Black/Hispanic men seeking business loans faced more scrutiny than whites

Ana the Ist · Sep 10, 2019

essentialsaltes said:
No. From the OP:

12% ?? That's what....7 out of 60 instances where Hispanics were asked about their W-2?

The horror...

Oh and the 3 out of 60 instances where blacks were asked about their education....what a disgrace.

Is this entire study a joke? I can't imagine anyone seriously expects customer service to be exactly the same all the time. This is literally digging for things to complain about....

Kaon · Sep 10, 2019

Endeavourer said:
Or, perhaps just blocks of high crime neighborhoods.

I've been involved in an inner city church plant for the last year. Before getting involved in this ministry I was not fully aware of how blocks and blocks of areas are not a good investment and how dangerous repossession activities could be. There have been cases of workers being shot for simply approaching the door because the occupant was expecting that the person might be coming to collect rent or some other bill. Further, in some of those areas the cost of home insurance is prohibitive, if available.

Some of my dear friends who are attendees at our church often have stories of gunshots in their neighborhood or of someone on their block being murdered during prayer request time. I've given some of my friends rides to their homes after dark and the journey within their neighborhood is tense as they are on the lookout for whether the corners look safe enough to stop at a red light, or whether it's safe enough to stop at their doorstep and if not, take a detour and come back in ten minutes or so. On one occasion my friend thought it would be better to approach her home through the alley and when we got behind her home there was a crowd of loiterers right there and she tersely commanded me to keep driving without looking at them. Crime is rampant and a home owners insurance company faces inordinate liability in the event a crime is committed on the property, and outsize possibilities of home damage.

These are financial factors to consider. Doesn't matter if the applicant is white, black or whatever, the property itself is a poor investment.

The situation in the one anecdote about the bank being interested when she brought in another borrower may simply be that the credit enhancement of adding another borrower helped get the deal over the hump. In some of these areas the cost of the real estate taxes is over half of the cost of annual mortgage payments; add to that expensive home owners insurance, so her salary of $60k could have been challenging, especially if she had little/no down payment.

Like you said, one story does not make a pattern.

High crime is a result of lack of basic needs being met. It is also a result of poor funding and siphoning of capital out of neighborhoods. This is a derivative of categorical racist practices.

Seeing the whole picture means unraveling the entire system, and highlighting the branches that allow for, and spawn the phenomenon. Why do you think so much energy is spent dismissing racism? Only the "lowest" are vindicated; everyone else is complicit by participating in the system that perpetuates the subjugation - no matter how blind we are to it.

Endeavourer · Sep 10, 2019

LaBèlla said:
Business loans are a different animal. It isn’t uncommon for lenders to request additional information or hope to secure it with personal assets.

This is usually done in those businesses which are borderline for approval. This only gives the lender the ability to threaten to wreak havoc in the owner's personal life as an encouragement to keep making the business payments on time. In my experience, it is not often that an owner's personal assets are actually pursued when collecting for business loans. Most business loan companies are set up for business collections rather than heisting someone's Jeep off when they aren't looking so collection of personal assets can become more burdensome than just writing off the debt. This outcome depends upon the amount and how ticked off the collections team is.

In well over 95% of my loans, the loan was simply declined rather than lean on personal guarantees or personal collateral. We were too risk averse for borderline loans.

Endeavourer · Sep 10, 2019

Kaon said:
High crime is a result of lack of basic needs being met. It is also a result of poor funding and siphoning of capital out of neighborhoods. This is a derivative of categorical racist practices.

Seeing the whole picture means unraveling the entire system, and highlighting the branches that allow for, and spawn the phenomenon. Why do you think so much energy is spent dismissing racism? Only the "lowest" are vindicated; everyone else is complicit by participating in the system that perpetuates the subjugation - no matter how blind we are to it.

Are you expecting loan officers to make bad loans in order to solve this problem? Also, on properties that are too dangerous for repossession?

