Predatory Lending Research Articles

A performance profile of dairying in Bangladesh - programs, policies and way forwards

A national dairy performance profile is developed and described in this article reviewing the performance of the smallholder dairy production system, its backward and forward supports and existing development programs and policies; and based on the analyses further way forwards are described concisely. Inclusion of quality genes over the past decades of crossbreeding resulted in crossbred cows of about 47% with an average lactation yield of 1838 litre in 266 days, while the similar performance of a local cow is 619 litre in 230 days, respectively. Further, population increase of crossbred cows may increase milk production horizontally at the expense of genetic dilution. Nevertheless, a common plane of nutrition with the availability of 54.7 and 22.5% of annual requirement of metabolizable energy and digestible crude protein, respectively, may not uphold vertical improvement of dairying in Bangladesh. Local buffaloes, on the other hand, having only 635 litre lactation yield in 227 days share only 2.29% of the total liquid milk production, and unlocking potentials of dairy Buffaloes may boost milk production further. Creation of an enabling environment for multiplication of private dairy feed industry and community fodder production system; policy support to private entrepreneurs remain active in dairy marketing; reviewing and revising of present domestic support to dairy; establishment of easy credit and capital support to rural dairy farmers; strengthening of coordinated backward services of the public and private sector; capacity strengthening for dairy extension, research and education and human resource development are the way forwards for expediting the dairy industry in the country. An important and effective support to dairy would be capacity strengthening through establishing an autonomous organization for an enhanced coordinated support to both public and private sector with a clear authoritative mandate for setting policy priorities, institutional structures, priorities for research and extension and appropriation of adequate financial resources. Considering all the above suggestions an action plan may be formulated to meet the growing demand of milk in the present changing and challenging socio-economic condition of the country.DOI: http://dx.doi.org/10.3329/bjas.v43i2.20662 Bang. J. Anim. Sci. 2014. 43 (2): 81-103

The Cost of Easy Credit: Loan Contracting with Non-Bank Investors

I study how the rise of non-bank loan investment from CLOs, mutual funds, and hedge funds influenced contracting relationships between firms and their senior lenders. Contrary to common perception that non-bank investors diluted the incentive for banks to monitor firms, I find evidence that bank underwriters embraced tighter contracts to mitigate agency and holdout problems associated with less-informed and dispersed non-bank investors. Using a novel measure for covenant tightness, I find that firms with non-bank loan funding had tighter covenants than otherwise similar firms with exclusively bank-funded loans at the peak of the credit cycle in 2007. Consistent with tighter covenant thresholds, I find that these firms were also more likely to renegotiate and violate covenants during the subsequent crisis. While recent studies show that non-bank loan investors lowered the cost and expanded the availability of capital ex ante, I conclude that tighter contracts assigned stronger control rights to lenders and imposed higher renegotiation costs to firms in a state-contingent manner ex post.

Transformation from Class Banking to Mass Banking through Inclusive Finance: A Paradigm Shift

The strategies of rural transformation in India focused on improving the standard of living of rural population has undergone several changes keeping in view the mammoth size of population, its changing dynamics and socio –cultural diversities of our country But the economic stagnation of vast chunk of rural population still suffers from social and financial exclusion resulting with high incidence of poverty, rising unemployment, growing inequality along with rich-poor divide widening. The high growth story of our country in the post reform era is not broad based, regionally imbalanced and socially inequitable Indian Banking industry in conformity with national policy objectives has reoriented from Class Banking to Mass Banking approach to enhance its outreach to bring the marginalized and excluded population into its fold for mainstream economic activity. The branch expansion was accelerated and institutional credit flow to poor rural households reached new heights to relieve them from the clutches of usurious informal money lenders. Modern banking in India has leveraged IT driven initiatives to bring the excluded population into the fold of mainstream banking, develop new products to suit their needs and more importantly educate them on financial products and services to enable them to take informed decisions. The Institutional mechanism, for enhancing access to institutional credit have been strengthened by establishing pro-poor institutions like Regional Rural Banks (RRBs) and National Agricultural Bank for Agricultural and Rural Development (NABARD) etc. The business delivery models like Self Help Groups (SHG)-Bank linkage programme, and Micro finance institutions have been encouraged to provide microfinance services at doorstep of marginalized households. The Agent/Correspondent Banking model of commercial Banks have been given a big boost to provide wide access of low income/marginalized people to Financial Markets. Financial inclusion being a gigantic task, it calls for an appropriate and well-coordinated/collaborative strategy by all the stake holders involved in its implementation. The government needs to increase investment in economic and social capital by increasing investment in basic rural infrastructure. Banking system is poised to provide efficient economic infrastructure like savings, access to easy credit and robust payment system. The community based organizations/NGOs should catalyze local participation to enhance efficiency and transparency in delivery of financial services to common man for making inclusive growth a reality.

