At 11:26 AM 12/4/1996, Matthew J. Miszewski wrote:
I consider it my business also, when people are denied opportunity because of where they live.
Why not simply disagree with me? You do not believe that people may lend their very own money, earned honestly, to anybody they please.
Actually, I never said that.
You say it below.
Anyone may. I may hire only white people (even with the intent not to hire others). I will also pay the consequences. And if someone feels that they need to do this, the teachers of civil disobedience indeed state it is their duty to.
Anyone may give their money to whomever they choose. I was simply stating it was morally wrong.
If you are ashamed of that, change your mind. If you are not ashamed, proclaim it the world and justify it.
I have never been ashamed of my opinions. Its just that I never said they couldn't do it. I justify my position as follows:
It is costly to everyone in the state to have areas of under and unemployment, poverty and usually high-crime rates.
It is unjust and costly to deny opportunity based upon residence.
It is just and efficient to allow markets to indeed be free instead of falsely supporting a certain hegemony based upon residence.
Free and full competition is the only way to achieve a free market. This can only happen when access to capital is equal with regard to worthless indicators (race, sex, residence and aga's favorite, sexual orientation).
See, right above there. If I earned my very own money honestly and I choose to lend it only to Albanians, you believe that this would be inefficient and, therefore, forbidden. In other words, you do not believe that I should be able to lend money to anybody I please. You can call it "equal access to capital" or "denial of opportunity", but the clearest and simplest description is that you believe I should not be able to lend my money to whomever I please. Instead of pretending otherwise, just say "I believe you should not be able to lend your own money which you earned honestly to anybody you please. I believe you should be allowed only to lend money in these circumstances..." Of course, non-discrimination is a vague term. Let's say I lend money only to people I know. I only know Albanians. Am I therefore a racist in my lending practices? That is unclear. Am I racist in my choice of friends? Perhaps we should make that illegal.
I have never suggested that provably bad credit risks should be given money.
What is irksome is that you are talking about Other People's Money and not your own. The perspective tends to change when it's your own savings on the line.
I may also hire whomever I wish, but I would have to pay the consequences if I happened to discriminate based on a protected class while doing so. That is the society in which I live. If I dont like it, I try to change it. Our society is not libertarian.
Current policy doesn't matter if we are discussing the wisdom or justice of possible policies.
It does if my argument is that this part of the system *is* just. I realize you disagree, but I am sure you are not dismissing my argument out-of-hand. If you disagree, as you say, then disagree.
Actually, I have trouble following your argument. Please forgive me for my limited intelligence. If you are arguing that the current policy is just, that question is not related to whether it is the current policy. But, I suppose you were just sort of observing on the side something like "oh, and by the way, this is current policy."
It isn't clear to me whether you are discussing policy options or whether one should violate laws one does not like. When an action is illegal, it is still permissible to discuss its legalization.
I agree. I am not arguing that we need to withdraw Title VII. Aparently you are?
I do not know what is in Title VII. Perhaps it would be better to ask me about particular policies.
There are times when government should intervene. I believe it should be as infrequent as possible, but would not want to live in a society where disinfranchised people have no possible recourse. Your choice would apparently be different.
Perhaps. In any event, it is important to understand precisely the mechanisms through which people are disenfranchised, if that is in fact what has happened. It is also important to understand the ramifications of phrases like "no possible recourse". To borrow money? It is safe to say that most poor people should be saving money rather than borrowing it.
Why are you stepping around your opinion? "...if that is in fact what has happened." Just say it. You do not believe poor people are disenfranchised.
In fact, I am open to the possibility that poor people really are disenfranchised. But, if I am to believe that I must hear an explanation that makes sense to me. If poor people are poor because absolutely nobody will do business with them for completely irrational reasons, that seems extremely unlikely. Even if most rich people are able to control their greed just to punish poor people of the wrong race, which is already hard to believe, you actually have to claim that they are all this way.
I understand the ramifications of "no possible recourse". How should poor people save money?
