I smell a statistical rat

From the AP (via Yahoo! News), word that "community activists" are suing Citibank and Bank of America for discriminatory lending practices. The banks allegedly charge higher mortgage rates to blacks and Hispanics than they do to whites.

The banks' defense is that the plaintiffs' statistics aren't telling the whole truth. And this is quite probably true. I have actually spent about a half hour hunting around for the original data set on which these charges are based. And as far as I can tell, it doesn't include relevant non-race information that might be useful in determining whether racial discrimination was really at work here. Among its omissions are the FICO credit scores and data on debt-to-income rations that the Citi spokesman cites in the AP article.

The plaintiffs certainly don't seem bothered by this shortcoming. On its website, the Inner City Press describes in broad strokes its method for conducting its analysis. Not a single mention of potential "mitigating factors."

Which is truly unfortunate. It is certainly worth considering the causes of any racial disparities in home ownership (assuming such disparities exist). After all, for most families a home is the single largest asset, and home ownership is still, as it always has been, a vital step up the socio-economic ladder. So if minorities aren't enjoying equal access in the housing market, it's a potentially large problem.

But if it turns out that the disparities in mortgage rates suggested here are a result not of bankerly racism but of widespread credit-rating problems, what good is suing the banks going to do? Wouldn't it be more effective to focus on better financial education in the schools, to teach people how to manage credit wisely enough to earn a credit score that will qualify for low mortgage rates?

As I say, I have no idea whether there truly is a problem, and, if so, what is causing it. But my suspicion is that this lawsuit is barking up the wrong tree, no matter how many headlines it grabs.