Defenders of racial preference policies often argue that they are needed because discrimination still exists. Those of us who are critical of such polices tend to view this argument as a non-sequitur. Since discrimination on the basis of race is wrong, we insist, the fact that it may still exist can provide no justification for engaging in still more of it.
But everyone who believes racial discrimination is wrong has an obligation to condemn it wherever and whenever it raises its ugly head, an obligation that I believe critics of preferences have a heightened duty to honor. In this regard an article buried in the Real Estate section of today’s Washington Post has special relevance. “Thirty-five years after Congress passed the Fair Housing Act,” it asked,
do racial preferences and discrimination continue to exist in home mortgage finance? Are American home buyers still charged higher rates or fees on their loans solely because of their skin color or racial heritage?
The unfortunate answer appears to be yes.
Section 3604 of the Fair Housing Act of 1968 made it illegal, among other things,
(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.
(c) To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination.
Unfortunately, there is a great deal of evidence that housing discrimination still exists. As the WaPo article points out,
[s]ince the advent of the fair housing law in 1968, dozens of cases have gone to federal courts involving charges of racial discrimination against minority home buyers. Lenders, insurance companies and others have been accused of charging minorities — primarily blacks — higher mortgage fees or rates, or “redlining” entire minority neighborhoods by ceasing to make mortgage loans.
The article highlights a recently announced settlement in a case from the federal district court in Indianapolis in which the Flagstar Bank of Troy, Michigan, while admitting “no wrongdoing, liability or improper conduct,” agreed to pay a $1.2 million settlement to a group of borrowers who claimed the bank had discriminated against them. What was unusual about this case is that the plaintiffs had discovered written bank policies instructing its loan officers to discriminate.
[Amy Ficklin] DeBrota [attorney for the plaintiffs] said Flagstar’s policy was discovered when one of its loan officers resisted following the pricing instructions and was fired. The loan officer “felt that any sort of preferential treatment to one racial group over others violated the law,” said DeBrota. “She refused to do that.”
There was one other unusual thing about this case: Flagstar instructed its loan officers to discriminate against whites.
• Minority home buyers could be charged no more than 3 percent in loan origination fees or “points,” but white applicants could be charged up to 4 percent.
• Loan officers whose “revenue per loan average” from mortgages made to minority applicants exceeds their “non-minority [white] average” will be subject to disciplinary actions, including probation and termination.
Can we all agree that this blatant racial discrimination is wrong? No? I didn’t think so. If Title VI of the 1964 Civil Rights Act, which provides that
no person in the United States shall, on the ground of race, color, or national origin, be … subjected to discrimination under any program or activity receiving Federal financial assistance. [42 U.S.C. § 2000d][,]
doesn’t mean what it says (and the Supremes have now said that it doesn’t), why should the Fair Housing Act?
If “diversity” is now so important that it trumps the principle that bars racial discrimination in higher education, isn’t it equally if not more important in K-12 education? And aren’t “diverse” neighborhoods the surest route to “diverse” schools? If all that is true, shouldn’t lending institutions be encouraged or even required to provide lower mortgage rates to minorities where that will lead to an increase in “diverse” housing patterns?
In fact, what could the judge (John Daniel Tinder, Southern District of Indiana) been thinking last August when he found Flagstar had violated the Fair Housing Act? He must have been so busy reading the statute that he neglected to read the writing on the wall indicating that the non-discrimination principle is almost dead. Or maybe it’s just that he was appointed by a Republican president and so probably can neither think nor read.
The whole world is becoming an affirmative action bake sale.
UPDATE
Be sure to see StuartT’s comment to this post.
For anyone who has worked over a dozen years in the banking industry (as coincidentally, I have), this is a dog bites man story. Racial discrimination against whites in lending is as rampant and blithely accepted as it is in the University of Michigan law school. Though the root-cause is far more defensive in the former and ideologically malicious in the latter.
The germane passages to consider from the noted article are as follows:
“DeBrota said the dual-standard loan fee policy originally was put into place as a way to avoid any appearance of discrimination against black and Hispanic borrowers.
