What is Red Lining and does it still happen today?

Redlining refers to the discriminatory practice where services (such as banking, insurance, access to jobs, and even supermarkets) are withheld from potential customers who reside in neighborhoods classified as “risky” by the service providers. This practice is often racially motivated, as the areas designated as “high-risk” are typically those with a high population of racial and ethnic minorities. The term “redlining” originates from the red lines drawn on maps by the Home Owners’ Loan Corporation in the 1930s, marking areas considered poor financial risks, often due to the racial composition of their residents.

Redlining has had long-lasting impacts on communities, contributing to racial disparities in wealth, access to quality education, and health outcomes. It’s illegal under the Fair Housing Act of 1968 and the Community Reinvestment Act of 1977. It is designed to eliminate redlining practices by prohibiting discrimination in lending and requiring banks to serve the community’s needs, including low- and moderate-income neighborhoods.

Despite these laws, allegations of redlining practices persist into the modern day, suggesting that, while not as overt, systemic discrimination in lending and services can still be an issue. Modern-day redlining might not always involve racial discrimination but can also be based on income level, with low-income neighborhoods still facing limited access to essential services and financial opportunities. Banks, insurance companies, and other service providers might use sophisticated algorithms that inadvertently perpetuate these discriminatory practices, leading to similar outcomes as historical redlining.

Whether redlining still happens requires looking at recent investigations, legal cases, and studies analyzing lending practices, access to financial services, and economic development within marginalized communities.