# Why should RED-LINING be illegal?

## Should Red-Lining be illegal?

• ### No.

• Total voters
3

#### Lumpenproletariat

##### Veteran Member
Why should Red-Lining be illegal?

Insurance companies discriminate against certain types of customers. I.e., they PROFILE them.

Based on where they live, what sex they are, and other arbitrary categories. This is legitimate. Companies providing a product or service are entitled to reduce their costs, as long as it's in the interest of their customers, i.e., the consumers.

E.g., in some cases a male applicant pays a higher premium than a female. Males are sometimes a greater risk. Likewise younger-age applicants are discriminated against as higher risk. It's the same in the case of a high-crime neighborhood or zip code. Some regions have a higher crime rate. So if you want home insurance, or you want a home loan in that neighborhood, you may have to pay a higher price, higher interest, higher premium, etc., (or even be declined), because of the higher risk which the company/bank is taking on.

This is the same as "Red-lining." It's not about race, or about your religion or sex preference. It's about higher risk for that insurance or loan you're applying for.

You can be sure that RODNEY KING got equally-good terms for his mansion (after he got rich), the same as Whites in the same neighborhood. It's the risk for that particular neighborhood or city or zip code which determines the "discrimination" in those cases, not the race of the applicant.

#### TomC

##### Celestial Highness
This is the same as "Red-lining." It's not about race, or about your religion or sex preference. It's about higher risk for that insurance or loan you're applying for.

Objective risk management is quite different from forced race segregation. Maybe you don't understand what "redlining" means? I don't understand your OP?
Gimme a hint.
Tom

#### Arctish

##### Centimillionaire
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.

#### Loren Pechtel

##### Super Moderator
Staff member
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
There used to be very real issues with redlining. However, these days the discrimination cops need cases to justify their jobs.

Thus we get things like the claims of redlining some years back--paying no attention to the fact that what was going on makes more sense as the mortgage bankers considering another factor: expected appreciation.

You're left with either explaining why they discriminate against blacks in low-down mortgages but not in 20/80 mortgages, or the much more consistent position that they don't like writing low-down mortgages in areas with low appreciation.

#### Arctish

##### Centimillionaire
If you claim that red-lining only started late in the 20th century or only mattered in the 21st, then you don't have to explain how or why minorities were concentrated in areas of low property value, or how the property owned by minorities lagged behind as the property owned by whites increased in value. Which means you can obscure the connection between racist discrimination and things like home improvement loans and insurance rates.

That's why I want lumpenproletariat provide a definition of the term 'red-lining' as he is using it. I need to know what he's talking about before I get too involved with his thread.

#### Lumpenproletariat

##### Veteran Member
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
My definition is about the same one used in the following:
One example of how CRT can be used to understand current disparities can be seen in the area of housing through a process called Redlining. In the 1930s, the banking and real estate industry outlined neighborhoods that were primarily occupied by people of color in red ink, denoting these areas as “risky.”
This definition is also mine (excluding reference to the 1930s), except that the above doesn't say what the "risky" designation is based on (or doesn't say accurately what it's based on). It's based on statistics such as the past credit record of that area, not on counting the number of Blacks or minorities there. But otherwise, the above definition of "redlining" is also mine.

Subsequently, banking institutions denied mortgages to people living in “redlined” areas (Hanks et al., 2018). Two thirds of redlined areas continue to be inhabited primarily by minoritized groups, most frequently Black and Latino individuals and families (Mitchell & Franco, 2018). Today, lending practices continue to be greater among neighborhoods that are predominately White. Further, individuals and families living in areas that were “redlined” have less wealth, greater poverty, lower life expectancy, and experience greater rates of chronic diseases. Additionally, homes of similar quality in neighborhoods with similar amenities are worth 23 percent less in majority Black neighborhoods, compared to those with very few or no Black residents (Perry et al., 2018). Understanding the historic underpinnings of current inequities as well as current systems and policies that maintain these inequities is critical to progress.

It is the definition of Critical Race Theorists. Who say that the policy of banks discriminating against high-risk neighborhoods is an example of structural racism. The discrimination takes the form of imposing more strict terms on loan applicants from these high-risk areas, and these high-risk areas "redlined" by the banks are areas which have higher minority populations.

