Mr. Thomas E. Perez
Assistant Attorney General for the Civil Rights Division
U.S. Department of Justice
Dear Mr. Perez:
In today’s Wall Street Journal you justify the DOJ’s crackdown on banks that, in your and your colleagues’ opinion, allegedly resist extending mortgages at appropriate market rates to minority home buyers (“Government Is Right to Fight Discrimination in Lending“). And you protest that “The suggestion that the department, as part of its settlements, is forcing banks to lower their underwriting standards and make loans to unqualified borrowers is simply wrong.”
Please forgive my skepticism.
Your premise is that profit-hungry banks – out of bigotry or incompetence or both – are leaving money on the table by discouraging credit-worthy homebuyers from borrowing. If this dubious premise is valid, then a far better course of action for you and your colleagues is to quit your jobs as ‘public servants,’ start your own banks, and then lend to all of those many homebuyers whose profitable business is rejected by other banks.
By putting your own money where your mouths are, you’ll not only give credible evidence that your premise is valid, you’ll also – if you’re correct – (1) solve through voluntary market actions the problem that you now attack with government force, and (2) make a mint.
It’s a classic win-win.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
P.S. Yet another benefit of your putting your money where your mouths are is that, with government resources no longer spent solving a problem that the private sector cures, Uncle Sam’s fiscal woes will be a tad bit eased.