SummerMadness · Sep 10, 2019

And how long before the chorus of folks attempting to say there is no racial discrimination? They’ll say things like, “I’ve never seen this in my work...” Great! But it’s been documented in several studies in different industries. Then there will be the explanation of why people were given more scrutiny that sounds totally innocent... Sure, and if there was no discrimination, there wouldn’t be a significant difference between how racial minorities and the majority are treated. And yes, they still find these differences when controlling for the factors people argue as the real reason they were treated differently. And of course the third way they try to dismiss things is similar to the first denier, “I’m <insert racial minority> and I don’t see a problem. If I attack racial discrimination as false by saying I haven’t experienced it, it invalidates the whole study. I will use my skin color to maintain the system despite the facts showing blatant discrimination.” Honorable mention for the deniers attacking every study showing results similar to this study, but propping up any other contradictory study as the “truth” despite being few and far between or a special scenario. It’s a lot of work done to maintain the system they benefit from.

Kaon · Sep 10, 2019

Endeavourer said:
This is usually done in those businesses which are borderline for approval. This only gives the lender the ability to threaten to wreak havoc in the owner's personal life as an encouragement to keep making the business payments on time. In my experience, it is not often that an owner's personal assets are actually pursued when collecting for business loans. Most business loan companies are set up for business collections rather than heisting someone's Jeep off when they aren't looking so collection of personal assets can become more burdensome than just writing off the debt. This outcome depends upon the amount and how ticked off the collections team is.

In well over 95% of my loans, the loan was simply declined rather than lean on personal guarantees or personal collateral. We were too risk averse for borderline loans.

Endeavourer said:
Are you expecting loan officers to make bad loans in order to solve this problem? Also, on properties that are too dangerous for repossession?

You may be the rare financier that literally sees the numbers for what they are, not the exploitation of the demographic - which is fine. But, what I am saying is that even if you do not realize it, the decision to discriminate (which may be mathematically justifiable) is rooted in old(er) racist practices. You, personally may have never experienced such a thing in your transactions with your clients, but it definitely happens.

As I said, there is no way you can get a (business) loan without your demographic(s) playing a role. That includes socioeconomic condition. The decision to give/reject a [bad] loan is bounded by a system that is already prejudicial and predatory.

bèlla · Sep 10, 2019

Endeavourer said:
In well over 95% of my loans, the loan was simply declined rather than lean on personal guarantees or personal collateral. We were too risk averse for borderline loans.

That’s what I’ve seen as well. I’ve never taken a business loan and the same is true for those in my network. We created income producing ventures that provided the seed for others. It is a system of tiers and funnels that avert the need for loans until a future date when assets are at a point where risk is limited.

I’m a fan of liquidity for obvious reasons. ;-)

Endeavourer · Sep 10, 2019

Kaon said:
As I said, there is no way you can get a (business) loan without your demographic(s) playing a role. That includes socioeconomic condition. The decision to give/reject a [bad] loan is bounded by a system that is already prejudicial and predatory.

I'm sorry Kaon, this is laughable.

The $300 Million in business loans I've closed had nothing, **NOTHING** to do with demographics and everything to do with whether their business was profitable enough that we felt we would be repaid. I have used many different funding sources (banks) and never once was there a demographic consideration.

Do you seriously think a salesperson who feeds his/her family on commissions only wants groceries if they are on commissions from white customers?

I've worked with huge banks, small banks, niche banks and private investors. Never at any time was there a further demographic test to filter out all the "colored" income we didn't want to take home. If there had been, as a person who's children would be in your victim demographics, I would have been highly offended. Your comments are getting to be ridiculous.

Further, much of my work is in a virtual environment, so neither I nor my funding sources even know the races of the applicants when we are working on credit approvals/declines. Never at any time have I additionally researched the owner's race when creating a credit profile. Never at any time had it occurred to me to do so. Never at any time have I been asked to do so. Never at any time has a funding source inquired as to a business owner's race. No indication of the applicant's race is ever entered into our system. There isn't a data field in our system (which creates booking data required by all of the funding sources I referenced) for applicant race.

Kaon · Sep 10, 2019

Endeavourer said:
I'm sorry Kaon, this is laughable.

The $300 Million in business loans I've closed had nothing, **NOTHING** to do with demographics and everything to do with whether their business was profitable enough that we felt we would be repaid. I have used many different funding sources (banks) and never once was there a demographic consideration.

