Too Much Policing in Black Neighborhoods

[untermensche]

What is racist is looking at two people with the same finances and concluding the darker one is a bigger risk.

What is racist is reaching out and looking for potential borrowers only in predominantly white areas.

Which is what the banks had been doing for decades.

so again these banks weren't going somewhere that they could make money? So they aren't greedy?

I don't think all these bankers were racists.

This is institutional racism.

Racism inherent to the practices of institutions.

And nobody ever called bankers greedy for giving mortgages with money arriving from thin air. Why anybody should profit from such a thing is the question.

What was called greedy was not checking any information on applications and giving mortgages and then selling the mortgages to suckers in a fraudulent manner.

 

[Trausti]

so again these banks weren't going somewhere that they could make money? So they aren't greedy?

I don't think all these bankers were racists.

This is institutional racism.

Racism inherent to the practices of institutions.

And nobody ever called bankers greedy for giving mortgages with money arriving from thin air. Why anybody should profit from such a thing is the question.

What was called greedy was not checking any information on applications and giving mortgages and then selling the mortgages to suckers in a fraudulent manner.

I'll just place this here.

 

[untermensche]

I'll just place this here.

Where does he say the banks should stop checking information on loan applications and fraudulently sell bundled mortgages to others?

Because that is what caused the crash.

Not slightly riskier loans backed by government insurance.

 

[Derec]

Not slightly riskier loans backed by government insurance.

The point is that the government should not require for banks to issue riskier loans to some people based on their race.

 

[untermensche]

Not slightly riskier loans backed by government insurance.

The point is that the government should not require for banks to issue riskier loans to some people based on their race.

You are saying the government should not do anything to address the problems caused by centuries of oppression and discrimination based on race.

The only way to have equal opportunity is to try to build a level playing field.

 

[Derec]

You are saying the government should not do anything to address the problems caused by centuries of oppression and discrimination based on race.

"should not do anything" != "should not do this particular stupid thing".

The only way to have equal opportunity is to try to build a level playing field.

Let's say a black person and a white person wanted to buy a house in the same neighborhood and have same credit worthiness, income etc. They should not be treated differently.
But if one wants to buy a house in an iffy neighborhood why should that not be taken into consideration by the bank only because the borrower is black?

 

[untermensche]

"should not do anything" != "should not do this particular stupid thing".

What should the government do to try to deal with the problems created by centuries of oppression, murder, and segregation?

 

[Crazy Eddie]

Is yammering now counted as argument?

You don't think that might have something to do with the low clearance rate?

It doesn't. It's the fact that most people in the high-crime neighborhoods of Chicago are slightly more afraid of the police than they are of gang bangers.

Basically this: gang violence is random and unpredictable and hard to predict, so most people just treat it as a massive environmental hazard that needs to be dealt with within the community.

Police violence is also unpredictable, but it's not quite as random because police wear uniforms and (mostly) only show up where they've been called. So police, unlike gang bangers, are visible and relatively easy to avoid. More importantly, gang bangers won't arrest you and throw you in prison for smoking marijuana, drinking in public, driving on a suspended license, or driving a car with expired plates. If a gang banger decides to fuck with you, most of the time he'll just steal your wallet or your phone and you're out a couple hundred bucks. If a cop decides to fuck with you, you wind up spending a night in jail and then go to lockdown for the weekend. A cranky judge with a stick up his ass might decide he doesn't like facial expression and set your bond at $5000 in which case you're not getting out until somebody can bail you out, which might take a few days if you aren't given access to a phone until the following day or the day after.

The easiest way to avoid gang bangers, it turns out, is to not talk shit about them on facebook. The easiest way to avoid cops is to not talk to them AT ALL. Neither of these tactics is entirely fool proof. But getting robbed by a gang banger takes all of five minutes and costs you $300 and then it's over. Getting robbed by the police takes 5 days and costs you $900 and then they still make you show up to court dates and harass you for months if not YEARS after the fact.

