The editorial page of the New York Times recently weighed in on an important but underappreciated aspect of the financial crisis: The systematic targeting of communities of color for risky and unfair loans. As the Times put it:
Pricing discrimination — illegally charging minority customers more for loans and other services than similarly qualified whites are charged — is a longstanding problem. It grew to outrageous proportions during the bubble years. Studies by consumer advocates found that large numbers of minority borrowers who were eligible for affordable, traditional loans were routinely steered toward ruinously priced subprime loans that they would never be able to repay.
Rampant lending discrimination during the housing bubble exposed black and Latino communities to the harshest consequences of the economic crisis. The link between race, subprime lending, and devastating rates of foreclosure has been crystal clear for some time. Researches at Princeton have found, for example, that "the greater the degree of Hispanic and especially black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences." That same study found that these disparities are due in large part to the disproportionate chance that minority borrowers will receive subprime loans.