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This insinuates that car lenders are racist. I am truly curious of what the business model of denying minorities a car loan is? I mean, long ago, I guess I ca

This insinuates that car lenders are racist. I am truly curious of what the business model of denying minorities a car loan is? I mean, long ago, I guess I can at least process the ugly mindset of "we don't want 'them' as our neighbor", but I can not come up with any logical or illogical reasonable reason why a business person would intentionally lower their income just to be racist. Literally no one would know that you made a loan to a minority, so that can't be it. Is the insinuation that the loan officer might "get a feeling" that a person might not repay a loan based on the race? If that were the case, at least in the financial sector, it would seem that another financing institution would have noticed this inefficiency long before 2019 and gobbled up all of that free money on the table. I also wonder if the higher interest rates of credit cards accounts for higher approval rates.

crooked-v 8y ago
> I am truly curious of what the business model of denying minorities a car loan is? Why does it have to be a business model? Humans are not rational actors. The segregation era almost certainly lost tremendous amounts of money for retail businesses as a whole, but their management still went along with it. The remaining implicit bias in many businesses still loses tremendous amounts of money for retail businesses as a whole (see the various "wealthy black celebrity treated like a shoplifter" news stories, for example), but people still do it.
- mhuffman 8y ago
  > Why does it have to be a business model? Humans are not rational actors. True! I guess my real point was why no arbitrageurs eating the free money up? > The segregation era almost certainly lost tremendous amounts of money for retail businesses as a whole, but their management still went along with it. I don't think I agree with that. If the larger society was racist and would not go to a business that was segregated, then the business owner made a "rational" business decision to keep the wealthier customers ... at least that could be true. > The remaining implicit bias in many businesses still loses tremendous amounts of money for retail businesses as a whole (see the various "wealthy black celebrity treated like a shoplifter" news stories, for example), but people still do it. I have seen some of those anecdotal stories, but it remains that there certainly are (and have been) other businesses very happy to take money from "wealthy black celebrity" customers. I get your angle, but it still seems like something is missing, especially now in non-segregated times.
  - toufiqbarhamov 8y ago
    If you’d been neglected and abused for your whole childhood, then finally managed to run away and escape, you’d be out of your bad situation right? How long do you think it would take for you to catch up to the adults who weren’t raised that way? Evidence suggests that you never would, unless you were so gifted that you could compensate for your past. Most people won’t be that gifted, and won’t thrive. What I’m saying is that the missing ingredient is context. The market is a competition in many ways, and black people only got the chance to compete on a nominally fair playing field over the last few decades. Remember the Tuskeegee syphilis experiment only ended in 1972. Rodney king was nearly beaten to death in 1991. Families that were impoverished, segregated, and denied an education and voting rights take time to recover. A history of aggressive policing of the “war on drugs” hasn’t helped either. So at what point does it occur to you that the missing ingredient is history that only people like you and me get to forget?
    - mhuffman 8y ago
      I get all of that, but it in no way explains the question that I asked. How do the terrible atrocities of the past cause auto lenders of today to deny minorities loans based on racism alone and not business sense? That is my question and that is what this post is about. TFA has evidence that people are going out of their way now to deny car loans to people that would otherwise be eligible for those loans except for their race. I am not doubting that this is happening, I am trying to determine why it would be and how no start-up has recognized the "market inefficiency" and opened a "we specialize in loans to black and hispanic people" and made billions and billions of free dollars currently being neglected.
      - toufiqbarhamov 8y ago
        I see, well I still think that I can help here. How do the terrible atrocities of the past cause auto lenders of today to deny minorities loans based on racism alone and not business sense? Because attitudes take time to change, and if we didn’t know that before the resurgence of facism in places like Brazil, Italy, Austria, Hungary and other countries should reach us that. The same people who thought it was acceptable to redline, or even kill people over their race still do, they’ve just changed their language. Some of their children doubtless feel differently, others almost certainly inherent their attitudes from their parents and communities. The older generation with its concentration of wealth and influence also haven’t changed. As another person said, people are not rational.
jlarocco 8y ago
> If that were the case, at least in the financial sector, it would seem that another financing institution would have noticed this inefficiency long before 2019 and gobbled up all of that free money on the table. Of course. They'll just only hire people who aren't subconsciously biased. No problem. They'll just put "No racists please," in their job advertisements. Simple as that. LOL!
- mhuffman 8y ago
  ... or just set up a fully automated system that specializes in offering these underserviced loans ...
michaelchisari 8y ago
You're assuming rationality.
skywhopper 8y ago
You seem to assume racism is always an active choice, rather than largely (these days) a set of systemically biased policies as well as implicit and often unconscious prejudice. It's also not all about rejecting loans. Rather, it's that the terms offered are different for every buyer, and the groups that are being discriminated against are charged higher rates, and thus pay more, for the same product. There's plenty of data out there proving that, for whatever reason, African American loan applicants with identical credit scores and income are routinely charged higher interest rates for auto and home loans than their white counterparts. The next question to ask is "why?" but we can't pretend the effect doesn't exist.