Right; you have given your experience, which is why I alluded to you being the rare financier that literally sees numbers for what they are. I also said even if you do not realize it, the decision to discriminate (which may be mathematically justifiable) is rooted in old(er) racist practices. What is "profitable" is based in discrimination and prejudice - you may just see the numbers/capital.

Do you seriously think a salesperson who feeds his/her family on commissions only wants groceries if they are on commissions from white customers?

If the salesperson believes white people are guaranteed commissions, then perhaps. But, that wasn't my point at all. Loans are predatory and prejudicial based on demographics.

I've worked with huge banks, small banks, niche banks and private investors. Never at any time was there a further demographic test to filter out all the "colored" income we didn't want to take home. If there had been, as a person who's children would be in your victim demographics, I would have been highly offended. Your comments are getting to be ridiculous.

Yes, of course there won't be any "no colored money allowed" contracts. Institutional racism is much more subtle. If my comments are getting ridiculous it is because you cannot entertain the possibility: it is a personal problem.

Further, much of my work is in a virtual environment, so neither I nor my funding sources even know the races of the applicants when we are working on credit approvals/declines. Never at any time have I additionally researched the owner's race when creating a credit profile. Never at any time had it occurred to me to do so. Never at any time have I been asked to do so. Never at any time has a funding source inquired as to a business owner's race. No indication of the applicant's race is ever entered into our system. There isn't a data field in our system (which creates booking data required by all of the funding sources I referenced) for applicant race.

So, you think virtual platforms don't collect massive amounts of data on people? Just because you don't recognize it, or don't pay attention to the analytics doesn't mean they aren't factored into decisions to approve or deny loans, for example.

You are still basing the entirety - no matter how bounded - on an extrapolation of your personal experience. It is excellent you don't think you discriminate based on demographics. But, to act like it doesn't happen is a disservice to intellect, history and modernity.

And, you don't have to be black/latino to realize what is going on, and support anti-discrimination regarding financial endeavors. Your eyes just have to be slightly open, and be willing to be honest.

Endeavourer · Sep 10, 2019

Kaon said:
is why I alluded to you being the rare financier that literally sees numbers for what they are.

Not true. I work with some of the largest banks in the US and **NONE** of them use or even have a way to identify the race of the business owner in the process of applying for business loans.

Do you think Chris Johnson who runs Wheeler financial and Pitney Bowes' ecommerce leasing arm (sells financing to all small and medium customers who use their mailing system products) ferrets out all the black and hispanic business owners?

Financial Services | Pitney Bowes

Kaon said:
I also said even if you do not realize it, the decision to discriminate (which may be mathematically justifiable) is rooted in old(er) racist practices. What is "profitable" is based in discrimination and prejudice - you may just see the numbers/capital.

No, we're salespeople and we just need to feed our families. We don't care what type of customer helps us meet our quota. None of us worries about the business owner's race.

Kaon said:
If the salesperson believes white people are guaranteed commissions, then perhaps.

Huh? Apparently you could not understand my comment. The salesperson is the one who earns the commissions. When they make a sale, they are often paid some percentage of the funding amount to supplement their salary, and that is called a commission.

Kaon said:
But, that wasn't my point at all. Loans are predatory and prejudicial based on demographics.

Kaon said:
Yes, of course there won't be any "no colored money allowed" contracts. Institutional racism is much more subtle. If my comments are getting ridiculous it is because you cannot entertain the possibility: it is a personal problem.

Your comments are getting ridiculous because you don't have a foggy clue what you are talking about. Apparently you have a bias to believe what you want to believe instead of reality. And that's up to you, buddy.

Kaon said:
So, you think virtual platforms don't collect massive amounts of data on people? Just because you don't recognize it, or don't pay attention to the analytics doesn't mean they aren't factored into decisions to approve or deny loans, for example.

I work with the platforms of the largest banks and the smallest banks. The credit decision is based on:
--the D&B (no racial indicator of the owner or officers is included)
--Hoover's analysis (no racial data of the owner or officers is included)
--financial statements (the owner typically doesn't indicate his/her race in financial statements)
--the business tax returns (to the best of my knowledge and recollection, no racial data is indicated)
--last three months of bank statements (again, no racial data of owner or officers is indicated)

The booking files we generate are full of little characters and spaces and digits that are imported into their systems so they can finalize the deal. This is uploaded after the credit decision. That is all the information the bank has on the customer, and it contains only the data we collect. No racial data.