Is Poverty and Inequality Actually Good for Growth?

This paper aims to provide some evidence on the not necessarily positive impact of poverty and inequality on growth. It follows the line of argument that these features of society, while actually creating pressure for efficiency and enabling more savings, may impede sustainable growth. The recent financial crisis and the following period of austerity have made these arguments highly relevant. The findings of the empirical analysis of this paper are that inequality in the context of consumerism and easy credit may lead to over-borrowing and excessive consumption, which is ultimately detrimental to its sustainability. Poverty also causes deterioration in general trust, disabling smooth cooperation with lower transaction costs. Inequality existing in a given society deepens this effect.

Reciprocity, Commodification, and Poverty in the Era of Financialization

In this article I explore how financialization works among the poor, based on the case of a group of migrants living in Barcelona’s urban periphery, who were granted mortgages during the climactic years of the Spanish housing boom (2004–2007). I argue that the hopes and values that underpin relations of reciprocity among the disadvantaged are transformed as they start accessing home ownership via predatory loans. Undeniably, forms of financial exploitation are rooted in and depend on a high degree of commodification. However, people tend to deal with the abstract logics of accumulation that underpin their domination through concrete interpersonal relations framed by moral values and mutual obligations.

Citigroup’s unfortunate history of managerial and regulatory failures

Citigroup has served as the poster child for the elusive promises and manifold pitfalls of universal banking. When Citicorp merged with Travelers to form Citigroup in 1998, Citigroup’s leaders and supporters asserted that the new financial conglomerate would offer unparalleled convenience to its customers through ‘one-stop shopping’ for banking, securities and insurance services. They also claimed that Citigroup would have a superior ability to withstand financial shocks due to its broadly diversified activities. By 2009, those bold predictions of Citigroup’s success had turned to ashes. Citigroup pursued a high-risk, high-growth strategy during the 2000s that proved to be disastrous. As a result, the bank recorded more than US$130 billion of losses on its loans and investments from 2007 to 2009. To prevent Citigroup’s failure, the federal government provided $45 billion of new capital to the bank and gave the bank $500 billion of additional help in the form of asset guarantees, debt guarantees and emergency loans. The federal government provided more financial assistance to Citigroup than to any other bank during the financial crisis. During its early years, Citigroup was embroiled in a series of high-profile scandals, including tainted transactions with Enron and WorldCom, biased research advice, corrupt allocations of shares in initial public offerings, predatory subprime lending, and market manipulation in foreign bond markets. Notwithstanding a widely publicized plan to improve corporate risk controls in 2005, Citigroup continued to pursue higher profits through a wide range of speculative activities, including leveraged corporate lending, packaging toxic subprime loans into mortgage-backed securities and collateralized debt obligations, and dumping risky assets into off-balance-sheet conduits for which Citigroup had contractual and reputational exposures. Post-mortem evaluations of Citigroup’s near-collapse revealed that neither Citigroup’s managers nor its regulators recognized the systemic risks embedded in the bank’s far-flung operations. Thus, Citigroup was not only too big to fail but also too large and too complex to manage or regulate effectively. Citigroup’s history raises deeply troubling questions about the ability of bank executives and regulators to supervise and control today’s megabanks. Citigroup’s original creators – John Reed of Citicorp and Sandy Weill of Travelers – admitted in recent years that Citigroup’s universal banking model failed, and they called on Congress to reinstate the Glass-Steagall Act’s separation between commercial and investment banks. As Reed and Weill acknowledged, the universal banking model is deeply flawed by its excessive organizational complexity, its vulnerability to culture clashes and conflicts of interest, and its tendency to permit excessive risk-taking within far-flung, semi-autonomous units that lack adequate oversight from either senior managers or regulators.