Auditors from the federal Office of Thrift Supervision had warned the bank about a possible pattern of higher fees to minority applicants, DeBrota said. The resulting policy instruction to loan officers — the “Revenue Per Loan Procedure” — had a subtitle: ‘Monitoring Fair Lending Practices.’
The way to achieve fair lending for minorities, in other words, was to enforce a policy of higher-fee lending to non-minorities.”
The concluding paragraph is key, as it succinctly illuminates the ongoing relationship between regulatory agencies (the FDIC, OCC, Federal Reserve and, as mentioned in the article, the OTS)
and their subject institutions. In areas of compliance and consumer affairs, federal regulators explore ONLY the possibility of harmful disparate practices towards designated victim groups (blacks, hispanics, and so-called native americans). This is nowhere written, but everywhere practiced. How does a bank easily “prove” that it is not discriminating against blacks? One guess: Discriminate against whites.
Of course the statutes are color-blind, though no examiners–NONE–would dream of submitting a report critical of a bank for discriminating against whites–much less pursue legal action against it. Note that in this instance (and I’m certain all others involving white victims) legal proceedings were not driven through the regular examination cycle, despite the fact that examiners were almost certainly aware of the bank’s lending policy and practices. As I mentioned, dog bites man.
Instead, legal action only ensued when…”DeBrota said Flagstar’s policy was discovered when one of its loan officers resisted following the pricing instructions and was fired. The loan officer ‘felt that any sort of preferential treatment to one racial group over others violated the law,’ said DeBrota. ‘She refused to do that.”
Had this employee chosen expediency over principle then none of this mischief would have ever seen the light of day. Sadly, she is in the miniscule minority who make this choice.
However, if expediency is one’s primary focus–as it often is in a bank–then it is difficult to fault management here. Their choice was clear from a business perspective which included dealing with thousands of customers in a multitude of disparate situations, in which there will ALWAYS be minor statistical anomolies. If these favor whites, then the wrath of heaven and hell will fall on them, while if they favor blacks, then the regulators give them a hearty “attaboy!” Not a difficult decision.
Excellent analysis StuartT. By allowing statistics to be used as prima facie evidence of discrimination, we guarantee that we will find discrimination when there is none. The bank was put in an untenable position. If they carried out their normal business practices they would be cited for discrimination. Given the circumstances, I find the bank’s solution to be quite clever (and quite cynical). Unfortunately for them, they were very unlucky. They happened to have hired someone with a conscience who was willing to risk her job to do the right thing. How often is that going to happen?
well said. discrination is discrimination, for any reason.
i also believe however that discrimination is dead. we do not live in a country where skin color truly matters.
michael jordan is way above me in this country, way above me (btw, i’m white), as is every single professional athlete.
no one cares about black or white. just money and power.
I got caught in this type of situation once a few years back. I was a new car sales manager in a Southern City. My job was to extract the maximum amount of $ from any customer, no matter the color. Or so I thought.
Two of my salesmen sold identical SUVs to a white couple and a black couple within a few days of each other. We were able to get about $3,000 more from the black couple, not because of color but because it was obvious they wanted it bad. The white couple was ready to walk if the price wasn’t right.
What I didn’t know is the couples knew each other and compared notes after the sale. Of course the conclusion is that we had charged the black couple more because they were black. Suddenly attorneys were calling, a local pastor makes a scene in the showroom, and the dealership backs down and gives back some of the sales price.
I didn’t suffer any bad consequences from the affair, but it did leave a bad taste in my mouth. Trust me, car salesmen won’t screw you because of your race. We screw everybody.
There’s a pretty interesting study showing that car salesmen in Chicago charge black customers more, using grad students who weren’t really buying cars. Ian Ayres was the professor-in-charge.
The Supreme Court case that validated the use of fake-purchaser “testers” in housing discrimination suits turned, like the case here, on testimony by disgruntled ex-employees. Twenty-five years ago, though, the victims were black.
Well, I guess pendulums always swing too far.
Ah, yes. Further vindication for refusing to disclose my race on my mortgage application.