Or, actually, my definition is the same as any which connects "redlining" to some kind of unjust discrimination and which demands that the practice of redlining by banks be made illegal. Just find any article on this subject, condemning the practice because it's discriminatory, and whatever their definition is, that's the same definition I intend here.

Let's not quibble about semantics. It's quite clear what "redlining" means. There have been many complaints about it, from CRT and BLM and others who condemn it as racist. Just go by whatever definition these complainers are using, and take that as my definition (except that the "high risk" designation is based on past history of credit in that area, not on the number of minorities there). And give the reasons why the practice should be made illegal.

If they say "redlining" means bankers look at a loan applicant who is Black (or other minority) and then automatically exclude them and say they are rejected for a loan, then they are wrong. Banks do not do that. But if they mean those applicants are often from an area which gets worse terms than other neighborhoods which are treated better, that's my definition. I.e., simply that they categorize different neighborhoods, or zip codes, etc., as higher or lower risk, and the terms (for a loan (or also for insurance in the case of home insurance)) are often determined by that risk level, rather than by the individual applicant's personal financial history/risk.

In the above quote, I'm actually not sure what the writer's precise definition is, but let's go by that, whatever you think he's saying. If he's saying that "higher risk" means that the population in that area is heavier minority, and that defines "high risk" and causes the "redlining" there, then he's just lying. But more correctly the "high risk" refers to crime statistics (or other statistics, like past default rate) which make that area a higher business risk, e.g. for lending, than other areas which are lower risk and thus get better terms.

I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
The "general welfare" is promoted by allowing banks to continue this practice, because it reduces overall risk in the lending business, and thus reduces the cost to consumers generally.

The "general welfare" refers to the overall welfare to everyone, even though there are a few who are worse off. The best system is the one which provides the greatest good for the greatest number even though a small number are made worse off. Reducing costs for everyone overall is best, even though the cost might be higher for a small number. E.g., requiring those in a high-crime group to pay a higher premium, like young males required to pay higher for auto insurance (all else being equal), is a net benefit for the whole society, even though the benefit to young males as a group is made less. But it promotes the general welfare, because the slightly higher cost for that group is more than offset by the lower cost overall to the whole population.

Likewise, redlining based on good data promotes the general welfare by reducing the lending costs overall to all consumers, thus allowing an increase in total lending.

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#### Arctish

##### Centimillionaire
So you don't think the designation of black communities as high risk had anything to do with the widespread destruction of black communities like Tulsa and Rosewood in the 1920s, or the seizure of black owned businesses and properties under Eminent Domain like what happened at Bruce's Beach in the '20s or Hickory Ridge and Batestown in the 1930s?

You don't think banks recognized that financing black owned properties was risky, not because blacks were less reliable, but because blacks were frequent targets of racist violence and more likely than whites to lose their businesses and property to Eminent Domain whenever nearby communities wanted to build more roads and dams and utility corridors? Or that federal housing programs that blatantly discriminated against minorities were a factor in how profitable it was for financial institutions to invest in white neighborhoods rather than minority communities?

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#### Hermit

##### Cantankerous grump
If they say "redlining" means bankers look at a loan applicant who is Black (or other minority) and then automatically exclude them and say they are rejected for a loan, then they are wrong. Banks do not do that.
Of course not. Anatole France made a similar comment in 1894: "In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."

See? no discrimination. None at all. Laws and financial considerations apply equally to everyone, regardless of skin colour or any other peculiarity.

#### Swammerdami

Staff member
If they say "redlining" means bankers look at a loan applicant who is Black (or other minority) and then automatically exclude them and say they are rejected for a loan, then they are wrong. Banks do not do that. But if they mean those applicants are often from an area which gets worse terms than other neighborhoods which are treated better, that's my definition. I.e., simply that they categorize different neighborhoods, or zip codes, etc., as higher or lower risk, and the terms (for a loan (or also for insurance in the case of home insurance)) are often determined by that risk level, rather than by the individual applicant's personal financial history/risk.

. . . The best system is the one which provides the greatest good for the greatest number even though a small number are made worse off. Reducing costs for everyone overall is best, even though the cost might be higher for a small number.... it promotes the general welfare, because the slightly higher cost for that group is more than offset by the lower cost overall to the whole population.

