Redlining is a discriminatory practice that originated in the United States in the 1930s. It refers to the systematic denial of services, such as loans, insurance, and other financial opportunities, to individuals and communities based on their racial or ethnic background. The term “redlining” comes from the color-coded maps used by government agencies and financial institutions to designate neighborhoods.
During the Great Depression, the federal government established several agencies to promote economic recovery and stability, including the Home Owners’ Loan Corporation (HOLC). As part of its efforts, the HOLC created detailed maps of cities across the country, assessing neighborhoods for their level of creditworthiness. These maps used color codes to categorize neighborhoods, with red being the most disadvantaged.
The color codes used in redlining maps typically included the following categories:
- Green: Neighborhoods marked in green were considered the most desirable. They were typically affluent and predominantly inhabited by white residents. These areas were seen as low-risk investments and were granted the best financial opportunities.
- Blue: Blue-coded areas were also considered desirable and financially stable. They were usually middle-class neighborhoods with predominantly white residents. These areas received favorable financial support.
- Yellow: Yellow-coded neighborhoods were deemed declining or “in transition.” They were often characterized by a mix of racial and ethnic groups, including immigrants and African Americans. Financial institutions were cautious about lending in these areas, resulting in limited access to loans and higher interest rates.
- Red: Red-coded areas were considered the most economically risky and undesirable. These neighborhoods were predominantly occupied by racial and ethnic minorities, particularly African Americans and other people of color. Redlining made it extremely difficult for residents to secure loans or mortgages, stifling their ability to purchase homes, start businesses, and build wealth.
Redlining contributed to systemic racial and economic inequalities, perpetuating segregated communities and denying minority groups access to crucial resources and opportunities. It has had lasting impacts on housing, education, employment, and wealth accumulation, as well as exacerbating disparities in health and overall quality of life.
It’s important to note that redlining was officially outlawed by the Fair Housing Act of 1968, which prohibited discrimination in housing based on race, color, religion, sex, or national origin. However, its legacy continues to shape the socioeconomic landscape in many American cities today. Efforts to address the consequences of redlining and promote fair and equitable access to housing and financial opportunities are ongoing.
