From CityAM:
Deputy Prime Minister Nick Clegg will today suggest that banks are racially discriminating against certain ethnic minorities in their lending decisions and will demand an inquiry into the matter.
In a lecture to be give later today, Clegg will claim: "Firms owned by individuals of black African origin have been four times more likely than so-called 'white firms' to be denied loans outright... Bangladeshi, Pakistani, black Caribbean and black African-owned businesses have been subject to higher interest rates than white and Indian owned enterprises."
Thursday, 24 November 2011
"Lending is racist"
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13 comments:
I will be driving past his gaff later, shall I drop by a copy of Reckless Endangerment or shall act with extreme prejudice?
Wasn't the attempt by lenders to avoid accusations of racism in lending practices one of the underlying causes of the US sub-prime mortgage crisis?
S, the former.
C, that is not quite true, the banks just use this as an excuse for lousy lending on overpriced housing and selling on the MBS crap. The US govt told the banks to look a bit more kindly on non-whites and not to abandon all credit checks etc.
I went to a small business seminar sponsored by the old Midland bank.
It was some sort of Tory back to work scheme.
The black guy next to me failed to get a loan for his car repair business.
The white guy on the other side did get a loan for his training parrots to talk business.
So maybe there is something in it.
I failed to get a loan for my dried flowers by post business. Which was a shame as I'd already singed the contracts.
BQ, was that pre-1992? And did you "singe" the contracts or "sign" them? I struggle to think which is dafter.
1989 I think.
i may have singed them after signing them.
Got the money from HFC bank in the end. But much like today the interest rate was so high as to doom the business almost from the outset.
BQ, sorry to hear that. I'd be fascinated to know what happened to the parrot guy and the car repair guy.
Was this the old scheme where the government guaranteed all or part of the loan anyway, and the bank could merrily dish out money to anybody they liked?
I hope this is not racist, but has anyone considered the possibility that the businesses which were "discriminated" against were simply a greater risk?
Tick VG Gold Star for Ken.
Indians? Accountancy, dentistry, software, distribution.
Bangladeshis? Restaurants, retail.
Some of these businesses have a low rate of failure, some don't. Guess which?
(and yes, I'm generalising - there are Pakistanis in software but I meet a lot more Patels and Singhs than Mohammeds).
Curmudgeon is correct.
Community Action Groups threatened banks with legal action if they gave out more loans to whites than to blacks (via "redlining"). This was so potentially costly for the banks that they gave in.
The correct logical defence for the banks was that the default rate on loans was the same for both blacks and whites but that argument was deemed politically incorrect and therefore unsuccessful.
Of course, when the loan allocation process was made politically correct then the default rate for blacks' mortgages shot up and the rest is history.
K, sure, but it seems quite plausible that bank managers are sub-sconsciously racist. That's not the point, the point is, what the hell is Clegg going to do about it and is it really that important?
JT, high end restaurants are very risky, they come into and go out of fashion very quickly. But yer basic curry restaurant, take away or corner shop will go along more or less for ever.
There's not much investment in fixed assets in a corner shop - there's a lot of money in the stock, but that has a very quick turnover so lending to corner shops is not that risky, short of outright fraud.
I love his example of football. Football is racist because there is only one black manager, but these racist impulses mysteriously disappear when employing black players way out of proportion to their share of the population.
The Progressive mind sees the natural variation arising out of cultural differences and immediately sees only 'racism'.
Can get it classified as a mental illness?
Indeed it was that loan guarantee scheme. I can't remember what it was called, but banks hated it and you had to turn up with all the details and info yourself to get them to even admit it existed. I'm not sure why.
I went to a few of these trying to create business events. Job centres were very keen on them. They were mostly awful. A few home conversions to B&Bs, someone restoring Dinky cars {actually, not too bad an idea now the internet and ebay has arrived. Good, cheap, access to stock and customers.} Someone wanted money to buy Shepperton studios back lot of props , which was turned down.
Problem was they were rarely real businesses, just ideas. Even if they were good ideas they weren't the things a bank was interested in. That prop buying idea. A great opportunity for an individual but high risk for a bank. What could they earn? Why bother?
{I did get a loan from Midland. For a high risk idea. But it was with well established retailers who had expressed more than passing interest. 7-11, circle-K, Amoco, Fina, and all those other long gone companies that the Supermarkets killed off by doing it better and cheaper.}
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