Kaon said:
You are still basing the entirety - no matter how bounded - on an extrapolation of your personal experience. It is excellent you don't think you discriminate based on demographics. But, to act like it doesn't happen is a disservice to intellect, history and modernity.

But if this is a widescale practice, wouldn't at least one of our largest banking entities, US Bank, CIT, PNC, DLL, Everbank, Citi, Wells Fargo et all collect racial data for business loans? I have worked with all of them as funding sources and **NONE** of them does. In fact, gasp, some of their loan officers and underwriters are black or Hispanic. Do you think they furtively farrow out ways to discriminate against themselves?

Kaon said:
And, you don't have to be black/latino to realize what is going on, and support anti-discrimination regarding financial endeavors. Your eyes just have to be slightly open, and be willing to be honest.

Or you can just continue making things up. Dude, I support racial equality and fairness. I want my kids to have equality and fairness in their lives, too. But you need to stick to actual truth so your efforts will bear fruit.

Kaon · Sep 10, 2019

Endeavourer said:
Not true. I work with some of the largest banks in the US and **NONE** of them use or even have a way to identify the race of the business owner in the process of applying for business loans.

Do you think Chris Johnson who runs Wheeler financial and Pitney Bowes' ecommerce leasing arm (sells financing to all small and medium customers who use their mailing system products) ferrets out all the black and hispanic business owners?

Financial Services | Pitney Bowes

No, we're salespeople and we just need to feed our families. We don't care what type of customer helps us meet our quota. None of us worries about the business owner's race.

Huh? Apparently you could not understand my comment. The salesperson is the one who earns the commissions. When they make a sale, they are often paid some percentage of the funding amount to supplement their salary, and that is called a commission.

Your comments are getting ridiculous because you don't have a foggy clue what you are talking about. Apparently you have a bias to believe what you want to believe instead of reality. And that's up to you, buddy.

I work with the platforms of the largest banks and the smallest banks. The credit decision is based on:
--the D&B (no racial indicator of the owner or officers is included)
--Hoover's analysis (no racial data of the owner or officers is included)
--financial statements (the owner typically doesn't indicate his/her race in financial statements)
--the business tax returns (to the best of my knowledge and recollection, no racial data is indicated)
--last three months of bank statements (again, no racial data of owner or officers is indicated)

The booking files we generate are full of little characters and spaces and digits that are imported into their systems so they can finalize the deal. This is uploaded after the credit decision. That is all the information the bank has on the customer, and it contains only the data we collect. No racial data.

But if this is a widescale practice, wouldn't at least one of our largest banking entities, US Bank, CIT, PNC, DLL, Everbank, Citi, Wells Fargo et all collect racial data for business loans? I have worked with all of them as funding sources and **NONE** of them does. In fact, gasp, some of their loan officers and underwriters are black or Hispanic. Do you think they furtively farrow out ways to discriminate against themselves?

Or you can just continue making things up. Dude, I support racial equality and fairness. I want my kids to have equality and fairness in their lives, too. But you need to stick to actual truth so your efforts will bear fruit.

Are you purposefully trying to be naive for the purposes of debating, or do you actually believe financial institutions do not discriminate against certain ethnic groups?

Do you realize the President Himself has discriminated against ethnic groups in the past - with real estate?

Seriously... I get that you may not be prejudiced or racist, but that doesn't mean we have to ignore common sense, history, modernity or reality. There is plenty of evidence beyond the OP that shows the institutional racism existent in America - especially its major financial institutions.

Endeavourer · Sep 10, 2019

Kaon said:
Are you purposefully trying to be naive for the purposes of debating, or do you actually believe financial institutions do not discriminate against certain ethnic groups?

Do you realize the President Himself has discriminated against ethnic groups in the past - with real estate?

Seriously... I get that you may not be prejudiced or racist, but that doesn't mean we have to ignore common sense, history, modernity or reality. There is plenty of evidence beyond the OP that shows the institutional racism existent in America - especially its major financial institutions.

