What to Do with Continuing Evidence of Race Discrimination

snood wrote:

Not that all cries of discrimination are true, but this one seemed solid enough that for me it didn't raise those kind of questions.

Just to cross-check, snood: How do you feel about car insurances whose rate depends on the type of car the client drives? If you buy a sports car in Germany, you automatically pay a higher fraction of the car's value than when you buy a family wagon. Do you think that's fair? Or would you consider this inacceptable discrimination?

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Yeh, Dys. Redlining in LA meant no loan for that area, if my memory isn't messed up. I do remember not being well favored - my ex and I not being married when we bought the house which was in a borderline redline area. But, I think redlining was outlawed just before that.

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Thomas wrote:

Just to cross-check, snood: How do you feel about car insurances whose rate depends on the type of car the client drives? If you buy a sports car in Germany, you automatically pay a higher fraction of the car's value than when you buy a family wagon. Do you think that's fair? Or would you consider this inacceptable discrimination?

What the hell does that have anything to do with this topic? Insurance rates vary for different cars based on concrete facts for the vehicle's history, such as theft and accident rates.

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Thomas wrote:

snood wrote:
Not that all cries of discrimination are true, but this one seemed solid enough that for me it didn't raise those kind of questions.

Just to cross-check, snood: How do you feel about car insurances whose rate depends on the type of car the client drives? If you buy a sports car in Germany, you automatically pay a higher fraction of the car's value than when you buy a family wagon. Do you think that's fair? Or would you consider this inacceptable discrimination?

Its discrimination, but a different kind. People can choose to drive a sportier car or not, so in that way, their choices determine the discrimination against them. Minorities cannot decide to be a minority or not on a given day, so the discrimination practiced against them for that reason is, on its face, more unfair to me.

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Quote:

I think it's wrong morally but not ethically

So its unfair, but not "cheating". Sheez.

It's discrimination that deprives one set of people of something, based solely on their race. Call it wrong, call it unfair, call it a clown hat, for crissakes.

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I am probably thick on this, but if everything else is equal and there still is a thirty or similar big percent difference, then I think it's illegal discrimination and not just a ill conceived business decision that will come out in the wash.
How you would prove that regarding race/ethnicity, I don't know. What "everything else" is in terms of criteria I don't know either, as I don't pay much attention to the mortgage industry, but JP seemed to have a handle on at least some of it.

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"Bitch stole my fish!"

Forgive Snood. He had a rough childhood.

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The term for this is "Institutionalized racism". The worst kind

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Institutional racism (or structural racism or systemic racism) is a form of racism that occurs in institutions such as public bodies and corporations, including universities. The term was coined by black nationalist, pan-Africanist and honorary prime minister of the Black Panther Party Stokely Carmichael. In the late 1960s, he defined the term as "the collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture or ethnic origin".[1]

http://en.wikipedia.org/wiki/Institutionalized_Racism

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Or, the institution is responding to their P&L statements--and the racial issues like property values of black/minority neighborhoods, segregated living and the disproportionate representation of minorities in poor neighborhoods is the cause.

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ossobuco wrote:

I am probably thick on this, but if everything else is equal and there still is a thirty or similar big percent difference, then I think it's illegal discrimination and not just a ill conceived business decision that will come out in the wash.

I just read through the entire thread and I think a part of what people missed in the story plays into your confusion.

"Adding to the harm being done, high-rate interest lenders appear to focus on minority neighborhoods, steering the local customers to the most expensive loans."

If "Lender A" sets up their office in a suburb with a low minority population the odds are that their customers are going to come from the suburbs they've setup in. If "Lender B" sets up shop in an urban area with a high minority population the odds again favor their customers coming from that area. (I think this plays into dys' comments earlier as well..)

In this case the "Lender A" types are offering lower interest rates - not for altruistic reasons but simply because the "Lender B" types have decided they can take advantage of their customers. I'm fairly confident that the Lender B types would be more than happy to take advantage of a white that showed up looking for a loan as well - they just see many more minorities in their day to day business so in general terms the minorities get stuck with higher rates more often.

If my suspicions hold true then there is no illegal discrimination since each lender would be treating their customers equeally. (If it were the same company it would certianly be illegal and if Lender A and Lender B got together and decided to "fix" their rates to match that would also be illegal.)

