HMDA Disparities or Discrimination?
In their analysis of the new HMDA data ("New Information Reported Under HMDA and Its Application in Fair-Lending Enforcement," Federal Reserve Bulletin, summer 2005), Federal Reserve Board researchers document substantial racial disparities in the cost of credit.
But after laying out the basic patterns, the paper quickly backtracks in efforts to explain away the uncomfortable findings.
A basic message that comes through is the possibility, if not likelihood, that with sufficient data on the right "objective" measures the racial disparity would disappear. And if this were the case, according to this perspective, the problem of racial discrimination would virtually disappear, except perhaps within a few selected institutions.
The notion that the presence or absence of a statistically significant race coefficient in a multivariate model is the touchstone for determining whether racial discrimination is present, however, is wrongheaded and dangerous. (I'm reminded of the statistical joke that if you torture the data …
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Publication information: Article title: HMDA Disparities or Discrimination?. Contributors: Not available. Magazine title: American Banker. Volume: 170. Issue: 186 Publication date: September 27, 2005. Page number: 8. © 2009 SourceMedia, Inc. COPYRIGHT 2005 Gale Group.
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