From: "E. Allen Smith" <EALLENSMITH@ocelot.Rutgers.EDU>
Date: Wed, 11 Dec 1996 15:26:32 -0800 (PST)
To: mjmiski@execpc.com
Subject: Re: Redlining
Message-ID: <01ICW68U4ZM2AEL2GZ@mbcl.rutgers.edu>
MIME-Version: 1.0
Content-Type: text/plain


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.
	You have also not bothered to answer the criticisms from Mr. Rackham
about why, if the sole motivations were racism and ignorance, people would not
be offering the residents of such areas loans; as (he?) pointed out, this would
appear to be a particularly attractive move for middle-class blacks, if your
assertion was the case.
	-Allen