That doesn't resolve the issue of the disparity in rates being offered on an overall scale though and, IMO, the person quoted in the original article is correct in that the high-rate lenders should be pubicly outed. Outing them makes their practices known so that more people will realize what is going on and be more likely to avoid them. It also highlights to the lower rate lenders opportunities where they could move in and pick up additional business.

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Lash wrote:

Or, the institution is responding to their P&L statements--and the racial issues like property values of black/minority neighborhoods, segregated living and the disproportionate representation of minorities in poor neighborhoods is the cause.

I agree.

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I didn't think of it that way, Fishin' and hadn't reread the original in a while. "Lender B types" opening in poorer neighborhoods would draw frim the neighborhood, we presume. I get that that is greed motivated but not in itself illegal; I think of it as a kind of "preying", agree on what you say about "outing".

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Snood is asking what to do.

I can only think of things like organizing groups of citizenry to write to implicated institutions and ask them to account for their practices...ie how DO they explain these figures? See if they have an explanation, and, if not, take action (isn't there the story of a bank which was proved to be discriminatory, and acted to change buried somewhere in this thread?)

or

Publicise their names with the facts in the article, and seek their explanation....act as above.

or

Do you guys have some sort of anti discrimination legal services/bureaucracies? Here, places like the Aboriginal Legal Rights Service used to have white staff, and black staff, with similar credit/clothes etc approach organisations and ask for service, if the black person was treated badly, they would then prosecute using existing law.

or

Is an education campaign needed for both credit providers AND users.....encouraging people know that they can shop around AND bargain...giving ongoing education re interest levels.....perhaps via existing services attracting lots of black and hispanic folk (like health and community services in neighbourhoods?) Again, do not know your system, but campaigns like this would not be too hard to organise here with someone doing a bit of homework, and making up a kit, and promulgating it through health and welfare and cultural networks....here we have financial advice services in the public sector which do a lot of it on a case by case basis, too....and a consumer affairs department which can do the same sort of thing.

Just off the top of me head.....

Hell, I would be happy to personally email all the institutions implicated and ask questions, if someone can give me a list of names.

Is that kind of info available in the article, Snood?

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dlowan wrote:

Do you guys have some sort of anti discrimination legal services/bureaucracies? Here, places like the Aboriginal Legal Rights Service used to have white staff, and black staff, with similar credit/clothes etc approach organisations and ask for service, if the black person was treated badly, they would then prosecute using existing law.

or

Is an education campaign needed for both credit providers AND users.....encouraging people know that they can shop around AND bargain...giving ongoing education re interest levels.....perhaps via existing services attracting lots of black and hispanic folk (like health and community services in neighbourhoods?) Again, do not know your system, but campaigns like this would not be too hard to organise here with someone doing a bit of homework, and making up a kit, and promulgating it through health and welfare and cultural networks....here we have financial advice services in the public sector which do a lot of it on a case by case basis, too....and a consumer affairs department which can do the same sort of thing.

The discrimination angle is hard to push because you need a whole lot more than just basic demographic info to go after anyone. A lender can be sued and/or prosecuted if discriminatory practices can be shown though.

We do have several programs in MA to educate both the banking industry and borrowers. For example: http://www.masscommunityandbanking.org

One interesting quote from that site in their "programs" page:

"In Massachusetts, subprime refinance lending increased 657% between 1994 and 1999. While the number of refinance loans decreased between 1999 and 2000, the loan share by subprime lenders increased substantially. In 2000, subprime lenders provided 21.8% of all refinance loans in the state, up from 12.1% in 1999. Similar patterns exist for inidividual cities and towns. Across the state, loans by subprime lenders make up a disproportionately large share of refinance loans to black, Latino and lower-income borrowers and to neighborhoods with low incomes and high percentages of minority residents. While not all subprime loans are predatory, the existence of high levels of subprime lending can indicate neighborhoods and borrowers that are likely to be targeted by predatory lenders."

That line I bolded supports my belief that what is happening is miinorities are being hit hard by companies that focus on doing just that. The subprime lenders (which almost always lend at much hiugher interest rates) are targeting minority communities. That may not be illegal but it certianly stinks.

