> It's my PoV that It's not predictability versus red-tape, and the people trying to do unaccountable analytics in this space are (perhaps in-advertedily) perpetuating racism.
I was with you until that last line. It is not racism to provide better credit conditions to groups that demonstrably have a lower risk of defaulting on a credit.
It would be racism if you offer worse conditions to a certain group without any rational business related explanation.
If some group has a 2x chance on defaulting on a credit then it isn't about the skin of their color - they get to pay more interest because it is more risky to offer this group a credit in the first place.
With that logic you could just as well say that offering better credit conditions to rich people is racist against poor people.
You said:
I was with you until that last line. It is not racism to provide better credit conditions to groups that demonstrably have a lower risk of defaulting on a credit.
It absolutely is, under ECOA, which explicitly maintains that you may not discriminate by race for loans.
And btw, as someone very familiar with credit scoring once mentioned to me, a small part of the reason the credit scores do not take into account what you currently make is that ability to pay is often a very poor predictor for willingness to pay. this burned a lot of people in 2006/2007 when it was assumed a good credit score justified a big loan, without any proper verification of income, assets and liabilities.
I didn't say that it is okay to discriminate by race for anything, I'm against that.
What I'm saying is that people should be treated fairly instead of using some kind of affirmative action.
If you did a proper verification of income, assets, liabilities and education, you'd likely find that some groups would have to receive worse credit conditions than others.
This doesn't mean that the system is or would be racist, it would strictly evaluate on socio-economic background, not based on race.
What I reject is to handicap one group to make up for the losses that another group generates for a bank by artificially lowering standards for certain groups.
Although this is made with best intentions, it is inherently racist (it presumes that some races are inferior to others - hence the introduction of lower standards), whereas evaluating the way I described would not be racist.
Btw: I'm myself a second-generation minority. If I'd have had the option to navigate through life with some social security autopilot and affirmative action provided by society I would have never made it to the upper strata of society.
You have to understand that expectations for life from where I and many others started were much lower than for most others, so people from this level are much more willing to accept a lower living standard provided for free than working hard for the chance to a higher standard.
From the perspective of upper middle class people these kinds of affirmative action and social benefits might seem like genuinely helping people whereas from my perspective it seems like poison that could have had inhibited my will to work on myself and fight to move upwards in society.
I was with you until that last line. It is not racism to provide better credit conditions to groups that demonstrably have a lower risk of defaulting on a credit.
It would be racism if you offer worse conditions to a certain group without any rational business related explanation.
If some group has a 2x chance on defaulting on a credit then it isn't about the skin of their color - they get to pay more interest because it is more risky to offer this group a credit in the first place.
With that logic you could just as well say that offering better credit conditions to rich people is racist against poor people.