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Is this something that is considered bigotry?


lostone
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Historically black colleges must pay more to issue bonds than institutions of comparable financial strength, study finds.

https://www.insidehighered.com/news/2016/04/11/study-black-colleges-pay-more-issue-bonds-colleges-similar-financial-circumstances

Colleges typically have their finances and institutional strength reviewed by rating agencies before seeking to issue bonds. The idea is that those buying bonds don't need to rely on colleges' word that they are creditworthy. The varying ratings theoretically provide investors with a sense of the relative risks associated with bonds from different colleges. Institutions with the same financial strength (or weakness) should be able to issue bonds at the same costs.

But a new study finds that historically black colleges end up paying more than colleges on similar financial footing to issue the same value of bonds.

Many historically black colleges -- due to decades of discrimination -- are weaker financially than many predominantly white institutions. But the study compared pools of historically black and predominantly white institutions with the same bond ratings, so the study's conclusion is based on comparing institutions of comparable financial strength, as verified by outside evaluations.

The study was based on an analysis of 4,145 bonds issued by tax-exempt colleges between 1988 and 2010. Of those instances, 102 involved historically black colleges. The pool included colleges that issued bonds more than once. Of the 102 bond issues by black colleges, there were 45 colleges involved.

The average cost of issuing a $30 million bond was $290,000 for historically black colleges, compared to $242,000 for other institutions. The black institutions studied spent about $5.1 million more, collectively, than comparable predominantly white institutions.

The gap in costs faced by historically black colleges vs. non-HBCUs was greater in the Deep South than elsewhere, the study found.

The research was done by Casey Dougal of Drexel University, Pengjie Gao of the University of Notre Dame, William J. Mayew of Duke University and Christopher A. Parsons of the University of California at San Diego. The study was published by the Social Science Research Network.

In an interview, Mayew -- of Duke's Fuqua School of Business -- said the researchers also controlled for other factors, such as share of alumni in a state (most bond investors are local) and endowment size. Likewise, the researchers wondered if the underwriters might be doing a lackluster job trying to sell the black college bonds, but found no evidence of any reduced effort. It simply takes them many more tries to find buyers.

The only factor that couldn't be ruled out was the race associated with the colleges involved, Mayew said.

The typical investor or decision-maker on the purchase for these bonds "is a rich white person," he noted.

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Does "white college" sound racist? BLM would have a field day if there was such a thing. Obviously, Yale, Harvard, etc are predominantly white, but if it's students refered to it as a "white college", Al Sharpton would be right there to protest. 

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8 minutes ago, biloxifalcon said:

I think he is. He doesn't realize there's a historical precedence for "black colleges" AND the restrooms were "whites ONLY". The HBCUs are NOT black only colleges. SMDFH!

It's the term "black college" that sounds racist. I'm not saying white people can't go there.

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Before I draw any conclusion I'd really like to see the numbers.  For instance, what historically black colleges did they compare to other colleges?

 

Anecdotally, I know of two HBC's that were most recently run into the ground...SCSU, and Morris Brown.  I can't say the same for predominantly white universities, but I'm sure there are some.  

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I hate these types of studies that have a preconceived conclusion blaming race.  They did nothing in the way of critically reviewing their findings to validate whether or not there were any other factors that influenced the trends they saw.

Pointing out that it's a rich white person that typically buys the bonds to further emphasize it having to be a race issue is ignoring the factor that rich people (of every race) only buy bonds to get richer.  They are not doing it to support one race over another, and it is financially driven.  If you want to research something that will likely tie back to racial prejudice, do research on something that has other motivational factors like charitable donations to universities, since those are meant to help lift one program over another.

This study completely ignored trends where HBCU's have been losing their accreditation.  That rich "white" person's bond just lost a TON of it's value if a college loses it's accreditation, regardless of financial standing (accreditation is not just based on financials).  Unfortunately, many HBCU's have also struggled finding good leaders that keep the quality of education up, while showing increases in enrollment rather than declining.  They have also struggled finding donors.  Being on good financial standing is only one aspect that goes into where you invest your money.  If you do not believe in the leadership of an organization, or if you perceive a higher risk because of trends with similarly classified organizations, it factors into the level of risk buying bonds tied to those organizations.  