 

[Loren Pechtel]

HUD & ASSOCIATED BANK REACH HISTORIC $200 MILLION SETTLEMENT OF 'REDLINING' CLAIM

HUD's Assistant Secretary for Fair Housing and Equal Opportunity filed a disparate treatment fair housing complaint alleging that between 2008 and 2010, Associated Bank discriminated on the basis of race and national origin regarding the denial of mortgage loans to qualified African-American and Hispanic applicants and the provision of loan services in majority-minority census tracts. HUD's analysis of Associated Bank's mortgage lending activity indicated that, compared to other mortgage lenders, Associated made few loans in majority-minority census tracts in five metropolitan areas in Illinois, Wisconsin, and Minnesota, but did make loans in nearby predominantly white tracts.

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-064b

How is it you get everything wrong?

1) How would this keep blacks together? If it's easier to buy a house non-black areas that would tend to cause blacks to disperse, not concentrate!

2) I don't know about the areas in question but we had similar allegations some years earlier here--and a closer analysis shows it's just more of the fake discrimination that the watchdogs use to justify their jobs.

Locally:

1) For any given house the odds of approval for equally qualified borrowers was equal.

2) For 80/20 loans the location didn't matter.

3) For low-down loans there were two zip codes that were majority black where loans were less likely to be approved. They screamed redlining and IIRC handed down some penalties.

Lets look more carefully at this, though. Why would they only discriminate against low-down borrowers?? That doesn't make much sense. Lets see if we can find a more solid factor that explains what we are seeing.

Observation: The zip codes in question were not participating in the general rise in house prices. Understandably so, they were about the worst parts of town.

Observation: Bankers love to see homeowner equity, they hate to see houses without equity. So long as there is decent equity the chance of things going bad is quite low and if they do they'll generally be made whole. With a lack of equity they'll probably take a bath if things go bad.

Hypothesis: Bankers were looking at the expected appreciation. Lets look at the situation a few years down the road. A low-down loan in most areas will build up equity from appreciation. A low-down loan in those two zip codes will likely still have very little equity. An 80/20 has decent equity, however.

Note that this explains all the data by making a single and quite reasonable assumption. The Redlining! people never explained why banks would discriminate only against blacks that had low-down mortgages.

Occam's Razor: The government failed to look at all the relevant factors, there is no discrimination going on. (Somewhat understandable as expected appreciation is an educated guess, not something subject to exact measurement.)

You really don't understand how redlining works, do you? By denying home loans to qualified African Americans in 'bad' parts of town, this causes those properties to either sit vacant or to be purchased by absentee landlords. This keeps the area slum-like, and continues extracting rent levels of expenses from the neighborhood. Without equity, the African American majority living there can't get a down payment or equity to move elsewhere where a higher down would be necessary. By denying loans in cheap parts of town, those parts of town remain slums.

Locally at least they had no problem with the 80/20 loans.

I note that you didn't address my alternate hypothesis that makes more sense.

- - - Updated - - -

So we have two scenerios.

1) The banks are turning down making money. And I thought banks were greedy bastards

2) Banks have to loan money to people who won't repay the loans

Saying you thought "banks were greedy bastards" is not any kind of a refutation. Not any kind of an argument.

Especially since banks do nothing, only people do.

And we can see what they did.

The point is you can't have banks both as the good guys and the bad guys. If they're greedy bastards that will make any buck they can they wouldn't turn down borrowers because they are black.

 

[Loren Pechtel]

Yes it was about how aggressively they could loan money. Banks were traditionally conservative, required 20% down. But the government didn't think they were being aggressive enough so they put in government programs to help. And then it was noticed that they were redlining because banks wouldn't make money in this investments, but it was a problem. Then it was they weren't loaning to minorities enough and they found a solution.

This is so twisted and far from reality I don't know if I can help.

For decades banks practiced racist policies and would not loan to many blacks.

The Congress asked them to seek out qualified borrowers that were minorities.

