In a two-day neighborhood stabilization strategies conference, Federal Reserve Bank of Boston president Eric Rosengren gave a speech. If people expected him to tackle the economy in general and the monetary policy, they were highly disappointed; instead, the top Federal Reserve Official touch-based on how the foreclosure crisis can be better solved by taking a more holistic approach.

According to him, the government should cease focusing on merely minimizing foreclosures and stabilizing the housing market but should also provide flexible, community-targeted funds to communities that were hit the hardest by the crisis. For him, foreclosures and falling home prices are just symptoms of a deeper problem within these communities.

In New England communities, where a high-number of real-estate owned foreclosures and vacant properties remain, residents have seen the worse public health, safety, and education measures as compared to those with a lower REO number. And this has been happening even before the housing crisis set in.

Rosengren says, “My own view is that too little focus has been on community problems because the focus has been more targeted to housing and foreclosures.”

For the Federal Reserve Bank of Boston president, focusing on combating foreclosure is a mere band-aid as opposed to completely treating the disease. The government should start resolving the general problems that lead to higher REO concentrations.

One way of doing this, suggested Rosengren, is to provide flexible funds for these communities. With a flexible fund, the local government can allocate the money where it is most needed, instead of being stuck with a housing stabilizing budget that won’t really solve the real problem. A flexible fund, he adds, will allow the local government to decide whether the community needs more teachers or more police or more assistance to local non-profits.