Just like anybody else does. You watch every penny. You don't eat meat. When you buy food, you buy inexpensive healthy food like lentils instead of expensive unhealthy food like Coca-Cola and potato chips. You do not go to McDonald's. You walk when you can instead of taking the bus or you ride a (used) bicycle. You don't smoke cigarettes. You do not buy alcohol. You do not buy other recreational drugs. You buy your clothing used. You economize on your living arrangements, perhaps by having a large number of roomates. (Note that this is illegal in most cities. That is a form of disenfranchisment.) You do not make long distance calls. If you can, you share a phone with other people. etc. etc. etc. If you know poor people, you will know that few of them do these things. Also, you work hard to increase your earnings. You show up at work on time every time. You develop a good work ethic. You wear clean professional clothing at work. You treat your employer and coworkers with respect. etc. etc. etc. Read "Your Money or Your Life" by Joe Dominguez and Vicki Robin. It outlines a workable program that all poor people - and quite a few others - will be able to use to their benefit.
I have not heard serious doubts for a while that redlining occurs.
It seems likely that people draw lines around certain areas and decide not to lend money there. What is less clear is that this is unreasonable. There may be a few good credit risks in poor neighborhoods. But, it may just be too much trouble weeding through the others to make it a paying business.
I thought that it didnt matter where people came from as long as the risk was low in reality. Banks weed through the people coming to them from the suburbs. Is it harder for them to see past a red line? More costly? How?
If you are going through prospective leads and the number of qualified people is, say, 10 in 1000, you will make a lot more money than going through a pool of leads that only has 1 qualified person per 1000.
It may also be the case that people lending money are behaving irrationally and drawing lines around neighborhoods for simple racial reasons and for no others. There is a word for this: opportunity.
It also screws up the market.
But why isn't that good news? If it's really market inefficiency, why not exploit it?
I am glad that you admit that racism is irrational.
A lot of human activity is irrational. In the case of racism, it is difficult to even define what it is for the purpose of writing a law under which people are to be prosecuted. This undermines the rule of law in the United States and opens the way to abuse and political corruption. Probably that was the idea. But, even if it were possible to define precisely what racism is, I would still believe it should be legal. There is no accounting for taste and it is wrong to dictate it to other people when they are causing no harm to others.
That is the core as to why the problem doesnt go away. It is an infinite loop. Current interests wont go there.
Not one? Absolutely no one? That's pretty hard to believe.
Generally, people who understand the problem are without access to capital. They would like to go there. They cant get capital. When they approach current interests, they wont go there.
Maybe there's something funny about the deal.
Bank of America was built by a man who perceived and exploited one such opportunity. Italian shop keepers in California could not get good banking services for, it turned out, irrational reasons.
There are a few examples of people who actually realize this as a problem/opportunity. Oddly enough, this point reinforces mine. Redlining did exist. Bank of America realized it and made a lot of money. But it still exists elsewhere. Why dont business plans around the country spring up on venture capitalists desks with an approved stamp on them?
More to the point, why isn't Matthew J. Miszewski drooling in anticipation of all the money he is going to make by recognizing this glorious opportunity? Giannini made a tremendous amount of money. Even if you don't care about money, which is unlikely, think of all the good you could do once you made that fortune!
They don't even have to put the money in for a long time. Once you've set up a package of mortgages, you can sell them off on the CMO market which is liquid and, I believe, quite colorblind. The beauty of this scheme is that you can take your profits right away and let other people take on the long term interest rate risk, default risk, and management hassles. This will make your plan easier to sell to investors.
I agree with you that it is a financially attractive proposition. At the Center for Public Representation where I worked during Law School we approached investors. The ROI was extremely attractive not to mention the added "goodwill" in a largely liberal community (I went to Law School in Madison, Wisconsin). No one bit. Hmm?
Hmmm? Maybe it was lousy investment in spite of a good ROI number. Nobody? Not one person was willing to buy in? Hardly an endorsement.
You might also look into the microlending market. The idea is to lend poor people small amounts of money (less than $10,000) to start businesses and the like. The default rates are claimed to be surprisingly low. I have my doubts, but it sounds as if you do not. Good luck.
Actually, I am very glad you brought it up because I was just going to. Microloans are successful not only in this country but in India and around the world as well. The Grammeen Bank initiated its microloan program in India by loaning usually less than $100 to individuals. They fixed up their residences or started extremely small businesses. The default rate was less than 5%. (BTW, the system also encouraged community by a system of cyclical neighborhood lending where neighbors took responsibility for neighbors).
