Comment by macspoofing | Hacker News Reader

Comment by macspoofing | Hacker News Reader

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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.

> 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.

> 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.

>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.

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

Redlining ended over fifty years ago. Pick a different bugaboo.

According to this article, it hasn't. Provide contradictory evidence.

Bank loans are very hard to get for properties like this. Further, there are many extra opportunities for minority owned businesses. The hard truth is that being black is an advantage for loan seekers, not a disadvantage. It simply doesn’t outweigh the risk of failure. My spouse is a minority but with no interest in business. Man, would I like to take advantage of that, but I’m on my own ;)

> Counting a building with active tenants paying rent as being valued at $0 is ridiculous.

No it's not. If they live without running water, no toilet or heating with a leaky roof the tennants don't magically add value to the building.

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.

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.

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.

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?

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?

"Banks are racist" is my very short summary of the supposed situation. The problem I have with such explanations is the same I have with "women get 20-30% less money for the absolute same work". Since labor is the major cost factor in most industries, any company exploiting that arbitrage would stomp their competitors.

Why wouldn't anyone want to get rich off of lending to minorities? Pecunia non olet, I'm sure even a committed racist would be quite happy to make 10% by lending to African Americans instead of 5% by lending to WASPs in a highly competitive market. They may not want to deal with them personally, but that wouldn't stop them. It's even more astonishing that rich Black people wouldn't do it, so I believe it requires a bit more of an explanation.

> 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.

Are the shareholders mostly white? It's my understanding that most large investors are pension funds, insurance companies and the like, not individuals. We've supposedly saved the banks in pretty much every country because we'd wipe out those institutions, not because of some private individuals with giant investments.

A) They are doing it

B) Markets aren't perfect

C) You have to fight against, or change the influence of (through, say, commentary in the media), the government's funding and regulation.

>Are the shareholders mostly white? It's my understanding that most large investors are pension funds, insurance companies and the like, not individuals.

Who owns and benefits from the funds?

If "they" are doing it, where's the issue? Markets may not be perfect, but they're not that bad, especially when huge profits are waiting to be collected with little risk.

> Who owns and benefits from the funds?

Everybody that gets any kind of pension or has any kind of insurance. Is your point that the majority of those may be white and therefore they should've let them crash?

> If "they" are doing it, where's the issue? Markets may not be perfect, but they're not that bad, especially when huge profits are waiting to be collected with little risk.

See C

>Is your point that the majority of those may be white and therefore they should've let them crash?

If you truly think that's what I'm saying, we're on very different pages. The pensions have greater political power than the people in black areas. Both of them have the same problem - an unfair pressure that drives costs of lending up - but when it affects the majority rich and white investors, spending money to fix it is much more palatable.

Tim O’Reilly has been talking about that with his fund recently:

https://news.ycombinator.com/item?id=23657403

>Every policy has a differential impact, that doesn't mean we chose not to address them when we see them.

What do you mean? If every policy has a differential impact, then your contention is that therefore we must address every differential impact?

If, let's say, bank has a policy that you need 20% down payment to qualify for a mortgage, and let's say this has a differential impact on some group, how do you go about addressing this?

>If, let's say, bank has a policy that you need 20% down payment to qualify for a mortgage, and let's say this has a differential impact on some group, how do you go about addressing this?

You look to see why that's the case, and if it happens to be that those people have been recently (relative to society) emancipated slaves who've barely had 4 generations in a society that still systemically kills them via law enforcement, then you do whatever you can to change that.

We don't need to chose to address every differential impact, only the ones that we see as being bad, or particularly worthy of attention, for example the systematic exclusion of black people from the normal financial tools that allow us to build wealth.

I agree with this goal, but I don't see systemic exclusion in this article because the article didn't bother to do any investigation to understand where these policies came from. I keep reiterating this, but debt is an incredibly dangerous financial tool and you have to take extra care in differentiating someone being denied a loan because the objective risk profile is high vs being denied a loan because the bank is following racist policies.

You don’t have to have racist intents to execute a policy that enforces racism. Unfortunately when we talk about systems of society within humans, individual human intentions begin to dissipate.

>The question is, was the policy created with the intent of racism.

That's convenient for the people it doesn't affect. Not only do you not have to worry about the policies: by choosing not to be racist, you absolve yourself of blame or privilege for benefiting from them.

It also depends on you being able to infer another person's intentions. Intentional racists have always been in favour of covert racism in the form palatable policies that indirectly harm the groups they dislike and have always benefited from the unintentional bias of others.

Models are models, not a representation of reality. As long as the model is close enough to the local maximum that the providers keep making money, it keeps existing. And history suggests lenders are not perfect at calculating diversified risk.

The only assumption that OP made is that cheap credit makes it easier to make money, and that makes it easier to get cheap credit. That's not especially controversial.

>That's convenient for the people it doesn't affect.

It's not convenient because it allows for conspiracy theories like yours to take hold.

Tell me, how do you decide that a policy which makes no reference to race, and is implemented in a regulated environment that makes racist policies illegal, is actually racist?

