Feed on
Posts
Comments

I’d simply like to see some consistency on when corporations are deemed to be greedy and when they are not. In today’s WaPo:

Evidence that banks still deny black borrowers just as they did 50 years ago

Well, I have no doubt that banks deny black borrowers. But the article title is to put it mildly, misleading. The evidence that banks redlined in the past surely is in the literature somewhere, but it’s not really “evidence” to show a single map of Chicago from 1939 as systematic evidence of the practice. It would be at least moderately useful to explain what the empirical literature shows about lending to minorities, controlling for all of the factors that impact lending, in 1939. Be that as it may, the article, you would think, would go on to show you systematic evidence of redlining today. Right? Well, not exactly. The article is about a single Wisconsin’s Bank activities in three states. And the evidence that redlining by bankS (note the S)is common, just like 50 years ago, is:

HUD’s analysis of Home Mortgage Disclosure Act data concluded that the bank disproportionately denied qualified loan applicants in predominantly minority neighborhoods in Chicago, Milwaukee, and Minneapolis, compared to other lenders operating in these same communities.

Whoa, what? So, Redlining is prevalent because it seems that one bank does it as compared to other banks who are presumably not doing it or are doing it less? That is sciency goodness. The author goes on to say:

The case is not about doling out mortgages to minority households that wouldn’t otherwise qualify for them — it’s about offering equal access to families that look just as eligible on paper as white homeowners nearby.

You would hope that the author would provide the reader some context. Are there any reasons that a bank would be willing to walk away from sure profits like this? I have no doubt that they may in fact be discriminating, so how about some context about just how much they were willing to sacrifice in order to indulge their “taste” for discriminating? Maybe that was a simple oversight, but the following bit of economics is a bit off:

If your family was denied a mortgage in the 1930s, or the 1950s, or the 1970s, then you may not have the family wealth or down payment help to become a homeowner today. In that way, the consequences of past redlining transcend time, even as new forms of it continue

What does being denied a mortgage have anything to do with how much wealth your family has today? Maybe showing the massive pile of research that demonstrates that people who own homes accumulate more wealth than people who rent them would be useful here. Or perhaps even supporting the statement with some intuition would have one check the validity of it. Let’s rewrite it: “looking at two identical properties in a city, you save a lot more money by owning it than by renting it.” Does that pass the smell test?

In any case, this bank seems not to be greedy. But if you are not greedy then you are a racist. Are those the only options? By the way, I regularly redline everyone everywhere. I’ve never opened a retail store in any neighborhood and I certainly have never made a mortgage loan to any borrower, qualified or otherwise. What does that make me?

Leave a Reply

books on zlibrary official