Racism by the Numbers (or, Black is White)

            “There are three kinds of lies: lies, damned lies, and statistics.” – Mark Twain

Bank of America* recently agreed with the Department of Justice (DOJ) to pay $335 million to settle allegations of racially discriminatory lending by its Countrywide subsidiary. Specifically, DOJ had found that in 2004-08, of 525,000 black or Hispanic borrowers, 210,000 paid higher fees or rates than the average for non-Hispanic whites.

That’s just disgusting – that such outright discrimination could still be practiced by a major national corporation in 21^st century America. A great day for cynics who say nothing ever changes, that racism is alive and well, and America’s pretensions to progress and equality are hollow.

But you can’t argue with the numbers. Fully 40% of minority people paid more than the average white. Bang – a smoking gun.

But . . .

Wait a sec. If 40% paid more, doesn’t that mean 60% of minorities paid LESS than (or equal to) the average for whites? Who actually got the worse deal here – minorities or whites? Yet of course the bank was accused of screwing the former, not the latter.

Are we in Alice’s Wonderland where, almost literally, black is white?

A fifth grade math student should be able to see the DOJ’s mistake – it’s obvious when stated as I have. Yet in fact this is the standard way discrimination law works in today’s America. When analyzing any situation like Countrywide’s, anything that effectively disadvantages whites doesn’t count. And anything that effectively benefits some minority people doesn’t count either. All that counts is some minority people getting a worse deal than the average white. Heads-I-win, tails-you-lose. And so we get Countrywide branded with the scarlet “R” of racism based on a statistic that actually shows the majority of the “disadvantaged” group was treated better than the average white.**

Such disparities are due to the bargaining that typifies home loan deals. If you think a moment, any business that bargains would be vulnerable to the Countrywide treatment if any minority people did worse than the white average. And meantime how did a majority of Countrywide’s minority applicants apparently manage to do better than the average white? Who knows? Maybe Countrywide was actually practicing a little affirmative action. Anyhow, DOJ’s policy should constitute a strong deterrent to allowing any negotiation – consistent with the egalitarian mentality that everyone must get the same results and any deviations from uniformity are intolerable (or against “social justice.”)

If the DOJ’s case was so obviously bogus, why did the bank agree to pay $335 million? Because this was a no-win situation. Even if it might ultimately prevail in court, that would follow months or years of news coverage linking the bank’s name with blood-curdling words like “racism” and “discrimination.” Better to just take the hit and move on.

Of course, the DOJ fully understands this, so its action against the bank is tantamount to a shake-down: pay up or get dragged through the mud. Columnist Holman Jenkins sees this as political – “those in power loot for the benefit of constituencies that keep them in power.” The bank’s millions will be distributed, by the Democratic administration, among blacks and Hispanics (overwhelmingly supporters of Democrats) who paid more than average, but not to any whites who paid more. Further, any surplus funds are “explicitly reserved for donations to Acorn-like groups that typically align with the Democratic party.” (Holman again, his emphasis.) In other words, government policy perverted into a racial spoils system.***

Recall my recent review of The Dictator’s Handbook. It’s not only dictators who stay in power by paying the Pauls who support them by robbing the Peters who don’t; that’s politics in democracies too. And the more power we vest in government, the more such corruption we get.

And it’s not just money, and not even just the bank’s reputation, at issue. This also feeds the cynical, pessimistic perception exemplified by my own second paragraph here. America has changed, for the better; in race relations, it’s a completely different country from the one I grew up in half a century ago.****  Bogus government accusations of racism undermine that truth and actually worsen race relations by making minorities believe there is more discrimination than actually exists. That’s the really disgusting part of this story.

* Disclosure: I have owned stock in Bank of America. I sold it. I lost a bundle. I have no affection for the bank.

** Admittedly on these numbers it’s still possible the average white did better than others (if the 40% were below by a lot and the 60% above by a little), but it’s unlikely.

*** Note that France takes a very different approach: it’s actually illegal to gather any data broken down by race or ethnicity.

**** If you doubt this, read Isabel Wilkerson’s wonderful book, The Warmth of Other Suns, about the black migration from south to north — and the conditions that caused it.