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.
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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.