Development Leadership Network: "PRIVATE INVESTMENT

A 1991 Federal Reserve Bank study of 6.4 million home mortgage applications by race and income found that commercial banks rejected black applicants twice as often as white applicants, and three times more often in some cities including Chicago, Minneapolis, Boston and Philadelphia. When taking income into account, the study found that the poorest white applicant was more likely to be get a mortgage loan than a black applicant in the highest income bracket. Bankers argued against the study’s credibility, saying that credit history was not taken into account. The Federal Reserve then went on to study other factors including credit worthiness, and found that minority mortgage applicants had, on average, greater debt burdens and weaker credit histories. When taking these factors into account, black and Hispanic mortgage applicants were about 60% more likely to be denied loans – reducing the disparity but not eliminating it.
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