From: Bovine Remailer <haystack@cow.net>
Date: Tue, 3 Dec 1996 23:39:33 -0800 (PST)
To: cypherpunks@toad.com
Subject: No Subject
Message-ID: <9612040725.AA18903@cow.net>
MIME-Version: 1.0
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At 10:18 PM 12/3/1996, Matthew J. Miszewski wrote:
>At 01:45 PM 12/3/96 EST, Bovine Remailer wrote:
>>At 10:50 AM 12/3/1996, Matthew J. Miszewski wrote:
>>>Take, for example, the practice of redlining.  How are people who live in
>>>"bad" neighborhoods supposed to not reveal that information.
>>
>>You may lend your own money to whomever you wish.  If you do not wish
>>to lend money to somebody, that is your business.
>
>I consider it my business also, when people are denied opportunity because
>of where they live.

Why not simply disagree with me?  You do not believe that people may
lend their very own money, earned honestly, to anybody they please.

If you are ashamed of that, change your mind.  If you are not ashamed,
proclaim it the world and justify it.

>I may also hire whomever I wish, but I would have to pay the
>consequences if I happened to discriminate based on a protected class
>while doing so.  That is the society in which I live.  If I dont like
>it, I try to change it.  Our society is not libertarian.

Current policy doesn't matter if we are discussing the wisdom or
justice of possible policies.

>If I would prefer that form of society I would have to accept that
>result.  Therefore I choose a balance between liberty and social
>justice.

It isn't clear to me whether you are discussing policy options or
whether one should violate laws one does not like.  When an action is
illegal, it is still permissible to discuss its legalization.

>There are times when government should intervene.  I believe it
>should be as infrequent as possible, but would not want to live in a
>society where disinfranchised people have no possible recourse.  Your
>choice would apparently be different.

Perhaps.  In any event, it is important to understand precisely the
mechanisms through which people are disenfranchised, if that is in
fact what has happened.  It is also important to understand the
ramifications of phrases like "no possible recourse".  To borrow
money?  It is safe to say that most poor people should be saving money
rather than borrowing it.

>>It is difficult to understand why redlining should be illegal, to the
>>extent that it even occurs.  When it does occur, we expect that eager
>>entrepreneurs such as yourself will rush in to grab new customers.
>
>I have not heard serious doubts for a while that redlining occurs.

It seems likely that people draw lines around certain areas and decide
not to lend money there.  What is less clear is that this is
unreasonable.  There may be a few good credit risks in poor
neighborhoods.  But, it may just be too much trouble weeding through
the others to make it a paying business.

It may also be the case that people lending money are behaving
irrationally and drawing lines around neighborhoods for simple racial
reasons and for no others.  There is a word for this: opportunity.

Bank of America was built by a man who perceived and exploited one
such opportunity.  Italian shop keepers in California could not get
good banking services for, it turned out, irrational reasons.

>I would love to have the financial wherewithal to startup such an
>enterprise.  Unfortuantely I reside in one such neighborhood.

People start businesses without their own capital all the time.  If
there really is such a great opportunity, go find some rich people.
Rich people, like other people, are always happy to hear about ways to
make more money.  They don't even have to put the money in for a long
time.  Once you've set up a package of mortgages, you can sell them
off on the CMO market which is liquid and, I believe, quite
colorblind.  The beauty of this scheme is that you can take your
profits right away and let other people take on the long term interest
rate risk, default risk, and management hassles.  This will make your
plan easier to sell to investors.

You might also look into the microlending market.  The idea is to lend
poor people small amounts of money (less than $10,000) to start
businesses and the like.  The default rates are claimed to be
surprisingly low.  I have my doubts, but it sounds as if you do not.
Good luck.

>It is difficult enough to raise money to run a small business (and
>turned out to be much easier to do without any bank lending at all).
>I have talked with people about starting their own banks.

In principle, there is no reason at all why banks are the only
institutions that can lend money for mortgages.  There may be legal
impediments, but then we are back to the actual culprit, the
government.

You might find that opening a bank was easier if all you had to do was
take deposits and lend money rather than wading through the morass of
legal requirements and paperwork.

>When you are working to make sure all the bills are paid it is a bit
>difficult to also build an entirely new socio-economic structure.

You don't have to build an entirely new socio-economic structure.  You
just have to find some good credit risks, some people with money to
lend, and put them together taking a cut for yourself, unless the
government has thrown up some obstacles to this.

>>Of course, we hardly live in a free banking era.  Most people would
>>prefer to bank with a company that respects their privacy.  Yet, banks
>>are so tightly controlled in the United States that they most often
>>will not dare to protect the privacy of their customers for fear of
>>regulatory consequences.  When the service is provided, it cannot be
>>advertised.
>
>Whom would the service be more readily available to? Who uses tax-havens?
>Who has access to swiss bank accounts?  Are you insinuating that my local
>bank actually has anonymous accounts and just won't tell me?  I wish that
>people DID value anonymous banking in this country.  The fact is they just
>don't care.

No, actually they do care, they just don't think (correctly) that they
can get it easily.

I have no idea if your local bank has "anonymous accounts".  More
probably, they have accounts for which they do not report transactions
in excess of $10,000, but which are held by people they know fairly
well.  This is more common than you might think, and not just for
laundering drug money.  Tax evasion is widely practiced.

>As long as they get short lines or myriads of ATM machines they are
>happy.  I am largely in favor of banking deregulation.  There are
>places where I simply draw the line.  Utter racism is one of them.

But wouldn't the racist banks be hurting their business?  Doesn't the
punishment go quite closely with the "crime"?

If you believe that there is a huge opportunity which the racist banks
(i.e., all of them) will not take advantage of, you had better explain
why there is nobody anywhere with any capital who wouldn't want to
make even more money off poor people.  Can it really be the case that
99+% of rich people will run fleeing from such a great opportunity?

Oh, and speaking of racism, where do wealthy African-Americans invest
their money?

>Everyone can now clamor that it just isnt true.  Banks have never
>discriminated.  Its all a big lie.  Whatever.

Banks have practiced discrimination, and not just against black
people.  They have been able to get away with it.  How?  Because the
government has protected the banking guild from competition.

If opening a bank were as easy as forming a corporation, you would not
see much discrimination, I assure you.  There is no reason why a bank
shouldn't be that easy to open.

>(snip)
>>You are in the unpleasant position of appealing for protection from
>>the very people who have robbed you of your privacy.
>
>You are right.  It is far from a perfect system.  We make trade-offs every
>day.

Appeals to the very people who are exploiting you are not likely
to meet with success, are they?

>The real world I live in is just not as simple as the Libertarian Wet
>Dream(TM).

Then it should be fairly easy to refute my points instead making
fatuous remarks such as the one above.

Red Rackham