Mental health in the foreclosure crisis

Current evidence suggests that the rise in home foreclosures that began in 2007 created feelings of stress, vulnerability, and sapped communities of social and economic resources. Minority and low SES communities were more likely to be exposed to predatory lending and hold subprime mortgages, and were the hardest hit by the foreclosure crisis. Little research has examined whether and how the foreclosure crisis has undermined population mental health. I use data from 2245 counties in 50 U.S. states to examine whether living in high foreclosure areas is associated with residents' mental health and whether the foreclosure crisis has the potential to exacerbate existing disparities in mental health during the recessionary period. I use county-level data from RealtyTrac and other data sources, and individual-level data from the Behavioral Risk Factor Surveillance Survey from 2006 to 2011. I find that – net of time invariant unobserved between-county differences, national time trends, and observed confounders – a rise in a county's foreclosure rate is associated with a decline in residents' mental health. This association is especially pronounced in counties with a high concentration of low SES and minority residents, which supports the perspective that the foreclosure crisis has the potential to exacerbate existing social disparities in mental health.

Feckless Monetary Policy, Fiscal Inaction and Regulation Stymie Economic Recovery

Five years after the Great Recession the economy continues to struggle because of misguided monetary and fiscal policies that have diverted capital from Main Street to Wall Street and Washington. Chronic near-zero short-term interest rates, well below the level of inflation, have infused so much liquidity as to create a flight to financial assets at the expense of normal growth in a drought-stricken economy. Indeed, misplaced capital stifles Main Street through a dearth of bank lending for consumption and capital investment that combines with onerous taxation and regulation that further deter economic recovery. Some speculate the Federal Reserve’s long-standing easy credit policy is intended to recapitalize the banks after the financial crisis and provide cheap financing for federal spending rather than stimulate growth. In any case, uber liquidity directs investor capital to risky stocks and bonds in a desperate quest for higher returns to overcome low interest rates, which also prevent banks from lending profitably. Meanwhile, the real economy starves for investment that produces jobs and growth. What’s more, through continued profligate spending the government amasses record debt that consumes an ever greater share of GDP. Specifically, that spending siphons productive capital from the private sector in the form of government bond purchases and taxes paid that would otherwise support consumption, business investment and employment. New financial regulation, albeit salutary in some respects, overly restricts bank liquidity and credit availability needed to service a growing economy, especially small businesses that produce most jobs. What’s more, government prevents promising oil and gas development, and imposes punitive regulation that undermines the law it enforces to the detriment of economic growth. Furthermore, government seems to create disincentives to work through overgenerous benefits that smother ambition and suppress production. The Fed should begin to raise short-term interest rates to inflation-adjusted levels to enable banks to overcome new regulatory capital restrictions and profitably lend to small businesses and startup companies that finally would fuel normal economic recovery. In turn, that activity would prompt corporations to invest their $2 trillion of idle cash in new production for further stimulation. In addition, higher rates will redirect capital from Wall Street to Main Street and defuse potential asset bubbles in the financial system while rewarding long suffering savers who will have more to contribute to consumption. Tighter credit, commensurate with inflation and employment levels, would restore an equilibrium between lenders and borrowers, notwithstanding some temporary discomfort in the transition. Additionally, substantial spending cuts, tax reduction, and regulatory relief would return capital to the private economy and stimulate areas of sluggish demand to foster the economic growth to be expected five years after the Great Recession. If only politics would cooperate.

Credit-Induced Boom and Bust

Can a credit expansion induce a boom and bust in house prices and real economic activity? This paper exploits the federal preemption of national banks in 2004 from local laws against predatory lending to gauge the effect of the supply of credit on the real economy. Specifically, we exploit the heterogeneity in the market share of national banks across counties and in state anti-predatory laws to instrument for an outward shift in the supply of credit. First, a comparison between counties in the top and bottom deciles of presence of national banks in states with anti-predatory laws suggests that the preemption regulation resulted in a 11% increase in annual lending in the 2004-2006 period. Our estimates show that this lending increase is associated with a 3.3% rise in annual house price growth rate and a 2.2% expansion of employment in the non-tradable sectors. These effects are followed by a decline in loan origination, house prices and employment of similar magnitude in subsequent years. Furthermore, we show that the increase in the supply of credit reduced mortgage delinquency rates during the boom years but increased them in bust years. Finally, these effects are stronger for subprime and inelastic regions.

