5 ms·

There is no 'chicken and egg' problem. Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates

There is no 'chicken and egg' problem. Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates. I also find perspectives like yours very perplexing. Debt is not charity. It is not charitable to provide debt to someone who cannot afford it. Not for the debtor, nor the lender. I've seen people suffer for years drowning in debt they could not afford. I've seen people with mortgages (variable rates in foreign currency) that went underwater when the rates and currency exchange shifted the wrong way. Bankruptcy is an incredibly painful process to go through as well. Debt is not charity. Banks also do not just give out big loans (no matter what your credit score is) unless there is collateral. It is clear as day, that the bank valued the collateral to be low or inconsequential (i.e. judged one property at land-value at $1/sqft and $0 for the building). So there was no collateral for those loans, because redevelopment of those properties was expensive, with lots of risk. Why do you think it hasn't happened yet? Why do you think these properties were standing there rotting away? Why didn't anybody take a flyer on those, given how inexpensive these properties probably are? Because there are major risks associated with redevelopment. In our city, a property, seemingly in a prime location, stood abandoned for years .. turns out, the property was cheap, the land was cheap, the environmental cleanup necessary for redevelopment, was not. >Were that person not black, it would be easier to get funding at a time of need Says who!? Have you actually tried? Our company was only extended a line of credit years after we were in business, and it was collateralized against purchase orders and revenue (and we had to provide lots of documentation to prove those). Banks do not want to give out loans with even a little bit of risk associated. They are not like venture capital firms and haven't been for a long time.

gwd 6y ago
> Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates. If this article is correct, then this claim is wrong. Banks may not directly use race as a criteria, but the claim is that they use race as a criteria for property value, and then use property value as a criteria for loans: > Five of his properties were in a decent state of repair and some had sitting tenants, while three needed a complete refurbishment. ...One bank finally sent someone on location to assess his properties 12 weeks later. They valued the buildings at zero dollars and just over a dollar per square foot for the land only. As the rules for most banks say a property must be valued at a minimum of $50,000 (£39,000) to get a line of credit against it, his case was shut. Counting a building with active tenants paying rent as being valued at $0 is ridiculous.
- MattGaiser 6y ago
  > Counting a building with active tenants paying rent as being valued at $0 is ridiculous. Depends on how much rent they are paying, what other large costs repair costs might exist for the building, and whether anyone is buying in that neighbourhood.
- macspoofing 6y ago
  >Banks may not directly use race as a criteria, but the claim is that they use race as a criteria for property value, and then use property value as a criteria for loans ... You have to do the leg-work to show that Banks have a policy that is in intent racist because every policy you can ever think of will have a differential impact on any group you create - because groups will never be perfectly uniform. >Counting a building with active tenants paying rent as being valued at $0 is ridiculous. Not necessarily. This is why these articles are so terrible. They didn't do investigative journalism. They didn't do the legwork. I can tell you right now, there is a reason why it is valued at $0 - we just didn't get that reason because the journalist is lazy.
  - bluntfang 6y ago
    Redlining is a real practice done by banks and credit issuers that use race criteria based on where you live to discriminate against people of color. https://en.wikipedia.org/wiki/Redlining https://en.wikipedia.org/wiki/Redlining
    - deleted 6y ago
      [deleted]
    - kyrieeschaton 6y ago
      Redlining ended over fifty years ago. Pick a different bugaboo.
      - bluntfang 6y ago
        According to this article, it hasn't. Provide contradictory evidence.
Traster 6y ago
If I say you have to be 5'9 to get a loan, I'm not discriminating based on gender. It's just a total coincidence that more than 50% of men qualify and less than 10% of women qualify.
- macspoofing 6y ago
  Every policy you can create will have differential impact on any group you create. The question is, was the policy created with the intent of racism. And this is for policies in the abstract. Debt is an incredibly dangerous tool. It is not charity to give someone a loan they cannot afford - I've personally experienced it and I've personally seen it destroy lives. When I see someone get denied for a loan or a mortgage in my circle of friends - in every case, that was a good thing. It would have killed them.
  - Traster 6y ago
    No, the question is absolutely not whether ther policy was created with the intent of racism, because we don't live in a world where racism is defined as a guy in a pointy white hat who also happens to be the bank manager stringing black men up for cat-calling his daughter. Every policy has a differential impact, that doesn't mean we chose not to address them when we see them.
    - luckylion 6y ago
      In that line of thinking ("banks are racist"), what's the exaplantion for why there's nobody disrupting the market, providing loans (at a premium) to minority investors and making off with large profits?
      - kiplkipl 6y ago
        You've put "banks are racist" in speech marks, but I can't find where you're quoting it from. The question is begging an easy answer to a structural problem. But note that, when a pandemic unfairly makes it expensive for businesses with disproportionately white shareholders to lend, the taxpayer spends trillions to make it cheaper. Edit: Isn't that exactly what JP Morgan Chase are talking about doing about in the link?
mschuster91 6y ago
> Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates. That's similar to saying a soap dispenser doesn't use race a criteria, that doesn't change the fact that the thing discriminated PoC. The core problem is biased data in the model - in this case ethnic composition of neighborhoods, in the case of the soap dispenser a lack of testing staff with non-white skin leading to misadjusted sensitivity for the photosensor - not being adequately filtered out. Banks and auto insurances absolutely do take account the neighborhood in their calculations and models.
- macspoofing 6y ago
  >that doesn't change the fact that the thing discriminated PoC. Intent matters. Every policy you can ever create will always have differential impact on any group you create. That's just a fact of reality. If you set a policy that you can only get a mortgage if you have 20% down, that could impact some ethnic group more than another - but that differential impact does NOT mean it is a racist policy. > in the case of the soap dispenser a lack of testing staff with non-white skin leading to misadjusted sensitivity for the photosensor - not being adequately filtered out. On a side note ... the criminally under-appreciated show, Better off Ted, did a bit about this: https://www.youtube.com/watch?v=XyXNmiTIupg https://www.youtube.com/watch?v=XyXNmiTIupg
  - mschuster91 6y ago
    > but that differential impact does NOT mean it is a racist policy Oh it does. This unintentional racism is still racism, structural racism in this case as a decently diverse QA could have prevented this outcome. A PoC unable to get soap doesn't care why the soap dispenser refuses to disperse soap, all he cares about is that he's getting racially discriminated based on his skin color.
    - macspoofing 6y ago
      >Oh it does. I absolutely disagree with that statement. A uniform standard for all is the opposite of racist. It is literally what was fought for by every civil rights movement. We used to live in a world where certain groups had racist barriers placed with intent to bar them from those institutions. A Jewish teenager had to get through harder entrance exams and/or a quota to get into a university. The way to fix that was to provide a universal standard. If you meet these criteria, then you're in. A policy that requires 20% down payment for a mortgage is NOT a racist policy, even if it has differential impact. It just sets a bar for every individual because math doesn't care about race. People intrinsically understand fairness like this. It is why Rosa Parks' refusal to sit at the back of the bus as a protest was so powerful - because everyone understood, even the racists, that it is unfair for the color of your skin to dictate your bus seat. And it was clearly a malevolent policy. And this is where the modern approaches to solve 'systemic' racism really worry me. A modern (satirical but not far from reality) spin on that racist bus policy would have white people sitting at the back of the bus in order to make up for past racism ... but in that case, you still cannot get away from intuitive notions of fairness. The fact remains, the idea that skin color dictates bus seat is unfair, even if you try to claim that you need to do it to make up for systemic racism and the races are reversed. Sorry for the rant. You and I have fundamental disagreement on this point. >A PoC unable to get soap doesn't care why the soap dispenser refuses to disperse soap This has nothing to do with anything. It is a silly example. Yes, the soap dispenser company effed up (not maliciously, just ignorantly) and should be embarrassed about it, and it will cost them to replace those dispensers, and I can guarantee you they will learn their lesson. It isn't the end of the world, and we're all on the side here, even the good people at the soap dispenser company.