Likewise, redlining based on good data promotes the general welfare by reducing the lending costs overall to all consumers, thus allowing an increase in total lending.

So, keeping blacks in a ghetto with poorer schools and all that comes with it is a benefit to society as long as it lets some insurance companies pay higher dividends? Practical ideas to reduce segregation and make American society more cohesive are bad ideas if they mean some mortgage broker can't afford to send his kids to private schools? Got it. Talk about excessive faith in the Almighty Dollar and all it represents.

Does this exaggerate your position? Maybe, but not by much.

Furthermore it's not true that race is not a factor in present-day "redlining." I worked with a man who directed a company which produced AI for lenders. The software was trained to mimic human decisions. Even if race was specifically excluded from the input, the software implicitly learned correlations. (For example, ethnicity can be guessed from surname or personal name.) And such automated training comes with a free disclaimer: "Don't blame us! The 'race-ignorant' computer rejected you!"

~ ~ ~ ~ ~ ~ ~

Several decades ago, I went to elementary and high school in a Northern California school district which had ZERO black students. I was barely aware of blacks, except from watching TV. Only many years later did I understand that realtors were simply not offering homes in that community to blacks.

#### Ford

##### Contributor

For some reason I think Lumpen is of the opinion that Lyle was the hero of this scene. Or perhaps Taggart?

#### Jimmy Higgins

##### Contributor
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
There used to be very real issues with redlining. However, these days the discrimination cops need cases to justify their jobs.

Thus we get things like the claims of redlining some years back--paying no attention to the fact that what was going on makes more sense as the mortgage bankers considering another factor: expected appreciation.
Okay, nothing like self-fulfilling prophecy.

#### Loren Pechtel

##### Super Moderator
Staff member
If you claim that red-lining only started late in the 20th century or only mattered in the 21st, then you don't have to explain how or why minorities were concentrated in areas of low property value, or how the property owned by minorities lagged behind as the property owned by whites increased in value. Which means you can obscure the connection between racist discrimination and things like home improvement loans and insurance rates.

That's why I want lumpenproletariat provide a definition of the term 'red-lining' as he is using it. I need to know what he's talking about before I get too involved with his thread.
Evil versions certainly used to exist. I'm just questioning whether what we see now is evil or just obsessive hunting for "evidence".

#### Loren Pechtel

##### Super Moderator
Staff member
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
There used to be very real issues with redlining. However, these days the discrimination cops need cases to justify their jobs.

Thus we get things like the claims of redlining some years back--paying no attention to the fact that what was going on makes more sense as the mortgage bankers considering another factor: expected appreciation.
Okay, nothing like self-fulfilling prophecy.
Which still doesn't address my point that it's the simplest assumption required to get a consistent picture.

#### Trausti

##### Deleted
If you claim that red-lining only started late in the 20th century or only mattered in the 21st, then you don't have to explain how or why minorities were concentrated in areas of low property value, or how the property owned by minorities lagged behind as the property owned by whites increased in value. Which means you can obscure the connection between racist discrimination and things like home improvement loans and insurance rates.

That's why I want lumpenproletariat provide a definition of the term 'red-lining' as he is using it. I need to know what he's talking about before I get too involved with his thread.
Evil versions certainly used to exist. I'm just questioning whether what we see now is evil or just obsessive hunting for "evidence".
The witch hunters always found witches to burn.

#### Trausti

##### Deleted
Everything is racist.

#### Arctish

##### Centimillionaire
Everything is racist.

Never mind. This is a derail.

Getting back to the thread topic, anyone here know what the phrase "the wrong side of the tracks" means?

#### Trausti

##### Deleted
Everything is racist.

That sounds like an updated version of the infamous mined quote "Everything is sexist" used to smear Anita Sarkeesian.

If I go looking into that text and read everything posted before and after it, will I see someone revealing their racism, or someone pointing out that racism influences choices people make, and that what some people assume is race-neutral really isn't?
“Institutional racism” is the QAnon of the Left. They look at the clouds and see all the shapes they want to see. Sometimes hilariously.

#### Arctish

##### Centimillionaire
This is a derail.

Do you want to start a new thread on the topic of Institutional racism, or do you want to discuss the reasons why red-lining should be illegal in this one?

