> You're making it sound as if lenders don't apply criteria such as race out of high-minded civic duty and a commitment to ethics.

I work for such a lender. Yes, that is precisely what I am saying. Although I might call it "basic ethics" not "high-minded civic duty".

Typically now "you" (someone raising this issue, because I don't want to put words in your mouth) point out that corporations are not ethical and simply act to seek maximal profit. Then I point out that corporations have a culture, which may have values other than just profit, and that corporations are made up of individuals who ALSO have motivations other than just profit.

The company I work for also has resisted the urge to open accounts that customers didn't ask for (as recently revealed of Wells Fargo) and many other ethical deviations. I am sure we have our own sins, and should work to improve them. I agree that laws constraining corporate behavior are ONE good tool for managing corporate behavior, but it is not true that absent such laws there would be no other constraints.

I'm sure you and your coworkers are people of the highest moral fiber but my point is you're congratulating yourself for not doing something plain illegal. And it's illegal now because people worked very hard to make it so and before that lenders (and landlords and employers and so on) were, in fact, using such discriminatory criteria. The current better practices aren't some natural result of banks somehow filling up with well-meaning people.

Those laws were passed because of cultural values that are widely shared. You make it sound as if bankers would prefer racist policies if only the law would allow it. GP's point is that even though most bankers do have such high-minded motivations, regulation is necessary to avoid bad actors from gaining a competitive advantage in a race to the bottom.

I'm not making it sound like that, that was precisely the case. Hence the laws.

How is lending based on all qualifying factors a race to the bottom?

Because to discriminate on some of those factors would sacrifice certain cultural values, such as equality and a fair shot for everyone, which we happen to value more highly than any marginal increase in lending efficiency.