What Color is Your Car (Buyer)?
Of guns and lynching.

Mr. Clegg is general counsel at the Center for Equal Opportunity.
July 11, 2001 8:55 a.m.

n the Fourth of July, the New York Times ran an article titled, "Review of Nissan Car Loans Finds That Blacks Pay More." It follows up on another Times story from last October, about a lawsuit alleging that blacks are illegally charged higher finance charges on car loans than whites. As I wrote at the time, in an NRO piece, the story raises two basic issues: Has racial discrimination occurred? And, if so, who should be held liable for it? The new Times story raises more questions than it answers for both issues.

As before, the only evidence reported is statistical. That is, there are no smoking-gun memoranda or e-mails cited by the Times in which anyone says that blacks are to be targeted for unfavorable loan terms, nor have any employees or former employees at Nissan been quoted as saying that they had such a policy. Instead, the plaintiffs point to the fact that "black customers in 33 states consistently paid more than white customers, regardless of their credit histories."

The trouble is, there are lots of other reasons besides creditworthiness that might explain the different rates. (As noted above, the Times story asserts that a study filed by the plaintiffs purports to control for credit histories; while plaintiffs offered to send me their evidence, as of this writing they have not; nonetheless, I'll take them at their word.) Among the other factors that might also explain why whites are more successful in getting lower interest rates than blacks: higher income and greater wealth (making it more likely that they will simply walk away from credit discussions, deciding to pay cash instead); more knowledge of and access to other loan opportunities (through the Internet, for instance); higher educational levels and perceived savviness; even a higher proportion of male buyers (in other words, the culprit may be more sex than race discrimination).

Not Real Discrimination, but "Disparate Impact"

In all events, the Times reports that "both sides agree that the giant lenders do not even know the race of the customers whose cars they finance." Thus, "None of the companies are accused of racial bias …." But if they are not racially biased, how can they be accused of racial discrimination?, you might ask.

The answer is through the magic of the "disparate impact" approach to civil-rights enforcement. If the defendant has a selection process that results in a racial imbalance, then that process is illegal unless it can be justified by some sort of "business necessity." This theory is a powerful engine for racial quotas, which is why the left likes it so much. It was originally limited to the areas of employment and voting, where it was bad enough, but now civil rights advocates are trying to expand it to other areas — like lending, education, and even environmental law — where it will be even worse.

Some might retort that, even if the finance companies aren't really discriminating, the dealerships might be. But, even if such discrimination is occurring at the dealership level, is not likely to be attributable to a dislike for blacks and desire to hurt them for the sake of hurting them. Rather, it is because blacks are perceived as being more willing to accept higher finance charges than whites are. That is discrimination — and it is wrong and illegal — but it is based on a kind of profiling that liberals, especially, might sympathize with: that blacks are more economically hard-pressed than whites.

In any event, even if the dealerships are discriminating, why does it make sense to hold the finance companies liable if they played no role in the discrimination? Unfortunately, the federal government — under the Clinton administration — has filed a brief favoring this dubious theory of vicarious liability.

Putting Things in Perspective

Here are a couple of other items to put the Nissan lawsuit in perspective. A similar lawsuit has been brought against Ford and, at the same time the Nissan story was breaking, there were articles about how Ford has also been sued for discriminating against white employees. The plaintiff in this lawsuit says he has smoking-gun communications that prove Ford discriminates against white men. It is a bit odd that the same company can be sued for having a policy of discriminating against minority loan applicants, and with wanting to have that policy carried out by, uh, minority employees.

Second, the same day I began working on this article I appeared on a Baltimore public radio station to discuss a local law professor's call for "truth and reconciliation commissions" that would "engage in cross-racial dialogue" about lynching. The professor began with an anecdote about the 1921 antiblack riot in Tulsa. While being careful not to take a pro-lynching position, I did point out that most of the people around for that riot are now dead. Indeed, according to the 2000 census, the median age in the United States now is 35, meaning most Americans now were born in 1966 or later, so that they have lived their whole lives after the 1964 Civil Rights Act and 1965 Voting Rights Act. For that matter, a graph of lynchings from 1882 to 1968 is flat at zero after 1950, and dipped below 20 per year in 1925 and never again rose above that level. Oh, and the front page, above-the-fold headline in the Washington Post that day was, "Biracial Couples Report Tolerance/Survey Finds Most Are Accepted by Families." So much for stringing up a black man for looking at a white woman.

And what does lynching have to do with car-loan discrimination? Not much, which is exactly my point. The civil rights issues in 2001 are now about whether a car company should be liable for nondiscriminatorily choosing a racially neutral policy that has the effect, but not the intent, of creating a black-white gap in finance charges of a few hundred dollars.

Moreover, the only way this could have become an issue at all is because there are lots and lots of African Americans buying cars, and in every income class so that the cross-racial comparisons in the Nissan study are possible. According to Michael Barone's recent book, The New Americans, "By 1995, the median income of black married-couple families was 87 percent that of whites." And according to Stephan and Abigail Thernstrom's America in Black and White, "The black middle class is now proportionally as large as the white middle class was at the end of Dwight Eisenhower's second term, a time when American society as a whole was usually described as predominantly middle class."

On the eve of his organization's annual convention New Orleans, NAACP head Kweisi Mfume called on the Bush administration this weekend to "focus on racial profiling, election reform and racial disparities in the death penalty," according to the Washington Post. Again, if these are Mr. Mfume's top three, it is cause for celebration, since for the latter two it is extremely doubtful that there is any discrimination going on at all and, for the former, one is hard pressed to find a single public official who defends the practice.

The only discouraging lesson from all of this is the fact that so many in the plaintiffs' bar, academy, and civil-rights establishment insist on trying to advance an "antidiscrimination" agenda that has nothing to do with actual discrimination.