Haiti, an urban nation? Revisiting Michel-Rolph Trouillot’s Haiti: State against Nation

In 1991, Michel-Rolph Trouillot published Haiti: State against Nation, which forcefully argued that in Haiti the peasantry is the nation. The peasantry is described as the “productive class,” from whom the state and urban elite extract value through a system of tariffs on agricultural exports, primarily coffee, and imported staples. The burden on the peasantry is further exacerbated by the country’s growing dependence on predatory loans from foreign states and International Financial Institutions. When Trouillot’s work was published, Haiti was on the eve of its first democratic elections. Amidst the optimism of those elections, he cautioned that the historical rift between state and nation had not yet been reconciled. In the years since the publication of State against Nation, much has changed. Here, I revisit Trouillot’s work in light of recent history to ask who, or what, is the nation today?

Credit Card Blues: The Middle Class and the Hidden Costs of Easy Credit

In an era of increased access to credit, it becomes increasingly important to understand the consequences of taking on unsecured consumer debt. We argue that credit can have both positive and negative consequences resulting from its ability to smooth life transitions and difficulties but that this occurs simultaneously with increased financial risks and stress resulting from carrying unsecured debt. We find that those in the middle of the income distribution suffer the greatest disruptions to mental health from carrying debt. Affluent borrowers are relatively unmoved by debt, suggesting the use of short-term debt as a convenience strategy for the financially well heeled. The least advantaged borrowers also suffer emotionally less from debt, possibly because securing spendable funds for necessities remains their most pressing concern. The onset of the Great Recession, however, produced increased emotional distress for all classes.

Windy Ridge: A neighborhood built to fail

This paper presents lessons learned from the development process of Windy Ridge, a subdivision in Charlotte, North Carolina, that drew national media attention as a community destined to be “The Next Slum” (Atlantic Monthly 2008). The development was aided by a city as growth machine environment that failed this and other neighborhoods through the lapse of proper planning oversight. Rather than laying the blame of high foreclosures at the feet of financial institutions that engaged in high-risk and predatory lending practices, or homeowners who bought more home than they could afford, this paper looks deeper to address both the social and physical decay of the neighborhood. Using a mixed-methods research approach, we uncovered a variety of contributing and enabling factors that led to high foreclosure rates, rapid neighborhood decline, and disparate impacts on low-income populations. We examine public policy, civic culture, development and land-use regulations, and homeownership patterns through Windy Ridge's political, spatial and economic geography. Because homes in Windy Ridge were marketed to investors and in package deals, the neighborhood was highly vulnerable to financial collapse as the Great Recession of the 2000s set in. This case study provides important implications for planning and land development policy.

Communities respond to predatory lending.

Low-income communities in the United States have faced a history of financial marginalization and exploitation, most evident today in the proliferation of predatory financial services, such as payday lending and check-cashing services. Ameliorating the negative effects of predatory lending has become increasingly important on the agenda of community development efforts and the field of social work. Through the use of case studies, this article describes three specific strategies that communities use to increase financial inclusion and buffer against the deleterious effects of predatory lending: inclusion, community-based alternatives, and community advocacy.

Predatory lending and the subprime crisis

We measure the effect of a 2006 antipredatory pilot program in Chicago on mortgage default rates to test whether predatory lending was a key element in fueling the subprime crisis. Under the program, risky borrowers or risky mortgage contracts or both triggered review sessions by housing counselors who shared their findings with the state regulator. The pilot program cut market activity in half, largely through the exit of lenders specializing in risky loans and through a decline in the share of subprime borrowers. Our results suggest that predatory lending practices contributed to high mortgage default rates among subprime borrowers, raising them by about a third.

When Poverty Becomes Profitable: A Critical Discourse Analysis of Microfinancial Development in Haiti

For the past thirty years, policymakers have lauded microfinance for its promises to reduce poverty and empower women in developing nations. First conceived by the Bangladeshi economist Muhammed Yunus and the bank he founded, microfinance has been hailed as a visionary project that promises to advance the economic interests of the poor by engaging them directly. Conventional studies by political scientists explore the place of microfinance in the global development architecture of international financial institutions, governments, and NGOs. Economic studies of its effectiveness are contributing to a crisis of legitimacy since they reveal that thousands of clients in developing nations continue to default on their loans due to predatory lending practices. Drawing on discourse analysis methodology, this article seeks to explain how microfinance, an industry embedded in the financialization of development, is now concerned with high financial returns for investments, not the social goals promised by its original raison d'etre. Treating microfinance as a discourse, I argue that there is a fundamental tension between the short-term social goals promised by microfinance and the long-term financial objectives of sustainability of investors.