If you prefer to not believe facts, I can't help you.

I hope you have a nice evening. Chao.

SummerMadness · Sep 10, 2019

Endeavourer said:
If you prefer to not believe facts, I can't help you.

I hope you have a nice evening. Chao.

Your experience does not match the reality. That is all.

———

I often wonder if people understand the idea behind sampling and how the studies they deride do a better job of explaining the environment than their point observation. When multiple studies have the opposite conclusion of your experience, you are living the exception, not the rule.

Kaon · Sep 10, 2019

Endeavourer said:
If you prefer to not believe facts, I can't help you.

I hope you have a nice evening. Chao.

Ok. You too. Cheers.

Ana the Ist · Sep 10, 2019

SummerMadness said:
And how long before the chorus of folks attempting to say there is no racial discrimination? They’ll say things like, “I’ve never seen this in my work...” Great! But it’s been documented in several studies in different industries. Then there will be the explanation of why people were given more scrutiny that sounds totally innocent... Sure, and if there was no discrimination, there wouldn’t be a significant difference between how racial minorities and the majority are treated. And yes, they still find these differences when controlling for the factors people argue as the real reason they were treated differently. And of course the third way they try to dismiss things is similar to the first denier, “I’m <insert racial minority> and I don’t see a problem. If I attack racial discrimination as false by saying I haven’t experienced it, it invalidates the whole study. I will use my skin color to maintain the system despite the facts showing blatant discrimination.” Honorable mention for the deniers attacking every study showing results similar to this study, but propping up any other contradictory study as the “truth” despite being few and far between or a special scenario. It’s a lot of work done to maintain the system they benefit from.

This would be a good post if anyone was actually discriminated against.

It's a study about how friendly customer service is....not loan denial rates.

bèlla · Sep 11, 2019

The smoking gun in all of this are the mystery shoppers. They’re following a script and needn’t have experience for the role. Most organizations use third party services who provide the shoppers.

Qualification is based on observation and writing skills. The more detailed the report the better for them. If the company didn’t request people with a specific background they send others whose reliability is proven.

I would expect some measure of challenge since they aren’t in possession of the background and resources they’re pretending to have. Salespeople develop a keen sense of serious buyers over time. I’ve seen the same play out in retail.

Kaon · Sep 11, 2019

SummerMadness said:
Your experience does not match the reality. That is all.

———

I often wonder if people understand the idea behind sampling and how the studies they deride do a better job of explaining the environment than their point observation. When multiple studies have the opposite conclusion of your experience, you are living the exception, not the rule.

I am highly critical of consensus correct theory, and I am also critical of correct by exception.

Having said that, I think they understand, they just don't care because people are led to believe personal experience trumps all. This is a consequence of centuries philosophical romanticism. However, prolonged ignorance is no excuse especially for individuals who consider themselves educated; it is always a spectacular waste when people are told something that should be viewable through an honest eye and common sense, and then the party finally sees after maximum damage can be done. (This is usually the case with any type of warning, and then once the danger is realized the party asks, "why didn't anyone tell us?")

Other people probably just like to troll, since that's the pastime of the generation. Those are easier to spot, since their arguments are generally skeletal and devoid of substance despite the effort (and, you can see the effort that is used to look like a regular mentality when it is put forth).

Some people ignore the truth because it convicts them, and their own actions. If an individual was being honest, they may find themselves as promoters of discrimination and prejudice based on their occupation/lifestyle/psychology - and it scares people into psychological submission/hiding via (academic) argument, denial and distraction. The root of prejudice and racism is fear, not pride. And, people perpetuate these inhumanities by ignoring and denying them.

Racism and discrimination is also big business. There is a lot of money to be made in prejudicial and predatory practices. Most people don't know what compartmentalization is, so they don't understand that one can be a contributor of a more nefarious entity without realizing it - even in so-call high positions, with so-called high-yield responsibility.

And, of course there are people who do not understand how modelling works, how to interpret data, how to make proper interpolations, and/or how to extrapolate from data. However, they will argue as if they do, even if it is to debate in the truest form: arguing a topic despite your stance on it. Some people take this as true debate, and argue controversial sides to prick people or be noticed.