Compare this now to people whom banks would generally consider a good risk. College Graduates. Generally, these folks live outside of the red line. Good risks right? What about those nasty student loan default rates? The red lines dont make business sense.
I'm hearing that cash register ringing. Go for it!
When you are working to make sure all the bills are paid it is a bit difficult to also build an entirely new socio-economic structure.
You don't have to build an entirely new socio-economic structure. You just have to find some good credit risks, some people with money to lend, and put them together taking a cut for yourself, unless the government has thrown up some obstacles to this.
I wish it were this easy. Economically depressed areas need new structures built. The current structure adds to the cycle of poverty. First, earnings are low.
Guess rents must be low too, otherwise why live there? Rents are a dominant expense for poor people.
Second, costs are high (Warehouse foodstores dont locate there so corner stores become the means of feeding the family ($$$)).
That's easy. Once a month get ten families together to go to the nearest warehouse store in the suburbs and stock up on provisions. Or, one poor family could buy a bunch of stuff every month and sell it out of their house and save everybody the trip. Discussions regarding "the cycle of poverty" are usually little more than litanies of excuses.
Again, business plans have been presented to no avail. Even private foundation subsidized events were tried. To no avail.
Gee, you would almost think there was something wrong with the investment. I challenge you to put your own money into this venture. You don't even have to quit your job to get into the microlending business until you've built it up to the point where it can support you.
If you believe that there is a huge opportunity which the racist banks (i.e., all of them) will not take advantage of, you had better explain why there is nobody anywhere with any capital who wouldn't want to make even more money off poor people. Can it really be the case that 99+% of rich people will run fleeing from such a great opportunity?
I once believed much like you. I saw an "opportunity" the existance of which I could not explain. It seemed irrational. And it was.
What I don't understand is why you are not excited by this opportunity. You claim there is this gaping hole in the banking business. If that is true, whoever exploits it is going to be unbelievably rich in addition to being a great human being. My point is not that there is a great opportunity so "somebody somewhere" will solve the racism problem. My point is that you yourself do not believe there is a great opportunity if it involves money you really care about, i.e. your own.
Racism is irrational. As you seem aware (BTW, I applaud you on what seems to be an honest degree of care)...
Don't get your hopes up. I've been poor and I've known many poor people. The unpleasant truth is that there are usually reasons why people are poor.
Oh, and speaking of racism, where do wealthy African-Americans invest their money?
Huh? What is your point?
You are claiming that there are ZERO investors who will invest in this great opportunity because they are racists. Contrary to popular belief, most African-Americans are not poor or even gang members. There are large numbers of middle class African-Americans and a smaller number of quite successful African-American businesspeople. If everybody rich is a racist, go to these people and propose that they can make money pursuing a business opportunity which they are uniquely qualified to identify and exploit. If you are claiming that even African-American investors are irrationally racist about lending to poor people, you should be forewarned that I and many other people are going to find that a little hard to believe.
Everyone can now clamor that it just isnt true. Banks have never discriminated. Its all a big lie. Whatever.
Banks have practiced discrimination, and not just against black people. They have been able to get away with it. How? Because the government has protected the banking guild from competition.
If opening a bank were as easy as forming a corporation, you would not see much discrimination, I assure you. There is no reason why a bank shouldn't be that easy to open.
We agree. But I feel that a legal elimination of redlining would decrease costs to the industry.
Wrong. Redlining is devilishly difficult to define. That hurts a small bank more than any other because they have to figure out how to comply with the law and defend themselves against the regulators instead of just borrowing and lending money. It raises the costs of banking. That means it is harder for people to borrow and lend money. And that, if you care about efficiency, is inefficient.
Appeals to the very people who are exploiting you are not likely to meet with success, are they?
If they never did we would still have slavery and only white, adult, male, land-owners would vote. While success is rare, it has prevailed when the cause is just.
I hate to admit it, but you do have a point here. However, the way privacy will be permanently eroded is through laws called "The Privacy Protection Act" which have clauses allowing the government to do whatever it wants. It is disconcerting to have the government dictating what information you may or may not keep on your computer or who you may give it to. Red Rackham
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