Redlining

Quick Facts: Who was Redlining?

Subject:

Redlining

Known for:

A discriminatory practice withholding financial services from minority neighborhoods.

Verified Source:

2Day Chrono-Wiki & Primary Historical Archives

Origins & Early Life

Redlining is a discriminatory practice from the United States, in which financial services are withheld from neighborhoods that have significant numbers of racial and ethnic minorities. Redlining has mostly been directed against African Americans, as well as Mexican Americans in the Southwestern United States, Jewish Americans, and Italian Americans. The most common examples involve denial of credit and insurance, denial of healthcare, and the development of food deserts in minority neighborhoods. Reverse redlining occurs when a lender or insurer targets majority-minority neighborhood residents with inflated interest rates by taking advantage of the lack of lending competition relative to non-redlined neighborhoods. The effect also emerges when service providers artificially restrict the supply of real estate available for loanable funds to nonwhites, thus providing alternative pretext for higher rates.

Career & Major Achievements

Neighborhoods which were targeted for blockbusting were also subject to reverse redlining. In the 1960s, sociologist John McKnight originally coined the term to describe the discriminatory practice in Chicago, Illinois of banks classifying certain neighborhoods as "hazardous," or not worthy of investment due to the racial makeup of their residents. In the 1980s, a Pulitzer Prize-winning series of articles by investigative reporter Bill Dedman demonstrated how Atlanta banks would often lend in lower-income White neighborhoods but not in middle-income or even upper-income Black neighborhoods. The documented history of redlining in the United States is a manifestation of the historical systemic racism that has had wide-ranging impacts on American society, two examples being educational and housing inequality across racial groups. Redlining is also an example of spatial inequality and economic inequality.

Enduring Legacy & Impact

The specific process termed "redlining" in the United States occurred on the background of racial segregation and discrimination against minority populations. It had its origins in sales practices of the National Association of Real Estate Boards and theories about race and property values codified by economists surrounding Richard T. Ely and his Institute for Research in Land Economics and Public Utilities, founded at the University of Wisconsin in 1920. With the National Housing Act of 1934 the federal government began to be involved in the practice and the concurrent establishment of the Federal Housing Administration (FHA). The FHA's formalized redlining process was developed by their Chief Land Economist, Homer Hoyt, as part of an initiative to develop the first underwriting criteria for mortgages. The implementation of this federal policy accelerated the decay and isolation of minority inner-city neighborhoods through withholding of mortgage capital, making it even more difficult for neighborhoods to attract and retain families able to purchase homes.

Chronological Milestones & Life Events

1. 1920: 1920 Milestone — Ely and his Institute for Research in Land Economics and Public Utilities, founded at the University of Wisconsin in 1920.
2. 1934: 1934 Milestone — With the National Housing Act of 1934 the federal government began to be involved in the practice and the concurrent establishment of the Federal Housing Administration (FHA).

Historical Fact-Check Quiz: Redlining

True or False: “The Federal Housing Administration's initial redlining maps designated all areas with racial minorities as 'Type D' (red).”

Answer (FALSE ❌): While minority neighborhoods were often marked 'Type D,' the maps also included other classifications like 'Type B' and 'Type C' for different levels of desirability.

Contemporary Figures & Related Historical Timelines

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• Abdullah Ibrahim — Historical peer (Born in 1934) (1934): Pianist and composer, considered the leading figure in the subgenre of Cape jazz.
• Abimael Guzmán — Historical peer (Born in 1934) (1934): Peruvian Maoist revolutionary leader, founder of the Shining Path.

Frequently Asked Questions about Redlining