[ExI] How do we construct workable institutions and ethical behaviors?

[spike]

>... On Behalf Of Jeff Davis
...

>...Some years ago some law was passed by the feds prohibiting the practice
of "redlining".  This was where banks wouldn't give home mortgage loans in
minority neighborhoods.  I'm very suspicious that this is the origin of the
notion that "the banks" were "forced" to give out the bad loans, when what
was really "forced" on the bank was the prohibition of racial discrimination
in banking services.  So my theory has it that "they were forced" is a
classic case of right-wing truth torturing with its time-honored "blame the
liberals(and the niggers and spics, too)" formula...  Jeff



Jeff, this is a perfect example of what I was referring to in the earlier
post.  The banks redlining wasn't about racism.  It was about risk control.
They would loan to minorities in safe areas, they would refuse loans to
non-minorities in redlined areas.  The banks didn't care what race the
borrow was, they cared about the risk the borrower would get killed and the
bank wouldn't be able to get their money back.  The politicians made
redlining into a big racism scam, when it was never that.  It was about
risk.  Banks had no problem with minority neighborhoods, but they avoided
risky neighborhoods.  Two different things.

Perfect example in this area: East Palo Alto, a classic example of a
redlined area.  It was adjacent to crazy rich Palo Alto, Menlo Park,
Stanford, Mountain View, Sunnyvale, but East Palo Alto was a damn dangerous
neighborhood.  They had almost no cops, couldn't afford them because they
had almost no tax generating industry in there.  I knew this because I did
business with a scrap metal shop in EPA.  So it was very dangerous in there.
Crime statistics prove that.  Of course banks didn't want to loan money for
homes down in there.  Can you blame them?  They were accused of racism,
because EPA had a lot of minorities, but businessmen are not automatically
racist.  They want to control risk, and it was easy to see EPA was risky.
Businesses couldn't get a toehold in there because the theft rate caused
them to be unprofitable.

What finally happened about 15 yrs ago IKEA went in there.  Since furniture
stores generally are immune from theft, it made it.  That generated tax
revenue, which allowed them to hire cops, which made it safer, which
encouraged other businesses and banks to loan on homes.  Those who remember
East Palo Alto from the late 80 to early 90s should go look at it now: you
wouldn't recognize the place.  It has a Nordstrom, a Home Depot, Office
Depot, a Best Buy, even a grocery store.  Hell they have a Starbucks there
now.  It looks like a perfectly safe silicon valley town now.  15 years ago
you took your life in your hands even going into the metal warehouse.  In
1992 EPA had 42 murders, which comes out to 173 murders per 100k proles.  

The banks' redlining EPA wasn't about race, it was about risk.  EPA has all
these big rap stars that live there, Sean T, Scoot Dogg, perhaps Ice Dog,
Canine Icicle, Frosted Dog Shit, plenty of others with some variation of
"ice" and "dog" in their name, but that should tell you something in itself.
As I understand it, the term "ice" in rap means murder.  Dog means something
other than Bowser the family pet as well, but the point is that the local
entertainers were urging their audiences to murder each other.  Imagine the
banks reluctance to loan their money where such entertainers reside.

That whole reluctance was turned into a red hot racism accusation.  Banks
came up with an idea: create exotic derivatives to spread that risk, then go
ahead and make the loans in the dangerous hoods.  Some banks went another
route to combat the charge or racism: they loaned to minorities in safe
neighborhoods.  The banks already knew the proles couldn't or wouldn't pay
(that's what credit ratings are for), such as the see-through house down the
street from me which had four people living there for over a year who had
exactly no possessions and never did so much as put up curtains, which is
why you could see through their house.  Then when those exotic derivatives
eventually went bust, the bank was holding property which was still worth
something.  The people moved out without even a moving van: they all four
got into their four cars and drove away, haven't seen them since.

The banking industry's redlining wasn't about racism, it was about risk
control.  They were accused of racism.  But to falsely accuse of racism is
racisim.

spike