imposing significant hardships on millions of people and an untold number of communities over the past few years," she added.
Specifically, Pianalto noted that losses in housing wealth have held back consumer spending, sapped household confidence, and reduced the ability of small-business owners to obtain credit.
Housing issues also continue to affect bank earnings and credit quality, she added.
"So, I can assure you that I see the consequences of our housing market challenges both as a resident of northeast Ohio and in my role as a Federal Reserve policymaker," she said.
The nation's challenges with vacant and abandoned housing are immediate, the Cleveland Fed chief said, but added that "they are the result of forces that have been at work long before the recent financial crisis and recession."
"While the effects of the crisis and recession certainly deepened their impact and significantly increased the challenges we face, we cannot hope to overcome these forces by implementing a single program or through the efforts of any one governmental or private organization," Pianalto concluded.
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