Yesterday, the Treasury Department announced the second round of its Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets. The program was originally set up in mid-February to fund innovative state-level programs targeted in five states with home price declines greater than 20 percent. The second round will target five states with high concentrations of people living in economically distressed areas in which the unemployment rate exceeded 12 percent in 2009.
Besides begin a targeted program, what I like about this approach is its emphasis on public sector innovation. The incentive here is for states to come up with locally-focused solutions.
We are seeing this approach more and more in the Obama Administration. For example, also yesterday the Education Department announced the winners of it’s competition for Race to the Top grants while the companion Invest in Innovation Fund is still taking applications.