crooked-v 8y ago

> I am truly curious of what the business model of denying minorities a car loan is? Why does it have to be a business model? Humans are not rational actors. The segregation era almost certainly lost tremendous amounts of money for retail businesses as a whole, but their management still went along with it. The remaining implicit bias in many businesses still loses tremendous amounts of money for retail businesses as a whole (see the various "wealthy black celebrity treated like a shoplifter" news stories, for example), but people still do it.

mhuffman 8y ago
> Why does it have to be a business model? Humans are not rational actors. True! I guess my real point was why no arbitrageurs eating the free money up? > The segregation era almost certainly lost tremendous amounts of money for retail businesses as a whole, but their management still went along with it. I don't think I agree with that. If the larger society was racist and would not go to a business that was segregated, then the business owner made a "rational" business decision to keep the wealthier customers ... at least that could be true. > The remaining implicit bias in many businesses still loses tremendous amounts of money for retail businesses as a whole (see the various "wealthy black celebrity treated like a shoplifter" news stories, for example), but people still do it. I have seen some of those anecdotal stories, but it remains that there certainly are (and have been) other businesses very happy to take money from "wealthy black celebrity" customers. I get your angle, but it still seems like something is missing, especially now in non-segregated times.
- toufiqbarhamov 8y ago
  If you’d been neglected and abused for your whole childhood, then finally managed to run away and escape, you’d be out of your bad situation right? How long do you think it would take for you to catch up to the adults who weren’t raised that way? Evidence suggests that you never would, unless you were so gifted that you could compensate for your past. Most people won’t be that gifted, and won’t thrive. What I’m saying is that the missing ingredient is context. The market is a competition in many ways, and black people only got the chance to compete on a nominally fair playing field over the last few decades. Remember the Tuskeegee syphilis experiment only ended in 1972. Rodney king was nearly beaten to death in 1991. Families that were impoverished, segregated, and denied an education and voting rights take time to recover. A history of aggressive policing of the “war on drugs” hasn’t helped either. So at what point does it occur to you that the missing ingredient is history that only people like you and me get to forget?
  - mhuffman 8y ago
    I get all of that, but it in no way explains the question that I asked. How do the terrible atrocities of the past cause auto lenders of today to deny minorities loans based on racism alone and not business sense? That is my question and that is what this post is about. TFA has evidence that people are going out of their way now to deny car loans to people that would otherwise be eligible for those loans except for their race. I am not doubting that this is happening, I am trying to determine why it would be and how no start-up has recognized the "market inefficiency" and opened a "we specialize in loans to black and hispanic people" and made billions and billions of free dollars currently being neglected.
    - toufiqbarhamov 8y ago
      I see, well I still think that I can help here. How do the terrible atrocities of the past cause auto lenders of today to deny minorities loans based on racism alone and not business sense? Because attitudes take time to change, and if we didn’t know that before the resurgence of facism in places like Brazil, Italy, Austria, Hungary and other countries should reach us that. The same people who thought it was acceptable to redline, or even kill people over their race still do, they’ve just changed their language. Some of their children doubtless feel differently, others almost certainly inherent their attitudes from their parents and communities. The older generation with its concentration of wealth and influence also haven’t changed. As another person said, people are not rational.

jlarocco 8y ago

> If that were the case, at least in the financial sector, it would seem that another financing institution would have noticed this inefficiency long before 2019 and gobbled up all of that free money on the table. Of course. They'll just only hire people who aren't subconsciously biased. No problem. They'll just put "No racists please," in their job advertisements. Simple as that. LOL!

mhuffman 8y ago
... or just set up a fully automated system that specializes in offering these underserviced loans ...

michaelchisari 8y ago

You're assuming rationality.

skywhopper 8y ago

You seem to assume racism is always an active choice, rather than largely (these days) a set of systemically biased policies as well as implicit and often unconscious prejudice. It's also not all about rejecting loans. Rather, it's that the terms offered are different for every buyer, and the groups that are being discriminated against are charged higher rates, and thus pay more, for the same product. There's plenty of data out there proving that, for whatever reason, African American loan applicants with identical credit scores and income are routinely charged higher interest rates for auto and home loans than their white counterparts. The next question to ask is "why?" but we can't pretend the effect doesn't exist.