question for the libs on here

[Clark Addison]

Originally Posted by FMCoug

Yep. The market is not racist. If there was money to be made in redlined areas, they would not have been redlined.

That is just absolutely not true. What are you basing that statement on? The market is not racist, but people certainly can be. It is only within the last 15 years or so that predictive modeling became the predominant method of determining credit worthiness. Before that time, almost all of the decisions were made by people, who had their own predjudices. Even today, in many industries and companies, a lot of loan underwriting is done by people's judgements, which leads to a whole ot of inefficiencies.

I don't mean this as a rude question, I am just trying to get where you are coming from. Do you have a history in consumer lending?

[MikeWaters]

Is it a market inefficiency for a company to have a policy not to hire niggers, FM?

[Clark Addison]

FM, while you are (maybe) replying to my other posts, here are some related thoughts. I am a strong believer in the power of free markets, but we have plenty of examples where they have not fixed racial problems:

- Most economists I have read agree that slavery in the antebellum South was not economically sound (it would have been more efficient to pay workers). Why did it continue?

- It certainly would have been more profitable for businesses during the Jim Crow area to serve all people, regardless of their color, yet they didn't. Why did the market not fix that?

- In the specific case of redlining, why did poor white areas not get redlined nearly as much as comparable black areas? I'll tell you right now, it was not because they paid their loans better.

[FMCoug]

Originally Posted by Clark Addison

In the specific case of redlining, why did poor white areas not get redlined nearly as much as comparable black areas? I'll tell you right now, it was not because they paid their loans better.

I'd love to see data to substantiate that.

But before we gett to far afield into redlining, the premise of my post is that the government forcing banks to make risky loans is what started this. Agree or not?

[Clark Addison]

Originally Posted by FMCoug

I'd love to see data to substantiate that.

But before we gett to far afield into redlining, the premise of my post is that the government forcing banks to make risky loans is what started this. Agree or not?

I'm not smart enough to say what exactly the cause of all of this is, but I am also not dumb enough to lay all the blame on one thing. I've worked at Banks for about 8 years, all in consumer lending, and while the government gives us a lot of direction and regulations, they've never forced us to make bad loans. The marketing and sales people try to make us do that a lot more than the government.

My opinion is that the massive growth in the mortgage CDO market did a whole lot more to cause this than the government (and the fault that the government has is not in getting rid of redlining). Large investors (pushed by investment houses) created a huge demand for CDOs, the investment houses pushed that demand down to the consumer banks and mortgage brokers, who sold a bunch of loans to people who couldn't afford them (who are also not faultless in this). The brokers who made these loans were motivated much more, IMO, by the fact that they could make a lot of money selling them than they were by the government hoding a gun to their heads.

[fusnik11]

I love it.

For 6 years all major decisions in this country were decided by one party.

They claim the economy we enjoyed for 8 years during Clinton's years were because of Reagan. They claim the rough start to this decade was because of Clinton and his inability to reel in the tech bubble. And now ya'll are blaming the market correction, credit crunch, and subprime woes, of the past 12 months on the Dems who less than 2 years ago took control.

[FMCoug]

Originally Posted by MikeWaters

Is it a market inefficiency for a company to have a policy not to hire niggers, FM?

your race baiting is true to form. That has nothing to do with the discussion at hand and you know it.

[MikeWaters]

Originally Posted by FMCoug

your race baiting is true to form. That has nothing to do with the discussion at hand and you know it.

Bullshit. If a bank has a policy to not give loans to any black person or black-owned business, is that a good thing? Is that ok?

I used to be of the opinion that a business could do whatever it wanted. If it wanted to hang a sign out front "NO COLOREDS", that was ok. Not hire minorities? Ok. No mortgages to blacks? Ok. I argued the market would take care of it. I'm not of the same opinion anymore.

[FMCoug]

Originally Posted by MikeWaters

Bullshit. If a bank has a policy to not give loans to any black person or black-owned business, is that a good thing? Is that ok?

Of course not. That is a racist view. But if socioeconomic data says zipcode X is a high risk place to lend money, regardless of cause, is that racist? So what if it HAPPENS to be a pre-dominantly black area?

[MikeWaters]

Originally Posted by FMCoug

Of course not. That is a racist view. But if socioeconomic data says zipcode X is a high risk place to lend money, regardless of cause, is that racist? So what if it HAPPENS to be a pre-dominantly black area?

Yes it is, because any model that only uses location is a DUMB model.