One way to stop discrimination in lending is to ban lending. Which reminds me of Groucho Marx’s dialogue with the bellhops working for him in his hotel in The Cocoanuts:
Hammer:
Wages? Do you want to be wage slaves? Answer me that!
Bellhops:
No.
Hammer:
No, of course not. But what makes wage slaves? Wages!
So he proposes not to pay them as a way of preventing their enslavement.
Here in my home county in Maryland, the Montgomery County Council’s attempt to ban discrimination probably intended to ban discrimination the old fashioned way, by making it illegal. But according to today’s Washington Post, the result might end up being more (Groucho) Marxist:
Montgomery County’s effort to curb discrimination in mortgage
lending through harsh penalties against alleged predators ran into two
major obstacles yesterday. A state judge issued a temporary injunction
to halt the law’s enforcement for four months, and the Bush
administration said the measure usurps federal authority.The
double blow jeopardized what Montgomery’s officials characterized as an
effort to strengthen civil rights protections in an increasingly
diverse county. But it also stopped the defection of mortgage lenders
— about two dozen of whom have announced that they would suspend
making loans in Montgomery. Such departures would raise the possibility
that the market would become less competitive and force up the price of
loans.The legislation, which was to go into effect today, would raise from
$5,000 to $500,000 the maximum damages that a lender must pay if a
borrower can show discrimination.
Other brilliant forays into economic fantasyland by the Mongomery County Council can be found here and here.
