Here we go again.

Or so say Associated Press, who has written the authoritative—and wholly unquestioning—account of the charge. Good luck finding any major news outlet not parrotting the AP write up.

Here is the Czar’s favorite part from the AP story: NAACP member (ain’t that convenient?) Amara Weaver made on offer on a Milwaukee home, and when her bank (the institution was not named, so it probably was neither HSBC nor Wells Fargo, as that would have made a little more sense, right?) offered her $40,000 and a low interest fixed rate. The exact rate was not specified in her story, but imagine her surprise when she discovered, at closing, that the actual rate would be 11 percent.

Angrily, she circled the rate on the closing documents, shoved them back at the lender, and said “This is not the rate we agreed to. Either amend the rate to the one we discussed for me to initial, or else the deal is off and I will take my business elsewhere.” She then crossed her arms, irritated, and wondered why her attorney reviewing the initial contract failed to catch this mistake. Right?

Wrong! She signed the document. “I was blown away,” she admitted, using a code for “I have no idea how closings work.” She added “I didn’t have any choice (but to sign)….It made me feel violated.” The Czar suspects the sensation she felt was not violated, but foolish. The Czar has been through a few closings himself and fails to recall anyone pointing a gun to his head and forcing him to sign an 11% interest loan. He does recall getting a few phone calls from his attorney pointing out typos and mistakes in the paperwork that his lender was only too happy to correct prior to the closing.

The Czar’s recollection that the phrase is caveat emptor appears to be shared by this guy, who makes a pretty good argument that the lenders have been generously looking out for subprime candidates by either refusing them dangerously over-leveraged loans, or by letting them built up a real credit history by entering the exciting world of home ownership.

He also mentions another suspicion of the Czar’s: that people familiar with the loan business could look at a mixture of loan application data—from blacks, whites, Hispanics, and others—and come to almost exactly the same conclusions as to whether the loan should be approved, approved subprime, or rejected. It is a question of numbers fed into a computer, not skin color.

But what the Czar did not expect was that a review of black-owned lenders reveals approvals, subprimes, and rejections with almost exactly the same percentages. Interesting, that.

What this boils down to is simple. A population of “tens of thousands” (so says AP) is stuck paying high fixed rates in a bad economy because they got greedy when times were good. Now that money is tighter, someone else should pay that mortgage.

“Well, that’s a pretty far-fetched hope,” said some of their friends. “After all, you never asked your landlord to pay your rent in 1991…because you know what he’d say.”

“Not so fast,” countered the NAACP. “We can open up a whole can of worms, because we notice that all of the subprime candidates who belong to the NAACP share a shocking similarity: they are all black. We simply call the lenders racists.”

“Wow, could that work?”

“Why not? And if it does, we can also go after the big cities, who charge higher sales taxes than the suburbs, and after all, there are more black in cities than anywhere else.”

What most people have already forgotten was that this was tried back in 2004, when Chrysler Financial, Honda, Ford Motor Credit Company, Nissan Motor Acceptance Corporation, and numerous other car-lending financial houses were sued due to egregious racial discrimination. Most of this was based on the work of Mark Cohen, a Vanderbilt professor, who studied the records of a Tennessee bank (and car loan clearinghouse) and concluded that blacks were paying $247 more per month than whites on average. When researchers learned that the loans did not contain racial data, there was no way of knowing that blacks did in fact pay more—unless you happened to know that the higher rate payers were black in advance.

All the unfounded charges showed was that people who play the “lenders-are-discriminatory” race card simply do not understand how credit scores are computed and risks analyzed. Unless it turns out that the computers doing the number crunching are racist. This is a thought the Czar has not considered….

The Czar of Muscovy

Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.