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25 minutes ago, lostone said:

NC A &T

WSSU

if those two schools are paying higher loans then it is rigged.  Those two schools are in the top 10 hbcus in America 

Loans?!?!? 

I think they should take a financial peace course....lol

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7 minutes ago, lostone said:

Hah!

At least if you are going to get one, thy should be the same rate if they have the same credit rating.  

I heard this on morning edition on NPR and it caused me to search.

Don't want the general black population have this same problem? Higher rates for the same score? 

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7 minutes ago, mdrake34 said:

They're not called "black colleges."  They are "historically black colleges."  Look up what that means before commenting on it. 

I was waiting on you to chime in :lol: Never fails. Your're probably itching to hit that report button again.

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42 minutes ago, pzummo said:

I hate these types of studies that have a preconceived conclusion blaming race.  They did nothing in the way of critically reviewing their findings to validate whether or not there were any other factors that influenced the trends they saw.

Pointing out that it's a rich white person that typically buys the bonds to further emphasize it having to be a race issue is ignoring the factor that rich people (of every race) only buy bonds to get richer.  They are not doing it to support one race over another, and it is financially driven.  If you want to research something that will likely tie back to racial prejudice, do research on something that has other motivational factors like charitable donations to universities, since those are meant to help lift one program over another.

This study completely ignored trends where HBCU's have been losing their accreditation.  That rich "white" person's bond just lost a TON of it's value if a college loses it's accreditation, regardless of financial standing (accreditation is not just based on financials).  Unfortunately, many HBCU's have also struggled finding good leaders that keep the quality of education up, while showing increases in enrollment rather than declining.  They have also struggled finding donors.  Being on good financial standing is only one aspect that goes into where you invest your money.  If you do not believe in the leadership of an organization, or if you perceive a higher risk because of trends with similarly classified organizations, it factors into the level of risk buying bonds tied to those organizations.  

They had a regression model with at least 8 dependent variables, including things like school characteristics.  Why did you assume they didn't control for other factors and assume they had a preconceived outcome to the research?

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22 minutes ago, lostone said:

NC A &T

WSSU

if those two schools are paying higher loans then it is rigged.  Those two schools are in the top 10 hbcus in America 

Morehouse was the 12th ranked HBCU in the country, and they lost their accreditation.  Investments carry risk, and financial standing is only one small factor when valuing an organization, or issuing a bond to that organization.  

2 minutes ago, lostone said:

Hah!

At least if you are going to get one, thy should be the same rate if they have the same credit rating.  

I heard this on morning edition on NPR and it caused me to search.

These are purely financially motivated transactions.  If an investor sees more value in bonds over other universities, they would buy it with less fees.  The bond market is entirely driven by what you think it's value "will be", not just their financial standing today.  You have to be able to sell the bond at some point.

Many HBCU's have had declining enrollments.  Think about if this was your money.  Pretend they have the exact same financial standing as Harvard.  Harvard has 20 times more applicants than what actually get accepted every year, 5% acceptance rate.  Even if their applicants dropped by 50%, they would have full enrollment and revenue growth due to annual increases in tuition.  WSSU has a 62% acceptance rate.  If the number of applicants dropped in half, their financial standing would plummet.  Would you pay the same just because they have the same current financial standing?

Of course not.  There is a LOT more that goes into pricing bonds than financial standing and this was a bull**** article that only intended to get quick reactions out of people thinking it must be racially driven and proof of discrimination.  Maybe there is something racial about it, but that can't be determined by their bull**** research because it ignored the majority of factors that go into pricing bonds.

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The abstract from the article itself:

Historically black colleges and universities (HBCUs) pay more in underwriting fees to issue tax-exempt bonds, compared to similar, non-HBCU schools. This appears to reflect higher deadweight costs of finding willing buyers: the effect is three times larger in the Deep South, where racial animus has historically been the highest. School attributes or credit quality explain almost none of the effects. For example, identical differences are observed between HBCU and non-HBCU bonds: 1) having AAA credit ratings, and 2) insured by the same company, even prior to the Financial Crisis of 2008. HBCU-issued bonds are also more expensive to trade in the secondary market, and when they do, sit in dealer inventory longer.