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snood wrote:

People can choose to drive a sportier car or not, so in that way, their choices determine the discrimination against them. Minorities cannot decide to be a minority or not on a given day, so the discrimination practiced against them for that reason is, on its face, more unfair to me.

Point taken. But unless I missed something, the red-lining you described is by neighborhood, not by race. And people can choose the neighborhood they live in.

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Would it be possible to prosecute by using the example I gave of having folk identical re profiles EXCEPT for race or ethnic group...(I doubt anywhere could prosecute re neighbourhood!) apply for identical loans and get different treatment?

I understand that you would need more than broad demographics, of course.

I do wonder if a broad publication of these figures would begin to put pressure on financial institutions? You know, press releases by relevant community bodies....getting the info onto Oprah....stuff like that?

Another group who used to get preyed on here were the intellectually disabled......not only would they borrow from the places who charged insane rates, (who targeted the lower end rent to buy stores) but many store owners would actually, get them to sign on to hire purchase goods where the weekly repayments were more than their income. This is now outlawed....but of COURSE credit cowboys prey on anyone who is vulnerable to them for any reason. It used to be the same for single women here...ie institutions would not loan, despite good income, forcing them to the cowboys.

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dlowan wrote:

Another group who used to get preyed on here were the intellectually disabled......not only would they borrow from the places who charged insane rates, (who targeted the lower end rent to buy stores) but many store owners would actually, get them to sign on to hire purchase goods where the weekly repayments were more than their income.

That's different though. The problem with intellectually disabled people is they don't know what contract they're signing. They think they're signing one contract, but actually sign another. By contrast, black or hispanic lenders know as well as a white lender what the terms of his contracts are; the problem is they don't like those terms.

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Thomas wrote:

dlowan wrote:
Another group who used to get preyed on here were the intellectually disabled......not only would they borrow from the places who charged insane rates, (who targeted the lower end rent to buy stores) but many store owners would actually, get them to sign on to hire purchase goods where the weekly repayments were more than their income.

That's different though. The problem with intellectually disabled people is they don't know what contract they're signing. They think they're signing one contract, but actually sign another. By contrast, black or hispanic lenders know as well as a white lender what the terms of his contracts are; the problem is they don't like those terms.

Doh. I know. I was illustrating the propensity of some credit providers to be bad parasites...ie to kill their host.

Actually, the black or hispanic borrower may or may NOT not be aware that the terms of the contract are different from those offered to whites.

Presumably arming people with that knowledge is a step in the right direction.

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Thomas wrote:

snood wrote:
People can choose to drive a sportier car or not, so in that way, their choices determine the discrimination against them. Minorities cannot decide to be a minority or not on a given day, so the discrimination practiced against them for that reason is, on its face, more unfair to me.

Point taken. But unless I missed something, the red-lining you described is by neighborhood, not by race. And people can choose the neighborhood they live in.

I'd like to explain why I bring up the comparison. Suppose you have two drivers who just got their licenses. One buys a sports car, the other a boring, slow, family car. Because they just got their driver's licenses, their "damage record" is identical. But the insurance company believes, perhaps correctly, that the guy with the sports car is a greater risk. Accordingly, the company prices this risk into the rate it charges. That's a fundamentally fair business practice. Insurance companies try to assess their clients' risk by imperfect, but workable proxies, including profiling by car.

Now imagine two grown-ups who want a mortage for a house. They're both young, neither has borrowed much yet, so their credit records are the same. Difference is, one lives in a good neighborhood, the other in a bad neighborhood. So the bank figures, perhaps correctly, that the lender in the bad neighborhood is a greater risk. It prices that risk into its mortage rate. The bank, like the insurance company in the car example, assesses the client's risk based on available, but imperfect proxies, and offers a price on its basis. That could be compatible with the observations in Snood's initial post, and would be a fair business practice in my opinion.

Now, I'm not denying there might be wanton discrimination somewhere in this picture. For instance, why are bad neighborhoods disproportionately populated by blacks and hispanics? But I'm rather skeptical that Snood's scenario prooves discrimination by banks.

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On yet another note, I found the original study that prompted the USA Today Article that in turn promted Snood's initial post. It's available from the Center for Responsible Lending here:

http://www.responsiblelending.org/pdfs/rr011-Unfair_Lending-0506.pdf

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What to Do with Continuing Evidence of Race Discrimination

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