Carney: Apple Card Is Probably Not Discriminating Against Women

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There is almost no chance Apple and Goldman Sachs are discriminating against women when it comes to credit limits on the new Apple card.

Yet over the weekend, both companies came under fire for allegedly doing exactly that.

From the point of view of pure self-interest, it would make no sense for Apple or Goldman Sachs to be sexist in credit allocation: both companies are fully incentivized to provide as much credit as possible to customers without regard to their sex. Neither Apple nor Goldman Sachs has any interest at all in losing income by denying women the same access to credit as men.

I hate to be the one who tells you this but Apple and Goldman do not care about you. They do not care about your hopes, your dreams, your philosophy, your politics, or your gender. They’ll use whatever pronouns you ask them to.

We are all just future income streams to them. That’s it. Dollars divided by time. A discount rate, a probability of default, and a regulatory capital charge.

Neither company has a particular interest in rationing credit, apart from some attempt to estimate the maximum credit they can provide and still get paid back at an acceptable rate. They do not really care if you, as an individual, wind up paying them back. They just want to get paid back at a rate that means making short-term consumer loans is slightly profitable enough to cover their cost of capital.

They are constrained by regulations that penalize them for supplying what the government sees as too much credit to people whose lives might be ruined by over-indulgence in borrowing. Those include a myriad of rules from the Consumer Finance Protection Bureau, capital regulation from the FDIC and the Federal Reserve, and state laws on credit.

Think about it this way. If there were a team at Goldman Sachs who developed a computer program that gave too little credit to women, what are the odds that another team at Goldman wouldn’t have figured out how to make more money by providing the appropriate level of credit? Is everyone there too sexist to want to make money by lending appropriately to women customers?

The allegations are absurd on their face.

The investigation follows a series of viral tweets by entrepreneur and web developer David Heinemeier Hansson about algorithms used for the Apple Card, which Goldman Sachs manages in partnership with Apple.

Hansson said the card offered him a credit limit 20 times greater than it gave to his wife, even though she has a higher credit score. He called the algorithm a sexist program.

If both Mr. and Mrs. Hansson applied for credit based on the same stream of joint household income, it would make sense that the second card drawing on that income would receive a lower credit limit. In fact, that is what regulations require to prevent households from becoming overburdened with credit.

Even if they were not applying based on total household income but individual incomes, it still is far more likely that her personal credit and income history would be more responsible for the different limit than a “sexist” algorithm.

Anyway, if Goldman’s credit algo had adopted the attitude of an angry incel, it would not be lowering the credit limits of women. It would raise them to infinity and hope to deliver financial ruin upon the borrowers. Perhaps the real victim here is Mr. Hansson, who may have gotten more credit than he can handle.


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