Fed Chief Stresses Need for Data

Detailed socioeconomic information on individual towns is essential for fostering economic development and improved government policies in underserved areas, Federal Reserve Chairman Ben S. Bernanke told attendees of a conference Thursday in Los Angeles.

“The development of more and better data on economically distressed communities, together with sophisticated tools for analyzing those data, is essential for continued progress in community economic development,” Bernanke said, speaking via satellite from Washington.

Such data can promote competition and alert investors to opportunities, provide a “reality check” for governments to see how policies are faring and make way for additional independent research, Bernanke said.

He didn’t discuss the outlook for the broader U.S. economy or interest rates in his prepared remarks.

“I do not believe that all aspects of economic development can or should be quantified,” Bernanke said. “Still, improving the measurement of inputs and outcomes is critical to better development policy.”

As an example, Bernanke cited the decision by a “national home-improvement retailer” to open a store in inner-city Chicago based on a local-data analysis even while the company’s “own site-selection model presented discouraging indications of profit potential for that neighborhood.”

The conference was held by the Greenlining Institute, a Berkeley-based public policy group that advocates investing in low-income and minority communities. The group, on its website, criticizes the Fed for not gathering racial data on business loans and for giving high ratings to banks that make, it says, too few conventional home loans to blacks.

The Fed and other U.S. regulators give ratings to large banks based on how well they serve their entire communities.