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The January 20, 2012 New York Times article titled Blacks Face Bias in Bankruptcy, Study Suggests

reports on a soon-to-be-released study showing significant disparities in the treatment of white versus black clients facing bankruptcy. The studys reported results are disturbing but neither surprising nor unexpected. African Americans continue to face major obstacles to succeeding economically in America. A preponderance of data and studies demonstrate blacks continue to face unfair barriers across the opportunity spectrum, from securing employment for which they are qualified and receiving equal pay and promotions, to accessing mainstream banking products, including safe and affordable mortgage credit. Now, its been documented that blacks also face bias in restructuring debt after a personal financial crisis. The irony of this situation is, of course, that blacks are more likely to face financial crises directly as a result of multiple barriers they face accessing opportunities based solely on their race. The study is reported

to have found that African Americans are twice as likely to be steered toward higher cost and less sustainable Chapter 13 bankruptcy filings, versus lower cost and more effective Chapter 7 filings, even when the financial characteristics of the clients are identical. This result parallels, for example, the propensity of blacks to have been steered toward high cost and unsustainable subprime mortgage loans during the years leading up to the recent foreclosure crisis. Research from the Center for Responsible Lending showed that in 2004 African Americans were more likely to receive subprime loans than white borrowers, even when risk factors such as credit scores were taken into consideration. Not only did that excessive peddling of reckless mortgage products to blacks result in their having experienced foreclosures at a disproportionately higher rate than white borrowers, but also, blacks are overrepresented in the ranks of the long-term unemployed which has also grown as a result of the financial crisis. The article does not attribute overt and intentional discrimination to have been the cause of the biased treatment of blacks. Rather the article suggests the unfair treatment may have been a result of subtle, disparate actions based on the subconscious behavior of bankruptcy attorneys toward African Americans. Yet this finding, while interesting, is in many ways inconsequential. The negative impact of the biased treatment is the same whether or not its intentional; blacks are steered to the more costly, yet less effective, legal route to preserve their wealth and rebuild their financial futures. A recent study by the Pew Research Center shows that since the economic crisis began, people of color have experienced an exceptional loss of assets, with the median net wealth of African Americans having fallen by more than 50 percent since the economic crisis ensued. As a result, the inability of blacks to access fair treatment when attempting to restructure their debts is a particularly disturbing reality since blacks are among the populations most in need of competent and fair bankruptcy protection. In many ways, overt discrimination would be preferred to the more subtle and unconscious behavior implied in the study since overt actions can be more easily identified and addressed. But a society in which people err so significantly toward biased treatment of their clients that it becomes systemic and statistically significant is a sad commentary on race relations in America today. This situation also drives home the need to collect and make available more complete and timely data on a range of professional practices from financial services, including bankruptcy protection, to access to employment, housing and more. Better data and information is the best way to monitor, understand and resolve lingering vestiges of discrimination that continue to unfairly impede and undermine the economic wellbeing and mobility of people of color in America.

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