gwd 6y ago

> Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates. If this article is correct, then this claim is wrong. Banks may not directly use race as a criteria, but the claim is that they use race as a criteria for property value, and then use property value as a criteria for loans: > Five of his properties were in a decent state of repair and some had sitting tenants, while three needed a complete refurbishment. ...One bank finally sent someone on location to assess his properties 12 weeks later. They valued the buildings at zero dollars and just over a dollar per square foot for the land only. As the rules for most banks say a property must be valued at a minimum of $50,000 (£39,000) to get a line of credit against it, his case was shut. Counting a building with active tenants paying rent as being valued at $0 is ridiculous.

MattGaiser 6y ago
> Counting a building with active tenants paying rent as being valued at $0 is ridiculous. Depends on how much rent they are paying, what other large costs repair costs might exist for the building, and whether anyone is buying in that neighbourhood.
macspoofing 6y ago
>Banks may not directly use race as a criteria, but the claim is that they use race as a criteria for property value, and then use property value as a criteria for loans ... You have to do the leg-work to show that Banks have a policy that is in intent racist because every policy you can ever think of will have a differential impact on any group you create - because groups will never be perfectly uniform. >Counting a building with active tenants paying rent as being valued at $0 is ridiculous. Not necessarily. This is why these articles are so terrible. They didn't do investigative journalism. They didn't do the legwork. I can tell you right now, there is a reason why it is valued at $0 - we just didn't get that reason because the journalist is lazy.
- bluntfang 6y ago
  Redlining is a real practice done by banks and credit issuers that use race criteria based on where you live to discriminate against people of color. https://en.wikipedia.org/wiki/Redlining https://en.wikipedia.org/wiki/Redlining
  - deleted 6y ago
    [deleted]
  - kyrieeschaton 6y ago
    Redlining ended over fifty years ago. Pick a different bugaboo.
    - bluntfang 6y ago
      According to this article, it hasn't. Provide contradictory evidence.