#### Arctish

##### Centimillionaire
That segment from John Oliver includes a lot of information on red-lining and how minorities were concentrated in areas that were subject to devaluation through industrial development, dumping, land seizures, etc. It is pertinent to lumpenproletariat's questions.

Did you watch the video? What did you think of that proposed pipeline in Memphis meandering through the predominantly black neighborhoods instead of taking the much shorter direct route through the predominantly white ones? The cost of construction per mile of pipeline is very high. What was it about going through the black neighborhoods that made it worth the added construction cost?

#### Swammerdami

Staff member
That segment from John Oliver includes a lot of information on red-lining and how minorities were concentrated in areas that were subject to devaluation through industrial development, dumping, land seizures, etc. It is pertinent to lumpenproletariat's questions.

Did you watch the video? What did you think of that proposed pipeline in Memphis meandering through the predominantly black neighborhoods instead of taking the much shorter direct route through the predominantly white ones? The cost of construction per mile of pipeline is very high. What was it about going through the black neighborhoods that made it worth the added construction cost?

I watched that video. Among sad stories: The soil in East Chicago is too poisonous for children to play in; this was known for many years before residents were informed.

Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
There used to be very real issues with redlining. However, these days the discrimination cops need cases to justify their jobs.

It's true that relevant players are motivated by love of money rather than hatred of blacks. But institutional racism still acts. One stat from the John Oliver segment is that Blacks earning $200,000 are exposed to more air pollution than Whites earning$25,000. So the racial income gap, while itself egregious, is not the full story.

Loren, have you watched the John Oliver segment?

#### TomC

##### Celestial Highness
This definition is also mine (excluding reference to the 1930s), except that the above doesn't say what the "risky" designation is based on (or doesn't say accurately what it's based on). It's based on statistics such as the past credit record of that area, not on counting the number of Blacks or minorities there. But otherwise, the above definition of "redlining" is also mine.
I figured that this would be the problem.
That's not what I mean by redlining.

What I mean is more pernicious and racist. It used to be extremely common, but it's gone and has been for years.
Tom

#### Bronzeage

##### Super Moderator
Staff member
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all. Most of these people are middle class whites, but a few of them are considered wealthy. The wealthy are less affected and the insurance allows them to enjoy a high standard of living in a high risk area. I am speaking of flood insurance.

This is a case where the red lines are drawn by the government because left to themselves, insurance companies would not offer flood insurance of any kind. The government regulates the flood insurance market, so that rates are kept artificially low and any single provider is not exposed to excess risk.

The result is an interesting economic model in play. Flood insurance allows land to be developed which otherwise would not be economically viable for housing, due to the risk of losing it all in a given period of time. This development changes the geography enough to increase the risk of previously marginal areas, so overall flood risk increases. Some properties have been declared 50% (and higher) losses 3 or 4 times in the past 40 years.

None of this would have happened if not for government regulation which created a insurance market for high risk properties, by drawing a red line around an area and requiring insurance companies to sell flood insurance to any who can afford it. A home owner is not required to be insured, but no bank will finance an uninsured property, which drastically affects market price.

So, if red lining is a problem, the government has shown it has a remedy. It just depends on who needs to be remediated.

#### BH

##### Super Moderator
Staff member
Hmmmm. if statistics show that more black people are arrested for shoplifting should I be able to charge black customers more if they come into my store to buy shoes, socks, and purses?

#### TomC

##### Celestial Highness
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all.

I am speaking of flood insurance.
I'm not sure why you are comparing flood insurance to racial segregation.
One is risk management. One is socially enforced race segregation.
Tom

#### Toni

##### Contributor
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all.

I am speaking of flood insurance.
I'm not sure why you are comparing flood insurance to racial segregation.
One is risk management. One is socially enforced race segregation.
Tom
You don't think that socially enforced race segregation is dressed up in risk management in order for white bankers and realtors and neighborhoods to feel secure and not 'racist?'

#### TomC

##### Celestial Highness
You don't think that socially enforced race segregation is dressed up in risk management in order for white bankers and realtors and neighborhoods to feel secure and not 'racist?'
No. I don't.

