Title: Redlining
Headings: Redlining

Content: Redlining












Redlining
Report on Redlining (cover), 1975

Redlining is the practice of arbitrarily denying or limiting financial services to specific neighborhoods, generally because its residents are people of color or are poor. While discriminatory practices existed in the banking and insurance industries well before the 1930s, the New Deal's Home Owners' Loan Corporation (HOLC) instituted a redlining policy by developing color-coded maps of American cities that used racial criteria to categorize lending and insurance risks. New, affluent, racially homogeneous housing areas received green lines while black and poor white neighborhoods were often circumscribed by red lines denoting their undesirability. Banks and insurers soon adopted the HOLC's maps and practices to guide lending and underwriting decisions. Further, the Federal Housing Administration, created in 1934, also used the HOLC's methods to assess locations for federally insured new housing construction. Like other forms of discrimination, redlining had pernicious and damaging effects. Without bank loans and insurance, redlined areas lacked the capital essential for investment and redevelopment. As a result, after World War II ,        suburban areas received preference for residential investment at the expense of poor and minority neighborhoods in cities like Chicago. The relative lack of investment in new housing, rehabilitation, and home improvement contributed significantly to the decline of older urban neighborhoods and compounded Chicago's decline in relation to its suburbs. Redlining's negative effects remained largely unrecognized by policymakers until the mid-1960s.