Traster 6y ago

If I say you have to be 5'9 to get a loan, I'm not discriminating based on gender. It's just a total coincidence that more than 50% of men qualify and less than 10% of women qualify.

macspoofing 6y ago
Every policy you can create will have differential impact on any group you create. The question is, was the policy created with the intent of racism. And this is for policies in the abstract. Debt is an incredibly dangerous tool. It is not charity to give someone a loan they cannot afford - I've personally experienced it and I've personally seen it destroy lives. When I see someone get denied for a loan or a mortgage in my circle of friends - in every case, that was a good thing. It would have killed them.
- Traster 6y ago
  No, the question is absolutely not whether ther policy was created with the intent of racism, because we don't live in a world where racism is defined as a guy in a pointy white hat who also happens to be the bank manager stringing black men up for cat-calling his daughter. Every policy has a differential impact, that doesn't mean we chose not to address them when we see them.
  - luckylion 6y ago
    In that line of thinking ("banks are racist"), what's the exaplantion for why there's nobody disrupting the market, providing loans (at a premium) to minority investors and making off with large profits?
    - kiplkipl 6y ago
      You've put "banks are racist" in speech marks, but I can't find where you're quoting it from. The question is begging an easy answer to a structural problem. But note that, when a pandemic unfairly makes it expensive for businesses with disproportionately white shareholders to lend, the taxpayer spends trillions to make it cheaper. Edit: Isn't that exactly what JP Morgan Chase are talking about doing about in the link?

mschuster91 6y ago

> Banks don't use race as criteria for loans, just as auto insurance companies don't use race as criteria for setting rates. That's similar to saying a soap dispenser doesn't use race a criteria, that doesn't change the fact that the thing discriminated PoC. The core problem is biased data in the model - in this case ethnic composition of neighborhoods, in the case of the soap dispenser a lack of testing staff with non-white skin leading to misadjusted sensitivity for the photosensor - not being adequately filtered out. Banks and auto insurances absolutely do take account the neighborhood in their calculations and models.

macspoofing 6y ago
>that doesn't change the fact that the thing discriminated PoC. Intent matters. Every policy you can ever create will always have differential impact on any group you create. That's just a fact of reality. If you set a policy that you can only get a mortgage if you have 20% down, that could impact some ethnic group more than another - but that differential impact does NOT mean it is a racist policy. > in the case of the soap dispenser a lack of testing staff with non-white skin leading to misadjusted sensitivity for the photosensor - not being adequately filtered out. On a side note ... the criminally under-appreciated show, Better off Ted, did a bit about this: https://www.youtube.com/watch?v=XyXNmiTIupg https://www.youtube.com/watch?v=XyXNmiTIupg
- mschuster91 6y ago
  > but that differential impact does NOT mean it is a racist policy Oh it does. This unintentional racism is still racism, structural racism in this case as a decently diverse QA could have prevented this outcome. A PoC unable to get soap doesn't care why the soap dispenser refuses to disperse soap, all he cares about is that he's getting racially discriminated based on his skin color.
  - macspoofing 6y ago
    >Oh it does. I absolutely disagree with that statement. A uniform standard for all is the opposite of racist. It is literally what was fought for by every civil rights movement. We used to live in a world where certain groups had racist barriers placed with intent to bar them from those institutions. A Jewish teenager had to get through harder entrance exams and/or a quota to get into a university. The way to fix that was to provide a universal standard. If you meet these criteria, then you're in. A policy that requires 20% down payment for a mortgage is NOT a racist policy, even if it has differential impact. It just sets a bar for every individual because math doesn't care about race. People intrinsically understand fairness like this. It is why Rosa Parks' refusal to sit at the back of the bus as a protest was so powerful - because everyone understood, even the racists, that it is unfair for the color of your skin to dictate your bus seat. And it was clearly a malevolent policy. And this is where the modern approaches to solve 'systemic' racism really worry me. A modern (satirical but not far from reality) spin on that racist bus policy would have white people sitting at the back of the bus in order to make up for past racism ... but in that case, you still cannot get away from intuitive notions of fairness. The fact remains, the idea that skin color dictates bus seat is unfair, even if you try to claim that you need to do it to make up for systemic racism and the races are reversed. Sorry for the rant. You and I have fundamental disagreement on this point. >A PoC unable to get soap doesn't care why the soap dispenser refuses to disperse soap This has nothing to do with anything. It is a silly example. Yes, the soap dispenser company effed up (not maliciously, just ignorantly) and should be embarrassed about it, and it will cost them to replace those dispensers, and I can guarantee you they will learn their lesson. It isn't the end of the world, and we're all on the side here, even the good people at the soap dispenser company.