I'm pretty sure that redlining is an issue where capitalism triumphed. The overtly racist policies of 1965 were good for business. Today they aren't. Raw greed overcame racism, in that particular instance.
Tom

#### Jimmy Higgins

##### Contributor
Lumpenproletariat, please provide the definition of red-lining that you are using. I don't want to get into a multipage discussion of the illegality of racial discrimination and the Constitution's purpose to "promote the general Welfare" only to discover that you aren't using the common one.
There used to be very real issues with redlining. However, these days the discrimination cops need cases to justify their jobs.

Thus we get things like the claims of redlining some years back--paying no attention to the fact that what was going on makes more sense as the mortgage bankers considering another factor: expected appreciation.
Okay, nothing like self-fulfilling prophecy.
Which still doesn't address my point that it's the simplest assumption required to get a consistent picture.
Except the part where a bank is saying they won't loan money to the owner because in the future they won't see as much appreciation in the value of property because of the owner because of the race of the owner. It is a self-fulfilling prophecy.

#### TomC

##### Celestial Highness
Except the part where a bank is saying they won't loan money to the owner because in the future they won't see as much appreciation in the value of property because of the owner It is a self-fulfilling prophecy.
Has this happened, in the last 30 years?
"because of the race of the owner."?

I don't think so. I think you're buying a bunch of crap from CRT proponents.
Tom

#### TomC

##### Celestial Highness
You don't think that socially enforced race segregation is dressed up in risk management in order for white bankers and realtors and neighborhoods to feel secure and not 'racist?'
No. I don't.

I'm pretty sure that redlining is an issue where capitalism triumphed. The overtly racist policies of 1965 were good for business. Today they aren't. Raw greed overcame racism, in that particular instance.
Tom
So, you are operating under the theory that your birth ushered in a brand new world where racism was vanquished—-by capitalism?

Lol. No.

This is the kind of unresponsive post I've come to expect.

#### Jimmy Higgins

##### Contributor
Except the part where a bank is saying they won't loan money to the owner because in the future they won't see as much appreciation in the value of property because of the owner It is a self-fulfilling prophecy.
Has this happened, in the last 30 years?
"because of the race of the owner."?

I don't think so. I think you're buying a bunch of crap from CRT proponents.
Tom
Loren isn't much of a CRT'er. He stated it, not me.

#### Toni

##### Contributor
This is the same as "Red-lining." It's not about race, or about your religion or sex preference. It's about higher risk for that insurance or loan you're applying for.

Objective risk management is quite different from forced race segregation. Maybe you don't understand what "redlining" means? I don't understand your OP?
Gimme a hint.
Tom
Maybe you don’t understand what redlining means.

This is truly worth the read. Unfortunately my ability to cut and paste is really limited at the moment.

#### Toni

##### Contributor
You don't think that socially enforced race segregation is dressed up in risk management in order for white bankers and realtors and neighborhoods to feel secure and not 'racist?'
No. I don't.

I'm pretty sure that redlining is an issue where capitalism triumphed. The overtly racist policies of 1965 were good for business. Today they aren't. Raw greed overcame racism, in that particular instance.
Tom
So, you are operating under the theory that your birth ushered in a brand new world where racism was vanquished—-by capitalism?

Lol. No.

This is the kind of unresponsive post I've come to expect.
It was responsive but I realized a moment after I posted that it probably could be seen as less than kind, so I deleted it. In the meantime, you responded.

Since you did respond, I’ll address what I see from a lot of well meaning white people who believe that they are enlightened and that racism, certainly racism codified in law and policy is a thing of the past—because they personally do not see it. It doesn’t affect them. Therefore, it’s all fixed. No longer an issue.

Unfortunately, society just has not changed as much as most of us would like to believe in the past 50-60 years. Sure, for the most part, gay people are much more accepted and have more rights. We’ll see how long that lasts if the SC overturns Roe V Wade. Some states are signaling a desire to return to a time when they did not have to accept interracial marriage or gay marriage or birth control. Hate is alive and well in the US, as is greed and insecurity.

