Should Fair-lending Investigators Better Mix Qualitative and Quantitative Methods?

Abstract

The author examines a controversy over the methods used by federal agencies to enforce fair-lending laws. Some hold that investigators should use primarily qualitative reviews of documents in loan files in their investigations. Others hold that the qualitative methodology of file reviews is inadequate and needs to be supplemented or replaced by quantitative statistical methods. The author argues that the methods in the federal Interagency Fair Lending Examination Procedure should be revised to use a combination of qualitative and quantitative methods in a better way so that they complement each other. Investigations should rely primarily on quantitative methods to investigate institutional discrimination, but use the qualitative methods of file reviews in the investigation of individual agents for their discriminatory decisions.