Emerging market bond spreads: The role of global and domestic factors from 2002 to 2011

We address the importance of external versus domestic conditions in determining emerging market bond (EMBI) spreads. Using principal components, we derive a measure of global risk aversion, which is shown to have a significant and, when interacted with a country's foreign debt to GNI ratio, nonlinear effect on these bond spreads. Our model, estimated using Pooled Mean Group techniques, which also incorporates country-specific variables (foreign debt, fiscal policy, debt servicing and political risk), is able to track developments in emerging market bond spreads over the period May 2002 to October 2011 quite well. From mid 2002 to mid 2007, the model suggests that just over two thirds of the decline in these spreads on average reflected improved fundamentals, with the rest due to easy credit conditions. During the 2008 crisis, virtually all of the run-up in emerging market spreads was due to the large increase in our measure of risk aversion. A model of the measure of risk aversion is also estimated, which identifies as its key drivers, the outlook for growth in the major OECD and large non-OECD economies as well as US credit supply conditions.

The Failure of Direct Monetary Constraints

Monetary authorities around the world have promised a safer money and that they would use this new authority to prevent future economic calamities. This claim has been met with abject failure throughout the history of central banks. Two questions emerge from: why do central bankers almost universally fail to accomplish their stated goals and what can be done about it? This paper identifies two main reasons for their failure: what has come to be known as the knowledge problem from Hayek (1945) and the very incentives of the central bankers to engage in expansionary monetary policy. Various policy proposals have emerged as a means of directly mitigating these failures. However, none have successfully managed to quell the problem of cheap and easy credit. A different solution is therefore necessary; this paper suggests doing so indirectly by eliminating their exclusive power over money. This solution no doubt has its own challenges (including legal challenges which must be overcome), but is nonetheless a viable solution. This paper provides is a clarification of the problem of central banks and encourages the defense of a process that may eventually yield a solution -- specifically, the market process.

Governing Indigenous Territories: Enacting Sovereignty in the Ecuadorian Amazon by Juliet S. Erazo (review)

Reviewed by: Governing Indigenous Territories: Enacting Sovereignty in the Ecuadorian Amazon by Juliet S. Erazo Karl Offen Governing Indigenous Territories: Enacting Sovereignty in the Ecuadorian Amazon. Juliet S. Erazo. Durham: Duke University Press, 2013. xxvi and 237 pp., maps, photos, notes, appendices, and index. $23.95 paper (ISBN 0-8223-5454-3) What happens to indigenous peoples after they receive title to their ancestral lands? This question has rarely been asked, let alone answered, despite the plethora of studies documenting the indigenous struggle to obtain official titles. Addressing this question is what makes Juliet S. Erazo’s Governing Indigenous Territories such a compelling read. The book combines a detailed ethnography and ethnohistory with a number of geographic methods—air photo interpretation, map analysis, indigenous conceptions and uses of space—to significantly advance our understanding of how indigenous peoples with a collective land title in hand interact with one another, Catholic missionaries, the state, the market, non-governmental organizations (NGOs) and the rapidly shifting discursive terrain that has swung from ‘economic development’ to ‘biodiversity conservation’ in a single generation. The Ecuadorian case study is set among the Kichwa community of Rukullakta in the Upper Napo River valley. Although Rukullakta’s [End Page 243] experience might appear singular, Erazo engages the many externally imposed and internally negotiated social and environmental themes and contradictions that occupy the lives of all indigenous and forest-dwelling peoples in Latin America, and especially those in the biodiverse Neotropics. The book contains ten useful and well-drawn maps, five thematic and chronological chapters, and is bookended by a comprehensive introduction and a short concluding chapter. Simply put, Erazo was not able to conclude a story that remains ongoing. One can imagine the author debating with herself if she should do more fieldwork or simply wrap the book up. She opted for the latter, noting that “Documenting history as it is occurring (and from thousands of miles away) can be confusing and difficult” (p. 198). We can empathize with the understatement and, in the end, having to cut the narrative off at a random point in time does not detract from an invaluable fifty-year snapshot of Kichwa political life. Indeed, one of the things that makes this study especially useful is its access to community archives: thousands of pages of hand-written minutes of community meetings dating back to the community’s formation as a cattle ranching cooperative in the 1970s. Access to the Actas de la Cooperativa Agropecuaria San Pedro de Rucu-Llacta, Ltda. is a dream for any scholar, and provided much of the basis for Erazo’s ethnohistory, a benchmark for socio-spatial change, and ready-made fodder for follow-up interviews with former leaders. The Actas also helped Erazo appreciate and convey the poignant struggles, changing priorities, leadership strategies, membership responses, and the internal debates governing bodies contended with on a continual basis. In 1977, 207 Kichwa families received collective title to 42,000 hectares of traditional lands in the Upper Napo watershed—more land than they asked for and the largest indigenous land title in the country. This successful struggle was supported by the 1964 agrarian reform, a movement to colonize the Oriente region of Amazonian Ecuador, and a state-funded turn toward the creation of cooperatives. Co-ops received wide support and radically changed indigenous lives by forcing a re-conceptualization of what ‘personhood’ meant (p. 49). Cooperative work arrangements, shared social space, and communal cattle pastures created with easy credit helped indigenous leaders in Rukullakta embrace a modernist vision of economic develop. But unlike citizens of a municipality, coop members were supposed to provide volunteer labor. Many resisted this and criticized their new autonomy as “pura minga” (p. 67). Things changed when cattle loans came due and the state “funding magic” disappeared (p. 72). The 1980s were marked by an important challenge to the early modernist vision, as a political and territorial re-ordering into sub-centers (now called communities) took place, devolving power to smaller socio-spatial units. In a strong chapter three called “The Property Debate,” Erazo shows how three socio-territorial visions vied with one another to shape Rukullakta’s land governance and landscape ideals: collectivists who...

