Later this summer the housing industry will see how the Supreme Court of the United States rules on the use of the theory of “disparate impact” in mortgage lending.
In Texas Dept. of Housing vs. Inclusive Communities Project, the Texas Department of Housing argues that the text and history of the law confirm that fair housing law does not allow disparate impact claims, but instead authorizes only claims based on intentionally discriminatory conduct.
The New York Times asked five leading voices to discuss the issue and — surprise, surprise — the only disparate impact here is that of having the more “progressive” voices outnumber the sane ones.
The heart of the question, as one of the five put it, is that if a policy treats everybody the same, regardless of race, and there’s no intent to discriminate, can it still be labeled “discriminatory” if its results aren’t racially balanced?
Well, of course not.
The problem is when it comes to rational discussion about race in this country, the progressive faction jumped on the crazy train a while ago and burned their return tickets.
Ian Ayres, Townsend professor at Yale Law School, offers the most seemingly reasonable, but fundamentally disingenuous argument.
Disparate impact law instead has focused on policies that have allowed lenders to disproportionately take excessive profits from the poor.
I always wondered about the business model.
- Find people with little to no money
I guess you can make that unicorn run if you scale it, fine.
But, what really bothers me is this part, also by Ayres:
For example, giving mortgage brokers the discretion to mark up the interest rate on mortgages far beyond what is justified by the risk of default – at times tacking on several hundred basis points on a loan’s A.P.R. – has been challenged under disparate impact law when these markups are disproportionately borne by minority borrowers.
“Has been challenged.” Lots of things are challenged. None upheld. Anyone can file a lawsuit, you know.
But the bottom line remains, if there’s no intent, there’s no discrimination.
Aderson Francois, professor of law at Howard University, goes wheels off with his first sentence.
For 350 years, United States housing policy was that blacks were unfit to live next to whites.
The human damage of these neutral ghettos is no less devastating than that which existed when it was the explicit policy of American government, businesses and institutions to keep blacks separate and apart from the rest of society.
Never mind that he’s off by about 125 years on how long the United States has been around, there are four different falsehoods in those two sentences.
As one commenter astutely noticed, beyond restrictive covenants on deeds, there’s no evidence of explicit policies that regulated where black people could live.
The commenter struck gold here.
The column reveals the universal victimhood philosophy at work. Although the author says slums were "set up" to remind blacks of a bunch of negative things, the very definition of a slum is that it is not planned at all. The slum apartment where I lived was once a nice home, with plumbing or electricity added much later. Slums grow where the housing becomes run down and less valuable for whatever reason.
And then we go over the cliff when we get to Eva Paterson’s blog. She’s president and cofounder of the Equal Justice Society.
The average white resident now lives in a census tract that is 79% white, the average black resident lives in a tract that is 46% black, and the average Latino resident lives in a tract that is 45% Latino.
At the risk of committing a modern-day heresy, I want to ask a simple question about that.
I mean seriously – why does that matter? At all?
What’s wrong with people wanting to live among people of their own background? Why is it a problem if people – absent any government coercion or prohibition – want to live around people with whom they share any common ground?
So, the answer is, as suggested, to force more neighborhood diversity in a way quantifiable by the Census Bureau? Isn't forcing people to live together as bad as not allowing them to live apart?
Paterson offers an answer:
Social science research demonstrates that increasing diversity can help mitigate the stress response of cross-group interactions, which in turn decreases implicit biases over time.
People repeat by rote the chorus about “diversity is our strength” but it increasingly sounds empty at best and more like something pushed by the authorities in Orwell’s novel. But more to the point and back to basics – so what? If people want to live among people who are like them, so?
Point is, any desire to engineer society doesn’t make the case we should assume there’s discrimination just because outcomes don’t fit preconceived notions. Freedom is messy that way.
Refreshing sanity returns with Meriem Hubbard’s blog on the issue. She’s a principal attorney with some outfit called the Pacific Legal Foundation.
She makes the – (trigger warning) – shocking case that no one is really equal except before the law, so of course nondiscriminatory policies lead to disparate impacts.
For example, charging everyone the same for cars, food or clothes may affect members of some races differently than others. Yet no one could logically say that a uniform pricing policy equates to discrimination. To the contrary, true discrimination would be to charge people separate, and unequal, prices based on skin color.
To be sure, numerical outcomes can be part of analyzing a policy, but a credible finding of discrimination must also include a full evidentiary record — history, prior conduct and other objective factors.
Which brings us back full circle to reasonableness and the original point that most of the bloggers forgot, which is that this is about housing.
David Stevens, president and CEO of the Mortgage Bankers Association, got a weak headline from the editors at the NYT on an otherwise powerful argument.
The problem with applying disparate impact theory to mortgage discrimination cases is that it allows the mere existence of a statistical variance to make a discrimination claim. As a result, it exposes every lending decision – whether to deny or make a loan, the pricing of a loan and any other credit terms -- to a potential legal challenge based on statistical differences, even if those differences are based on sound credit underwriting or compliance with other federal regulations.
We all believe that borrowers should be protected from all acts of intentional discrimination. The government has ample tools available and has used them effectively to ensure that lenders make credit available in a fair and nondiscriminatory manner.
Boom. Full stop.
The problem with relying too much on statistical analysis, aside from the potential for cherry-picking and chicanery, is that it treats people like they’re no more than members of whatever racial category you shove them in.
More heresy: Everyone is different. Every single person has unique talents, dreams, desires, ambitions, intelligence, skill and fortitude.
You can’t enforce universally and statistically perfect outcomes unless you limit individual choice and mandate whom gets to associate with whom. And you can't get past racist government policy by having government dig its heels into further color coding people instead of treating them as individuals.
The Grievance Industry relies these days on people accepting things on faith instead of fact. Now they want us to believe an entirely color-blind policy is racist just because they don’t like the end result.
Nope, not buying it. And neither should the Supreme Court.
The progressives are moving backwards. If anything, we need to consider scrapping some requirements laid out by HMDA, which requires that mortgage information gathered includes the race of the potential borrower. The less information like that the better, especially as we move quickly along the path to increasingly making mortgage shopping an online affair where no one needs to know the race of the borrower. Lenders care about the color green and that's about it.
It's like the lesson from Hong Kong under Financial Secretary John Cowperthwaite in the 1960s, who saw the economy there grow under his stewardship at a mighty pace because he practiced positive non-intervention, going so far as to refuse to collect economic data so that it couldn't be manipulated by officials who wanted to meddle in the free economy. It worked there.
Let's all take a cue from Morgan Freeman on this.