Recycled “Racism”

One of the things that happens when you get old is that what seems like news to others can look like a re-run of something you have already seen before. It is like watching an old movie for the fifth or sixth time.

A headline in the September 14th issue of the New York Times says: “Blacks Hit Hardest By Costlier Mortgages.” Thirteen years ago, virtually the identical story appeared in the Wall Street Journal under the title, “Federal Reserve Details Pervasive Racial Gap in Mortgage Lending.”

Both stories are based on statistical studies by the Federal Reserve showing that blacks and whites have different experiences when applying for mortgage loans — and both stories imply that racial discrimination is the reason.

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However, both research and old age tend to produce skepticism about things that look plausible on the surface. Just scratching the surface a little often makes a plausible case collapse like a house of cards.

For example, neither study took credit histories into account. People with lower credit ratings tend to get turned down for loans more often than people with higher credit ratings, or else they have to go where loans have higher interest rates. This is not rocket science. It is Economics 1.

Blacks in the earlier study turned out to have poor credit histories more often than whites. But the more recent news story did not even look into that.

Anyone who has ever taken out a mortgage loan knows that the lenders not only want to know what your current income is, they also want to know what your net worth is. Census data show that blacks with the same income as whites average less net worth.

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These are what could be called “Aha!” statistics. If you start out with a preconception and find numbers that fit that preconception, you say, “Aha!” But when the numbers don’t fit any preconception — when no one believes that banks are discriminating against whites and in favor of Asian Americans — then no “Aha!”

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