Nobody asked them or instructed them to just loan to anybody that asked without checking their credit.

That was entirely the idea of bankers. Because they had a scheme to defraud others with bad loans hidden in huge bundles.

The ratings agencies were in on the scheme as well.

They were caught between two rules:

1) Lend prudently.

2) Lend enough to minorities.

The latter is easy to measure, the former is not. If you have no choice but to break a law aren't you going to choose to break the one that is harder to define??

- - - Updated - - -

Now it's racist for a mortgagor to lend based on a potential mortgagee's default risk? Really, everything is racist now. Everything. Common sense out the window.

What is racist is looking at two people with the same finances and concluding the darker one is a bigger risk.

What is racist is reaching out and looking for potential borrowers only in predominantly white areas.

Which is what the banks had been doing for decades.

Locally at least that's not what they were doing. Given house, given finances, race didn't matter.

Rather, the local effect was a reluctance to write low-down mortgages to low-appreciation houses.

 

[Loren Pechtel]

I'll just place this here.

Where does he say the banks should stop checking information on loan applications and fraudulently sell bundled mortgages to others?

Because that is what caused the crash.

Not slightly riskier loans backed by government insurance.

The feds demanded they write the loans. They didn't have enough qualified borrowers so the feds demanded the standards be relaxed.

The banks knew the loans were iffy and got rid of them as soon as they could.

Then you had the independents jump on the bandwagon and exploit the loose standards to write pure shit loans and shovel them out the door as fast as they could so they wouldn't be left holding the bag.

 

[Loren Pechtel]

The point is that the government should not require for banks to issue riskier loans to some people based on their race.

You are saying the government should not do anything to address the problems caused by centuries of oppression and discrimination based on race.

The only way to have equal opportunity is to try to build a level playing field.

The problem is that anyone who thought about it could see it was impossible. As usual with such heavy-handed anti-"discrimination" measures the result ended up harming the very population it was meant to help. Blacks on average ended up farther behind after the inevitable blowup than they were before we got stupid. Same thing as AA admissions in college reduce the chance a black gets a degree.

The KKK should be cheering the modern anti-discrimination efforts!

 

[untermensche]

Where does he say the banks should stop checking information on loan applications and fraudulently sell bundled mortgages to others?

Because that is what caused the crash.

Not slightly riskier loans backed by government insurance.

The feds demanded they write the loans. They didn't have enough qualified borrowers so the feds demanded the standards be relaxed.

The banks knew the loans were iffy and got rid of them as soon as they could.

Then you had the independents jump on the bandwagon and exploit the loose standards to write pure shit loans and shovel them out the door as fast as they could so they wouldn't be left holding the bag.

Wells Fargo to pay $1.2 billion for hiding bad loans before housing crash

Wells Fargo acknowledged that between 2005 and 2010, it only reported 300 problematic loans to the Department of Housing and Urban Development. Meanwhile, internally it had spotted 2,900 loans with problems.

As in other bank settlements, no criminal charges have been brought against any bankers themselves.

http://money.cnn.com/2016/04/08/news/companies/wells-fargo-bad-loans-settlement/

 

[Crazy Eddie]

The feds demanded they write the loans. They didn't have enough qualified borrowers

Bullshit. They deliberately created a parallel criterion for what they termed "high risk loans" and imposed standards that even so-called "low risk" borrowers wouldn't usually meet. When the feds cried foul, they briefly relaxed those extra requirements, and THEN they realized they could package those bad loans and pass them off as securities and they relaxed them a little more while saying "look how fair we're being to minorities!"

That was when the sub-prime mortgage thing really started, and at that time the banks started pushing totally unrealistic directives on their brokers: they were restricted from conducting credit checks of any kind, of checking the backgrounds of borrowers, in some cases threatened with firing if they even bothered to confirm that the people they were loaning to even really existed. The game had changed at that point; the banks KNEW they were creating a bubble and they were trying to package up as many loans as they could and then sell them as commodities.