Law and Economic Exploitation in an Anti-Classification Age

Does our legal system permit the economic exploitation of extreme vulnerability? Focusing on predatory housing loans — a thriving business at the dawn of the 21st century — this Article argues that the answer in most cases is yes. Under an individualistic neoliberal paradigm, borrowers are held liable for their contracts, even if they were targeted with predatory practices. Further, borrowers’ attempts to resort to antidiscrimination law, and frame their exploitation as “reverse redlining,” have offered no real answer. An important yet undertheorized explanation for this problem is the impact of the Supreme Court’s anti-classification jurisprudence on lower courts. In an anti-classification age, even outside of the constitutional arena courts are reluctant to accept race-based arguments. As a result, colorblind analysis of predatory lending permits economic exploitation to thrive. This Article proposes a unique solution to this deadlock: embedding the analysis of individual borrowers in the context of their neighborhood, a move that neither denies nor relies on their race. Drawing on a variety of disciplines, including psychology, sociology, and public health, the Article explains how residing in distressed neighborhoods — the most embattled neighborhoods of our country — creates conditions especially fertile for exploitation. Based on this interdisciplinary analysis, the Article suggests an alternative legal framework which would circumvent the anti-classification problem. The new framework is tailored around the idea of individual dignity, which includes the right to freedom from economic exploitation. To protect such right it is suggested to utilize contract law and particularly the doctrine of unconscionability — which is highly apposite for a contextual analysis of predatory agreements.More broadly the Article argues that one of the important lessons to be learned from the tragic subprime crisis is how urgent it is to find an appropriate legal response to market exploitation of vulnerable individuals. Notably, the contractual framework suggested in this Article for predatory housing loans is useful for handling other exploitative loans, such as pay-day loans and auto-title loans. Further, the proposed framework is valuable beyond the contexts of lending and distressed neighborhoods, to address other forms of economic exploitation perpetuated by contract. Given persistent weakness in our economy, establishing an anti-exploitation norm in the market seems more important than ever.

Urban Housing Discrimination and Segregation of Urban Minority Communities

One can argue that discrimination still exist even after the civil rights movement. Many researchers have measured discrimination concerning housing, predatory lending and education. However, only few research studies were conducted based on credit score information, which showed gaps between whites and minorities within housing and lending. Credit score information is considered a vital instrument used by banks, employers, and property mangers.Research shows a connection between low credit scores and predatory lending. Does the credit reporting agencies impact the lives of minorities by supporting housing segregation and discrimination through credit scores? Minorities typically have lower credit scores, therefore the minority population continues to suffer from segregation and discrimination under the blanket of institutional or structural racism.