Small percentages nevertheless translate into a lot of heads across a population.
Besides, the ultimate endpoint of irrational discrimination in the marketplace need not be bankruptcy. Other banks which do not act irrationally will outperform those that do act irrationally. The irrational bank’s shareholders will then inquire of management as to why, exactly, they are underperforming their competitors. Underperform for too long and heads start rolling.
From page 20 of the study that you posted:
The statistics that I posted from the more comprehensive Acorn study, debunks this assertion in the Boston study:
“Applications by wealthy individuals or by those with “clean” records do not receive differential treatment based on race by lenders.”
When you have numbers like the following, you can still irrationally discriminate and still perform well.
Chicago Statistics:
White applicants = 107,712 rejected = 6.32%
Black applicants = 18,164 rejected = 31.66%
Latino applicants = 15,555 rejected = 16.22%
*
It does no such thing, because it does not include controls for factors other than income (I’m getting more than a little tired of repeating this).
What is your evidence that the ACORN study is “more comprehensive” than the Boston study?
It looks like you misunderstood me. What I said:
To put it this way: Money lenders don’t discriminate against qualified blacks because they have dark skin, as if the dark skin is the ultimate problem. They discriminate against them because–regardless of their creditials–black folks “look” like bad investments for the team to take on. Old ladies grab their purses in elevators even when well-dressed black men step on board because, to the old ladies, the men look more like purse snatchers than say scruffy white guys do. The same logic (or illogic) extends to business. This is all I’m trying to get you to see.
Blacks have a greater burden to prove that they are just as good as whites. I have experienced this personally all too much in my life to pretend that things are somehow different in corporate culture.
Again, you’re misreading things here. “Jumping through extra hoops” figuratively refers to having a greater burden of proof. As EasyPhil posted, even when blacks had an income almost twice as high as whites, they were still more likely to be rejected by lenders. So in order to be considered equally qualified it would appear that black folks have to “jump through more hoops” i.e. they have to work harder just to get the same results as their lighter-skinned counterparts.
Of course it matters. An entire subset of the population, identified purely by the color of their skin, apparently has problems becoming creditworthy. Surely one of those impartial banks has decided that this might be an important issue to figure out, if only to improve their bottom line, since we all know that they want blacks pouring in their doors.
So, I ask once again. Why do you think that blacks are less creditworthy to a bank than whites?
Why can’t the market handle what? If banks and their competition use similar methodologies for passing and denying lendees, then it stands to reason that they won’t be hurt by using that particular methodology. If the number of banks that play by a different set of rules is too low to make the other kinds of banks even care about them competition-wise, then the status quo is favored. Factor in the low number of black applicants relative to whites, and you should get your answer.
By the way, your question reminds me of a Dateline expose about the response black patrons got in New York jewerly stores. To put it lightly, they were not made to feel very welcome. Someone could easily ask “Why would the clerks do this? Don’t they know that’s bad for business?”
Well, they should know this, but that doesn’t mean they do.
You’re assuming that people know when they are being discriminated against. Believe it or not, black people give others the benefit of the doubt, just like most people do. If you give me a quote on a car rental, I’m going to assume that it’s a fair one. Unless I do extensive research or do an experiment where I send in a white friend to get a quote, how the hell am I supposed to know that I’m being discriminated against or not?
Sometimes people find out on accident. I had a black woman professor as a history instructor back in college. She was new to the area and was looking for a house. She found a listing that interested her and called up the real estate agent, who was very enthusiastic and helpful on the phone. When the professor showed up to see the house, suddenly the real estate agent was not very accomodating. The professor was basically told that the house wasn’t for sale anymore, due to some complications with the paperwork (or something made up like that).
Something like this happened to my mother when she was looking for nursery schools for my brother and sister. Enthusiasm on the phone. Show up an hour later and suddenly there are no spots left. Sadness, confusion. Later, anger and rage.
If both women–the professor and my mother–had spoken with just a little bit more “black” inflection, they could have been spared the realization that they were being discriminated against because of their race. They may have chalked up both situations to just bad luck. And the horrible dilemma is that it very well may be only bad luck, since no one flat out called them “nigger” or put up a sign, “No coloreds allowed.” But how many times can you rationalize away a pattern until you realize people don’t DESERVE the benefit of the doubt? Racism has taken my mother’s trust away. In her eyes, the system has done little to earn it back. As I’ve gotten older, I’m starting to see what she means.
Except that, as the paper I posted showed, when you control for additional variables affecting the lending decision, blacks are no less likely to be rejected than whites (outside of “marginal” cases, anyway). Indeed, it all depends on how you measure loan success: that study shows that whites fare better on debt-to-income measures, while blacks do better on loan-to-value measures, with the two more or less canceling each other out.