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I feel it's just not wanting to acknowledge that the world is not as equal as you feel it should be.  It's okay.  I don't blame you.  We are conditioned this way.  You should see images of welfare in the 50s vs post 60s.  The attitudes changed for welfare once the faces of it did.

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3 minutes ago, Leon Troutsky said:

The abstract from the article itself:

Historically black colleges and universities (HBCUs) pay more in underwriting fees to issue tax-exempt bonds, compared to similar, non-HBCU schools. This appears to reflect higher deadweight costs of finding willing buyers: the effect is three times larger in the Deep South, where racial animus has historically been the highest. School attributes or credit quality explain almost none of the effects. For example, identical differences are observed between HBCU and non-HBCU bonds: 1) having AAA credit ratings, and 2) insured by the same company, even prior to the Financial Crisis of 2008. HBCU-issued bonds are also more expensive to trade in the secondary market, and when they do, sit in dealer inventory longer.

I removed the highlight from the abstract, because it invalidated itself with the part I put in bold.  The writer continues to reference the schools as HBCU, which is an attribute of the school.  They go on to reference that attribute being an indication that the bond will be more difficult and more expensive to sell in the future.  Ignore the rich white guy part for now.  Do you think a rich black guy buying a bond should ignore this when he is making his financial decisions?  

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7 minutes ago, lostone said:

I feel it's just not wanting to acknowledge that the world is not as equal as you feel it should be.  It's okay.  I don't blame you.  We are conditioned this way.  You should see images of welfare in the 50s vs post 60s.  The attitudes changed for welfare once the faces of it did.

I don't think the world is equal.  Not at all.  But I don't think everything is racially motivated.  Many things in this world are financially motivated.  Do you really think financial investors devalue a company like WWT because they are a minority owned business (black owned, to be specific)?  Financial investors only care about green, generating returns on their investment.  They don't want to buy something they won't be able to sell for more money later.  

As I said, if you want to see something that IS racially motivated, look at boosters and donors for historically white vs historically black universities.  Rich white people giving away their money are not lining up to give it to HBCU's.  That is racially motivated.  Bonds are investments and the ONLY reason you buy a bond is to have a safe place your money can sit and grow.  If it is harder to sell HBCU bonds as they stated in their study, I don't care what your race is, as an initial buyer you SHOULD take that into consideration when pricing the bond.

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17 minutes ago, pzummo said:

I removed the highlight from the abstract, because it invalidated itself with the part I put in bold.  The writer continues to reference the schools as HBCU, which is an attribute of the school.  They go on to reference that attribute being an indication that the bond will be more difficult and more expensive to sell in the future.  Ignore the rich white guy part for now.  Do you think a rich black guy buying a bond should ignore this when he is making his financial decisions?  

I don't understand your point.  You criticized them earlier for not controling for other factors.  They did control for other facts, as the bolded part indicates, and those factors do not explain the disparity while a school being HBCU does.  The only attribute of the school (including credit worthiness) that explains the disparity, in other words, is that it's an HBCU.

The part that you bolded also is independent of those other factors (which you falsely said they didn't control for).  Being HBCU seems to be the key explanation, which suggests racial bias.

My former dissertation chair did a similar study that examined baseball card trading and found that cards for black athletes were less expensive and less desirable than those of white athletes, even after controling for on-field performance and other similar factors.  There's a huge area of research that has demonstrated racial bias in economic decision-making - another study did an experiment and found that people preferred applications with white-sounding names to those with black-sounding names even though the applications were identical in all other respects.  Frankly, this study isn't ground-breaking.  It simply demonstrates economic racial bias in an area otherwise not studied.

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40 minutes ago, mdrake34 said:

I've never hit the report button for one of your posts.   

This is what spongeguy does when he finally realizes he said something stupid. Next he'll talk about how much he enjoys the hate, followed by at least 3 emojis. 

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