Saw this article today on this recent study from the federal reserve bank of Boston, which concluded that there is a disparity between the credit offered to people in mostly white neighborhoods versus the credit offered to those in mostly black neighborhoods, even when comparing two individuals with basically the same credit history and credit score.

The knee-jerk reaction is to say that this makes sense because larger demographic factors might favor white neighborhoods over black neighborhoods, because the black neighborhoods are, on average, less wealthy and have higher crime rates, etc., making them more risky. The study, though, attempted to correct for these differences, in order to get an apples-to-apples comparison, and concluded that those in the black neighborhood still got a worse deal, even if all other factors could be evened out. In short, those in black neighborhoods get less credit offered to them because they are black. (The study used credit cards as the standard, because they are often the first type of credit that an adult gets.)

The real crux of the situation seems to be that if you have bad credit, you're treated the same regardless of race. But if you are black and have as good of a credit history as the white guy/girl 20 miles away, you will receive worse credit terms.

While I believe the overall finding that people in black neighborhoods have less access to credit, I question whether any research can adequately balance all the factors in order to conclude that a credit card company has a "race factor" built into its decision-making. If a neighborhood has a history of being a bad bet for a bank to lend to, can you really negate or balance out the differences between this "bad" neighborhood and a "good" neighborhood in order to make a straight-up comparison? I'm not so sure.

I'm sure it's true that lending institutions overweigh the neighborhood factor in their decisions, so that an average-credit white person in a wealthy suburb gets better access to credit than a black person with the same credit background who lives in the poor inner city. But this report would suggest that even if you could miraculously turn that inner city neighborhood into a similar wealth distribution and crime rate as the white suburb, the black neighborhood would still get discriminated against purely based on skin color. Not only would I not like to believe that this is true, I question whether any study can reliably conclude that it is true.

Banks like to make money, and I believe they're just as happy to take it out of the hands of a black person as they are of a white person. To suggest that banks have a system in which being black automatically means you're dinged a few points in the eyes of the bank seems unlikely. But that doesn't mean it's impossible.

What do you think?