The counter evidence I present is your assumption that all minoritys that get into college seemed to be undequalified have have come in under AA. A lot of minorities get into good college based soley on their achievments and qualifications. There is a certain percentage that must be met as specified by AA and if that percentage is not met then will individual minorities be judged based on non-academic merit. What would you say the number of that is? With all things being equal, there should be a certain amount of minorities qualified to go to good schools, since not all things are equal, AA is there.
This is a self correcting procedure. As society becomes more even handed with lower education, then more minorities are qualified to enter on their own merit and meet the percentages without any further intercession.
The “worthwhile thing” I was referring to wasn’t aimed at the bank, but at society, whether in the form of the government, or otherwise.
It might be different for home loans, but for standard loans, 25-35% or more would not be a stretch, depending on the bank’s criteria. Did I mention that I wrote loan processing software for a bank? We had three criteria, which were:
Credit score above 650. Anything more than 50 below this number was denied across the board. Those with scores in between (that’s a hefty number of folks) were turned over to the manager for possible approval.
Bad marks on credit report. Certain bad marks had to be older than a certain age, or loan was denied. While bankruptcy and repossessions were set in stone, if the other criteria were met, a manager could grant the loan if they felt that the bad marks were minor enough, or justified well enough.
Debt/Income ratio. Anything above 50% was denied. At the managers discretion, they would sometimes explain to a customer how to lower that number with the least amount of effort (lower your credit limit on your cards, as our D/I calc used “potential” debt).
There are many areas here where discrimination could occur.
No doubt there are. It’s hard to conceive of a fool-proof system, since human judgment must playy some sort of a role.
However, it’s not in the lender’s interest to turn down credit-worthy minority customers. On the contrary, it’s in their interest to make loans to these people. So, one would expect lenders to generally try to avoid discrimination.
Sooooooo…what? The government should force banks to take applicants on loan terms that do not match the applicant’s risk of default?
Grim cites to data that indicates minorities, on average, have worse credit histories than do whites. What possible remedy do you propose for that differential?
For the purposes of fighting ignorance, here’s an interesting article I found about lending practices. It also critiques the Boston Fed Study.
Here’s an interesting excerpt:
The authors also support tomndebb’s suggestion that the potential for criteria irrelevant to creditworthiness may impact minorities disproportionately:
Curious. That paper asserts that the disparity found in the Boston study cannot be explained by “omitted variables,” yet the paper I cited to earlier explains the disparity on precisely those grounds. I don’t see any evidence in that article that adding omitted variables fails to materially affect the Boston study outcome, while my study provides such evidence.
While I agree that the Boston study shifts the burden, I would counter that indications of methodological flaws in the Boston study shifts the burden right back.
But wouldn’t setting a minimum loan amount increase the likelihood of default by forcing the loanee to take out more than they can easily pay back? That looks rather self-fulfilling to me.
Poor people generally want to borrow less money than rich ones do. By making poor people who only need a few hundred dollars take out twice as much as they really can afford, the lenders are really not trying to screen the poor creditors from the good ones; they are really just trying to do business with guys who want to borrow lots of money. That ends up translating to not wanting to do business with poor people, which (given history and all that jazz) means a disproportionate number of minorities will be told “sorry, but we can’t help you, good bye”.
The “article” is actually only chapter 1 of the book they wrote, so I’m sure the research presented in the link is not all-inclusive. Check out the PDF; perhaps that’ll provide some insight into their evidence.
Yes, I would think so. The underlying business reason might be expenses. There’s too much overhead in each loan to make very small loans profitable.
However, a side effect is to drive poor borrowers away. From a business POV, that’s not so bad, since the poor are more likely to default. Maybe it was Groucho Marx who pointed out that:
a banker will only lend you money if you can prove that you don’t need it*
Bah, I hate it how a lot (but not all) of the same people who are against affirmative action are also not too keen on improving the inner cities and the schools in the inner cities because that means higher taxes.
Here’s an interesting analogy. Imagine two people at a race. One Black, one White. The race starts and the White man runs like hell, but the Black man is held back. Throw in a little affirmative action, and as the White man is in the middle of the track, he is stopped so that the Black man can catch up. Then, once they have both caught up, they are allowed to go on without interference. That is sorta how affirmative action really is. It’s about helping different groups so that they can catch up and make up for past discrimination.
Sorry to drag this thread back, but on the first page of this thread it was claimed that women are the main beneficiaries of AA; although I expect this is probably true, can anyone provide some sort of evidence showing this to be true?