To me, it seems like the only yard stick you have is if the policy has differential impact on some group. That is as low a bar as you can have and it completely dismisses personal attributes that are actually used to qualify for loan. It's also lazy, and malicious.

>The only assumption that OP made is that cheap credit makes it easier to make money, and that makes it easier to get cheap credit. That's not especially controversial.

Yes it is controversial. It's also idiotic and dangerous. Interest rates are low now, max out your HELOC and go make money with it - see how easy it is ... alternatively, try getting a business loan without collateral and see how fast you're rejected. Nobody is going to care that you are in a 'privileged' class.

Who cares about intent? Can I cash in a banker's "good intentions" elsewhere to get a loan for my business that I would otherwise qualify for if not for my name, zip code, alma mater, or my dialect? Can I pay the rent with the banker's "good intentions"?

The idea that racism exists exclusively inside the heads of racists, and that the actual physical material and financial harm it does to disadvantaged groups is unimportant compared to the subjective feelings of the person who is hurting them is so absurdly privileged that it borders on racism itself.

Imagine I burn your house down by pointing big fireworks directly at it. Would you be happy with the excuse "I didn't mean to hurt you, I was just aiming for the house with the least trees to get a better view of the explosion"? Are you suddenly happy with the loss of your house knowing that I targeted you for non-personal reasons?

>Who cares about intent?

If you're human you care. There is an extra level of malevolence when there is explicit intent. It makes a difference to people.

> I would otherwise qualify for if not for my name, zip code, alma mater, or my dialect

And where are you getting all that from? Loans are given based on personal attributes, like past ability to pay back debt (i.e. credit score), income, savings and collateral. Nobody gets a loan because of their zip code or dialect. What are you even talking about? Also, business loans are impossible to get for almost anyone. Banks just do not lend money for high-risk ventures like starting a business unless you put up collateral.

Also, debt is an incredibly dangerous tool. Do not treat it like charity. I've seen debt destroy people and here everyone is treating it like it is a human right. I get the sentiment behind it (everyone should get screwed with debt equally), but the actual mechanism (i.e. debt) is terrible.

>Can I pay the rent with the banker's "good intentions"?

You don't need anybody's good intentions to pay rent. What are you talking about? Who is preventing anybody from paying rent?

>The idea that racism exists exclusively inside the heads of racists

Where else would it live? This distortion of a simple concept does not advance anything. It makes everyone confused.

>Imagine I burn your house down by pointing big fireworks directly at it.

Oh stop with these idiotic hypotheticals. Nothing about what we're talking about is like arson.

Racism isn't bad because it's done by bad people. It's bad because it hurts people. Racism done by "good people" is still racism, and it's still bad for all the same reasons.

Nobody cares about racist intentions. Despite what fox news tells you, antiracists are not interested in prosecuting thoughtcrime. Have racist thoughts all you want, nobody gives a fuck. The problem that antiracism and all other egalitarian movements are interested in solving is racist/sexist/homophobic/whatever EFFECTS. Intent doesn't matter. Actual material harm matters.

>antiracists are not interested in prosecuting thought crime.

Come on. Nobody believes that. It is a practically a religious tenant that racism is hiding in the brains of people unbeknownst to even them even ready to strike at any moment and therefore you need to root it out! Where do you think the idea of 'implicit bias' and 'implicit bias training' comes from?

>The problem that antiracism and all other egalitarian movements are interested in solving is racist/sexist/homophobic/whatever EFFECTS.

No. The problem with antiracism all related movements is the same problem as with all ideologies. Everything is framed as either stemming from racism, or being racist. It's like a conspiracy theorist that sees everything as the work of the illuminati. Or a Marxist that sees everything as a class struggle. Or a Libertarian that sees everything as a collectivism vs individualism. Or a Feminist that sees everything as a result of patriarchy. Ideologies are blunt instruments that are occasionally useful but are disastrous when applied universally. There is never any reflection on false positive identification of racism. There is never reflection on whether some policy (for example, differential mortgage approvals) is the result of racism or other factors (hint: it's always racism) - maybe racism comprises 5% of the differential mortgage approvals and the rest is dominated by other factors? There is never any nuance. There is no evidentiary support for vast majority of claims, and counter-evidence is ignored or disparaged (for example 'implicit bias' and associated training has been discredited for a long time now, but no matter!).

> The question is, was the policy created with the intent of racism.

This sounds reasonable, but this is not how US Federal law works.

One key concept is strict scrutiny [1] -- when a regulation that infringes fundamental constitutional rights (such as equal protection under the law), or when a law pertains to a "protected class" like race or national origin, the standard is much higher.

In particular, in such cases, you do not have to prove, for example, racist intent to strike the law down. See the link for more. The obvious reason is that it's very hard to prove intent.

The current administration did manage to be blatant enough in its attempt to add a question to the census to suppress counting of people it does not like, that it did indeed reveal intent. [2]

[1] https://en.wikipedia.org/wiki/Strict_scrutiny

[2] https://www.aclu.org/blog/voting-rights/trump-administration...

> 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.

>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

> 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.

>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.

Does the gender gap in arrests, convictions, and prison population (which is several times larger than the racial gap) prove that our justice system is systematically/structurally biased against men?

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