The racial bias in predatory lending

A new study in the American Sociological Review explores how race impacted predatory lending and the larger U.S. housing crisis:

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory — pawn shops, payday lenders and check cashing services that “charge high fees and usurious rates of interest,” they said in the study.

“By definition, segregation creates minority dominant neighborhoods, which, given the legacy of redlining and institutional discrimination, continue to be underserved by mainstream financial institutions,” the study says.

The larger tale is that minority neighborhoods still do not have the same access to banks and lending institutions that non-minority neighborhoods enjoy. While the practices are now less covert (no redlining, restrictive deeds and covenants, riots when minorities moved into white neighborhoods), there are still clear race lines in American lending. These lending patterns have a strong impact on where people live, contributing to residential segregation (as seen in these maps).

Decrease in illegal immigration between 2007 and 2009

Based on data from the US Census Bureau, a new report from the Pew Hispanic Center says illegal immigration has recently dropped with a 67% decrease for the years 2007 and 2009 (about 300,000 people a year) compared to the years 2000 to 2005 (about 850,000 people a year).

A Washington Post piece explores the reasons for the decline:

Douglas Massey, a Princeton University sociologist who studies migration, said the recession and lack of jobs are major factors in the decline of those entering the country illegally.

The unemployment rate for unauthorized immigrants is 10.4 percent higher than that of either U.S.-born residents or legal immigrants, the Pew report said.

Massey said other likely reasons for the decline include an increase in law enforcement and deportations, and enactment of stricter legislation against illegal immigrants. He also pointed to more guest-worker spots, from 104,000 in 2000 to 302,000 in 2009 — allowing more immigrants to come to the United States legally.

While these results are open to some interpretation (the article includes several perspectives), the economic situation has to play a big role. For all immigrants, a weaker American economy likely has a big impact on decisions about whether to come to the United States. Without plentiful jobs, the “land of opportunity” has less to offer.

One way to help assess the impact of economics on illegal immigration would be to see whether immigration of all kinds is down over this same time period.