In general, the layperson may not care about the history that convicts them as much as they do capital and the *now*, so it is understandable why so many think, for example, slavery happened 10,000 years ago, and that discrimination was FIXED in the 60s.

Endeavourer · Sep 11, 2019

Kaon said:
Having said that, I think they understand, they just don't care because people are led to believe personal experience trumps all. This is a consequence of centuries philosophical romanticism.

Or, it could just be a dose of reality from those who have actual and deep insight into the situation.

Kaon said:
However, prolonged ignorance is no excuse especially for individuals who consider themselves educated; it is always a spectacular waste when people are told something that should be viewable through an honest eye and common sense, and then the party finally sees after maximum damage can be done. (This is usually the case with any type of warning, and then once the danger is realized the party asks, "why didn't anyone tell us?")

This is a valuable path of self reflection, Kaon. If none of the major banks are screening business credit approvals by race, perhaps it is just a spectacular waste to keep assuming they do to nurse a world view irrespective of the facts.

Kaon said:
Other people probably just like to troll, since that's the pastime of the generation. Those are easier to spot, since their arguments are generally skeletal and devoid of substance despite the effort (and, you can see the effort that is used to look like a regular mentality when it is put forth).

Then perhaps you are a troll. I provided extensive information including a list of the information banks do gather to make credit decisions and you just kept promoting your worldview without being phased by the facts or resources I provided.

Kaon said:
If an individual was being honest, they may find themselves as promoters of discrimination and prejudice based on their occupation/lifestyle/psychology - and it scares people into psychological submission/hiding via (academic) argument, denial and distraction. The root of prejudice and racism is fear, not pride. And, people perpetuate these inhumanities by ignoring and denying them.

Perhaps it scares you to realize your worldview about institutional, systemic racism is not lining up to the facts, at least in this segment of your assumption. Also, it is very prejudiced to accuse others of racism with made up assumptions and persist in the insistence when the assumptions are proven to be wrong and the actors are not racist after all.

Kaon said:
Racism and discrimination is also big business. There is a lot of money to be made

A lot of money is being poured into dividing the United States racially and paying "activists" to show up to disrupt with moralistic chants when the activists have no clue about the issue. I found it interesting that a mob of underemployed white kids showed up to a place where Candace Owens was having breakfast to chant about her "white supremacy" at her. Follow the money, Kaon. Who benefits from this course of divisiveness?

Kaon said:
And, of course there are people who do not understand how modelling works, how to interpret data, how to make proper interpolations, and/or how to extrapolate from data. However, they will argue as if they do, even if it is to debate in the truest form: arguing a topic despite your stance on it. Some people take this as true debate, and argue controversial sides to prick people or be noticed.

And then there are people who can't be swayed by facts. I laid out a long recital across multiple posts with detailed information on how the large banks are **NOT** discriminating based on race for business loans. And how the data collected had no race indication whatsoever. And how the banks don't know the race of the applicant until after the loan is approved when the provide a copy of their driver's license with the signed documents. The requirement of the drivers license by the way is pursuant to a federal regulation put into place after the liar loans in the 2009 crash.

Kaon said:
In general, the layperson may not care about the history that convicts them as much as they do capital and the *now*, so it is understandable why so many think, for example, slavery happened 10,000 years ago, and that discrimination was FIXED in the 60s.

Sure. Refuse to receive actual reality and just label in some monstrous way those who won't go along with your trolling and speculative posts. This is a very divisive tactic. I'm sorry to see that you have condescended to it.

Ana the Ist · Sep 11, 2019

Kaon said:
And, of course there are people who do not understand how modelling works, how to interpret data, how to make proper interpolations, and/or how to extrapolate from data.

You can just call them sociologists.

iluvatar5150 · Sep 11, 2019

Endeavourer said:
Do you seriously think a salesperson who feeds his/her family on commissions only wants groceries if they are on commissions from white customers?

If salespeople were perfectly rational and perfectly informed, perhaps not - but that's exactly how a good chunk of white society operated throughout the first 2/3 of the 20th century.

Black/Hispanic men seeking business loans faced more scrutiny than whites

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