Income alone is insufficient; it only tells part of the story. Consider two loan applicants: one making $250,000/yr., but who has maxed out all his credit cards, eats at the best restaurants every night, frequently takes extravagant vacations and generally lives beyond his means; and another making $50,000/yr., but who lives frugally, pays his credit cards in full every month, manages to save a portion of each paycheck and generally lives beneath his means. Who do you think is the better loan risk?
Isn’t that a racist statment? Attributing a behavior to ‘black people’?
And why do organizations cite ‘diversity’ as a reason to recruit black people. Isn’t the notion that having a significant black population will make your organization diverse racist? Why assume that just because a person is black, he’s going to provide diversity? Or is just having a nice mix of skin tones the kind of diversity colleges and corporations are shooting for.
No, it doesn’t matter. A bank is not set up to solve social problems. It is set up to make a profit. If a sector of the population is less creditworthy than average, it is not the bank’s duty to investigate why that may be.
The bank’s only duty is to make lending decisions on economic criteria rather than race. If those economic criteria, applied without regard to race, nonetheless lead to differing results across racial groups, that is not the bank’s problem.
Let me just repeat this because it is important: THE BANK CANNOT RACIALLY DISCRIMINATE, BUT IS NOT RESPONSIBLE IF RACE-NEUTRAL LENDING CRITERIA HAVE A DISPROPORTIONATE RACIAL IMPACT.
The lending market is a global one; this is not the 1950’s where you might only have two local banks to choose from. The market is rife with competitiors, each looking to get a leg up on their competition, each constantly refining their loan criteria to reflect ever-changing market conditions. The notion that a substantial number of lenders would cling to an irrational criteria in that type of market environment is simply absurd.
Why yes, black people DON’T behave like everyone else does! How could I have been so foolish (and apparently racist) to believe that!
Regardless of your skin color, you should always shop around for the best deal. Unless you believe that the overwhelming majority of banks – from giants like Citibank to your local credit union to internet-based lenders – engage in racially discriminatory lending practices, then voting with your wallet is an entirely plausible option.
And if you actually believe that the overwhelming majority of banks engage in racially discriminatory lending practices, you’re demonstrating Oliver Stone levels of paranoia.
Your sphere of reference may not include black people that don’t give people the benefit of the doubt.
It’s absurd to YOU. It’s not absurd to people who have grown up in an irrational world.
You aren’t explicitly saying this (well, you did tell some of us to take off our tinfoil hates, so scratch that), but by continually citing rationality, you’re attributing irrationality in those of us who recognize the entrenchness of racism in our society. We may very well be crazy, but we also have history on our side (and you have one dissertation thesis, whoop-tee-doo). History has shown that the US has been extremely IRRATIONAL when it comes to black people. The default in the country has been IRRATIONAL criteria, not RATIONAL criteria. Like I said, you may be optimistic (or naive, whatever one you like best) in believing that we’ve evolved to the point where logic and objectivity determine our behavior. But I can’t go there with you, and all of your ranting about sense and rationality isn’t going to take me there.
I agree that you should do research when making a huge financial decision. However, fear of racial discrimination should NOT BE the motivation behind that research. And having to hunt down the least racist bank to do business with is something that doesn’t appeal to me, especially when people would call me irrational for doing so.
This is grown folks’ conversation. If you don’t have any substance to add, just stay away from the keyboard.
Ahh…my mistake. Carry on.
The only thing that is absurd is your steadfast refusal to admit that bias exists in the financial arena. This is all that I’m talking about. BIAS. I’m glad that you have one paper to support what you wanted so badly to believe. But the idea that a significant number of lenders let prejudice get in the way of their decisions is not ridiculous. Even if what you say is true–that everything between whites and blacks is equal when it comes to loans–the idea that wide-spread bias occurs against blacks is not an absurd one. “Absurd” should be reserved for things that have never happened and never could happen; not for things that have happened and continue to happen, in spite of the irrationality of it.
Not to invoke the wrath of Goodwin’s law or anything, but the holocaust was an absurd idea. But it happened, right?
I do not hold to a position that says that racism has been eradicated. It has not. Tragically, it exists. There are, unfortunately, those who walk among us who are all too willing to render judgments based on nothing more than skin color.
What I DO claim is that racism in the US is not endemic. It is not under every rock or behind every tree. It is not a view to which most or even a lot of white people subscribe. The overwhelming majority of whites are horrified by those instances where racism raises its ugly head. Racism is the exception, not the rule, in modern American life.
Does that mean we should be passe in the face of legitmate cases of racism? No, of course not. But we neither should we view America as a racist hellhole crawling with people wanting nothing more than to put the screws to black people. A lot of people seem to think we’re still living in 1950, and it isn’t just the racist assholes I’m referring to.