(No need to respond to this point here - you can put it in response to TheOtherDave's parallel comment)

(Responded.)

But it wasn't that mild. Instead, the loans were simply turned down. The near-total absence of capital was crippling.

To repeat myself:

So? If they had offered a loan at 100% interest, people would be bitching anyway about discrimination. Maybe it is a calculated PR move that people will complain less about not getting a loan than about getting a loan at +2% interest; maybe it has to do with the fixed overhead of servicing loans; maybe they only had so much appetite for risk even if the interest rate were raised to make the loan +EV again; maybe this is an unexpected consequence of the millions of words of regulation governing banks.

Moving on:

A 'being black' penalty even of only 2% on loans would be colossal. Think how much debt a growing business has to incur, and compound that over the years. Apply it to choices of housing, of auto financing. Everyone in the community has less money, so they can't buy as much, so businesses have a harder time growing, so people earn less. It's self-perpetuating.

So, are you arguing that the 'being black' penalty is not accurate here? That the 2% penalty is compensating for risk that does not exist? If so then that's quite an opportunity: a free 2% price cut. Especially in the current low-interest rate environment, that's a lot of money being left on the table.

Or are you arguing that the penalty is accurate and anyone who tried to offer at non-penalty rates would lose their shirts as tons of loans defaulted?

I thought you were arguing against the latter, before... If you've changed your mind, it'd be good to say so clearly and explicitly before going on.

I am claiming that you have jumped to the conclusion that claims 1-n must all be false and hence the cancellation is a Bad thing. For my purpose, any of 1-3 can be correct, and I don't need to argue for any specific one especially if you already find plausible any of them.

If you want to overrule the bank's reaction, you need a lot of local domain-specific knowledge, and that's something neither you nor I have.

Here's an example of the sort of obscure knowledge you might need: are you familiar with the term "minority fronts"? This is when a government or other entity attempts a form of affirmative action in which minority-owned businesses or organizations get financially favored for grants or bidding on contracts; yet of course there aren't very many competent minority-owned businesses (that's why they're doing it in the first place), so this immediately leads to fraud in which a person meeting the minority criteria is put in place as the straw owner of a company actually run by other people of other groups and then the business bids on business as a minority-owned business, frequently simply passing on the work and money to a normal business minus the straw owner's share. Naturally, this is largely meaningless for a white-owned business as whites are not considered a minority. Now, remembering that the 'owner' in such cases has stooped to conspiracy and felony fraud to steal possibly millions, do you think that their shell business is a better or worse credit risk than an equivalent white owner matched on other observables like income?

Personally, I'd say worse. This is just a cute example of why race can be a salient factor in loans and why a white owner might be different from a black owner; I bring it up to stand for the larger class of relevant details and possibilities, not being a banker or economist or risk specialist. So before you can say that the 'discrimination' is purely irrational and unjustifiable, you need to know about all these details. Do you? I don't think you do.

EDIT: Ran into an international example of the abuse of affirmative action in The Economist:

The same goes for civil-service quotas. When jobs are dished out for reasons other than competence, the state grows less competent, as anyone who has wrestled with Indian or Nigerian officialdom can attest. Moreover, rules favouring businesses owned by members of particular groups are easy to game. Malaysians talk of “Ali-Baba” firms, where Ali (an ethnic Malay) lends his name, for a fee, to Baba (a Chinese businessman) to win a government contract.

Although these policies tend to start with the intention of favouring narrow groups, they spread as others clamour to be included. That American federal programme began by awarding no-bid contracts to firms owned by blacks, Hispanics and Native Americans; now it covers people with ancestry from at least 33 countries. In India 60% of the population are eligible for privileges as members of scheduled castes, tribes or “other backward classes”. Such policies poison democracy by encouraging divisions along lines drawn by discriminatory rules. The anger thus stoked has helped stir bloody conflicts in India, Rwanda and Sri Lanka. And such rules, once in place, are almost impossible to get rid of. In 1949 India’s constitution said quotas should be phased out in ten years, but they are now more widespread than ever. America’s policies have survived decades of legal pushback, though not unscathed.