I’m reading this new book by economist Thomas Sowell — The Housing Boom and Bust.
For more than a decade, US newspapers have editorialized that banks are more conservative than they should be about lending money to blacks. The current foreclosure debacle suggests otherwise.
A 1991 Federal Reserve study found that blacks and whites with the same income had different mortgage loan acceptance rates. Is this racism? It’s not clear. Income is only one factor in determining whether someone is a good bet to repay a mortgage loan. Blacks and whites with the same income tend to have very different levels of wealth.
The same Federal Reserve study found that whites were denied conventional home loans more often than Asians and resorted to subprime loans more. This fact did not make it to most news reports.
As Tom Sowell writes: "What such omitted facts might imply was that financial and behavioral differences among groups can lead to differences in mortgage loan approval rates… Credit history is another of the factors influencing mortgage loan approval, and credit ratings differ among groups. Just as whites average higher credit scores than blacks or Hispanics, so Asian Americans average higher credit scores than whites."
The same methods that would lead some to conclude that blacks are discriminated against in mortgage lending would force one to conclude that whites are discriminated against in favor of Asians.
Who really believes that banks are discriminating against whites?