Re: Redlining

At 6:24 PM 12/11/1996, E. Allen Smith wrote:
>From:   IN%"mjmiski@execpc.com"  "Matthew J. Miszewski" 11-DEC-1996
>16:21:56.21
>>Actually, my assertion was that the basic motivation was racism and
>>ignorance.  My example of student loan default rates should clear
>>that up.  College graduates generally live outside of redlines and
>>yet are regularly offered credit.  And yet default rates on student
>>loans are outrageous (the government backing of these loans is
>>irrelevant to individual creditworthiness).
>
>That some groups not within redlines have high default rates is not
>an argument against groups within redlines having high default rates.
>The market distortion caused by government sponsorship is certainly
>relevant to whether individuals are offered credit; I would suggest
>that in many cases the students in question would not be offered
>credit, as per their high default rates, if it were not for
>government sponsorship removing the risk from the lender.

I have personal experience with cases where the lender (actually the
company which bought the loan) misrepresented a loan default
apparently in order to get reimbursed by the government.  The
government requires the lenders to make a certain number of contacts
with the borrower before declaring a default.  In this case, the
lender simply lied about the contacts.  Payments had been interrupted
as a consequence of confusion relating to the change in procedure when
the loan was sold.  One presumes that this was not accidental and that
somebody had a roaring little business going.

I have no trouble believing that the student loan market would quickly
dry up were the government to get out of the business.

Red Rackham

Huge Cajones Remailer wrote:
> At 6:24 PM 12/11/1996, E. Allen Smith wrote:
>>From: IN%"mjmiski@execpc.com"  "Matthew J. Miszewski" 11-DEC-1996
>>>Actually, my assertion was that the basic motivation was racism and
>>>ignorance. My example of student loan default rates should clear that up.

[snip]

> I have no trouble believing that the student loan market would quickly
> dry up were the government to get out of the business.

Hallelujah!  The current college system is a fatcat and indentured
servant system - the tenured staff (and not necessarily the ones who
provide the most service) at the schools suck up the big bucks, and
the grads "owe their soul to the company store", just like the serfs
of a bygone era.  The more things change....

Actually, when I first came to L.A., there was a pretty good college
system, where most kids with minimal finances could go for cheap, in
some cases nearly free.  But this was taken over (co-opted) like so
many other programs that can be turned into cash cows.