Why they made the transition from grudgingly dealing fairly to "bet it all on black!" is not entirely clear, but most writers think it has to do with the lack of enforcement of SEC regulations that were supposed to prevent exactly that from happening. It was basically like a classroom full of kids who've just looked up from their worksheets and realized the teacher has left the room: they started to act up, then they started getting rowdy, and then shit got broken.

The banks knew the loans were iffy and got rid of them as soon as they could.

Then you had the independents jump on the bandwagon and exploit the loose standards to write pure shit loans and shovel them out the door as fast as they could so they wouldn't be left holding the bag.

You're half right. Again, it wasn't the Feds that ordered them to relax those standards, certainly not to the extent that they actually did. Once it was realized that trading bad loans as securities wouldn't get anyone into serious trouble, taking obviously bad loans seemed like a route to quick cash and everyone started doing it.

 

[coloradoatheist]

It was all parties that were happy with the relationship. I think they all figured it would just top off and come down a little, just not crash.

You had HUD rewriting the lower lending standards that banks used. The GSEs were buying the MBS because it met their goals of minority ownership. The FED fueled the interest rates for an excessively long time because it was improving the economy and banks and mortgage companies were making money. It took a lot of different things to come together to bring this about.

 

[RavenSky]

Yeah. Government policy pushed lenders to make loans that they would not have otherwise made. The lenders didn't create the default risk disparity.

Yes the banks had racist policies and they would not have made many loans to minorities.

But nobody told them to loan without checking credit and hiding these bad loans in huge bundles and selling them to others.

That was entirely the idea of criminal bankers.

Very few of which were ever prosecuted.

It's good to be the master.

Very few? I'm pretty sure it was one.

Only one low level banker.

Otherwise, you have been correct on this point.

I will also note that redlining is an old practice, and that Fair Housing laws that addressed it had nothing to do with the financial crisis. As you said, that was entirely the fault of the bankers.

 

[RavenSky]

Now it's racist for a mortgagor to lend based on a potential mortgagee's default risk? Really, everything is racist now. Everything. Common sense out the window.

You clearly do not understand what "redlining" means

 

[laughing dog]

It was all parties that were happy with the relationship. I think they all figured it would just top off and come down a little, just not crash.

You had HUD rewriting the lower lending standards that banks used. The GSEs were buying the MBS because it met their goals of minority ownership. The FED fueled the interest rates for an excessively long time because it was improving the economy and banks and mortgage companies were making money. It took a lot of different things to come together to bring this about.

For conservative atheists, gov't has replaced Satan as the source of all the badness in the world.

 

[Jarhyn]

I think it's silly to ignore the fact that if you don't let the majority of people living in a community own the houses they live in, those hoses will be owned by landlords who don't care to maintain or improve those houses, and that this leads to a decline in value over time relative to other areas. This in turn makes the area less 'lendable' except to outside buyers, and so the cycle continues, exacerbated by the higher costs of renting vs paying a mortgage.

 

[untermensche]

I think it's silly to ignore the fact that if you don't let the majority of people living in a community own the houses they live in, those hoses will be owned by landlords who don't care to maintain or improve those houses, and that this leads to a decline in value over time relative to other areas. This in turn makes the area less 'lendable' except to outside buyers, and so the cycle continues, exacerbated by the higher costs of renting vs paying a mortgage.

It is much deeper than that.

Poverty in itself leads to many psychological disturbances. It leads to broken homes and crime and children with no parenting except on the streets.

You really can't just address housing unless you address the corrosion caused by poverty, which lasts generations.

Plans for improvement have to be aimed at the next generation.

But capitalism is all about the near future. It makes thinking narrower and narrower. Until all one thinks about is the next quarter.

And then this mentality infects the governments controlled by capitalists.

Capitalism and addressing poverty from centuries of oppression are contradictions.

That's why capitalists hate things like Social Security which is an inter-generational plan created to address the long term.