#### Alcoholic Actuary

##### Senior Member
Crime Score and Credit Score are routinely used in insurance and lending underwriting standards and rating. The redlining occurs when those same criteria are used as a substitute or proxy for race. I've always been on the other side of that argument - I'd love to insure the drug lord's house:
1. I can get more premium if it's in a higher crime area
2. No one is going to rob the drug lord
3. If someone did, they have "internal controls" to deal with it other than filing a claim and drawing attention to themselves

aa

#### Harry Bosch

##### Contributor
Crime Score and Credit Score are routinely used in insurance and lending underwriting standards and rating. The redlining occurs when those same criteria are used as a substitute or proxy for race. I've always been on the other side of that argument - I'd love to insure the drug lord's house:
1. I can get more premium if it's in a higher crime area
2. No one is going to rob the drug lord
3. If someone did, they have "internal controls" to deal with it other than filing a claim and drawing attention to themselves

aa
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with. It was generally older areas with older homes. It was thought that these homes couldn't support a 30 year economic life (banks like to finance assets that have a longer life than the term of their loan). These areas tended to be owned by minorities.

#### TomC

##### Celestial Highness
It was responsive but I realized a moment after I posted that it probably could be seen as less than kind, so I deleted it. In the meantime, you responded.
It wasn't that it was unkind.
It was the flat out falsehood that I noticed.
I've come to expect that.
Tom

#### Jimmy Higgins

##### Contributor
Crime Score and Credit Score are routinely used in insurance and lending underwriting standards and rating. The redlining occurs when those same criteria are used as a substitute or proxy for race. I've always been on the other side of that argument - I'd love to insure the drug lord's house:
1. I can get more premium if it's in a higher crime area
2. No one is going to rob the drug lord
3. If someone did, they have "internal controls" to deal with it other than filing a claim and drawing attention to themselves

aa
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with. It was generally older areas with older homes. It was thought that these homes couldn't support a 30 year economic life (banks like to finance assets that have a longer life than the term of their loan). These areas tended to be owned by minorities.
And in not lending such areas money, set the wheels in motion for the outcome they worried about.

#### TomC

##### Celestial Highness
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with.
That's not what it meant around here several decades ago.
I don't think it meant that most places in the USA.

Realtors and banks had to do business. Showing or financing homes to people on the wrong side of the redline for their race would put them out of business. That started changing by 1975. By 1985, such overt racism would destroy your business as effectively as not doing so would have done in 1965.

Society has changed hugely in the last few decades. "Redlining" has become a dogwhistle word for one variant of social extremism.
Tom

#### Politesse

##### Lux Aeterna
This is the same as "Red-lining." It's not about race, or about your religion or sex preference. It's about higher risk for that insurance or loan you're applying for.
So you wouldn't mind being turned down for a loan on the basis of the neighborhood you currently live in, even if you could otherwise prove yourself to be creditworthy? "Fair's fair", you'd say, and just go back to living in the slums because too many of your neighbors are Mexican and that strikes you as a reasonable rationale for trapping you there indefintely?

#### Harry Bosch

##### Contributor
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with.
That's not what it meant around here several decades ago.
I don't think it meant that most places in the USA.

Realtors and banks had to do business. Showing or financing homes to people on the wrong side of the redline for their race would put them out of business. That started changing by 1975. By 1985, such overt racism would destroy your business as effectively as not doing so would have done in 1965.

Society has changed hugely in the last few decades. "Redlining" has become a dogwhistle word for one variant of social extremism.
Tom
Tom: I'm not sure that I'm following you. I'm a reformed banker. I was also an FDIC regulator for awhile. Redlining is literally circling a neighborhood that a bank wouldn't want to do business with. Often times it was because the homes were older (not as long of an economic life); sometimes in hazardous spill areas, lower income areas, minority areas. Fair lending act regulated redlinning. IOW, it's not allowed anymore.

#### Toni

##### Contributor
It was responsive but I realized a moment after I posted that it probably could be seen as less than kind, so I deleted it. In the meantime, you responded.
It wasn't that it was unkind.
It was the flat out falsehood that I noticed.
I've come to expect that.
Tom
As I have come to expect you to accuse others of falsehood rather than actually engage in a discussion. If you believed I was mistaken, you could have told me how I was mistaken. Instead, you prefer to level an accusation of posting a falsehood.

I understand completely.

#### Toni

##### Contributor
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with.
That's not what it meant around here several decades ago.
I don't think it meant that most places in the USA.

Realtors and banks had to do business. Showing or financing homes to people on the wrong side of the redline for their race would put them out of business. That started changing by 1975. By 1985, such overt racism would destroy your business as effectively as not doing so would have done in 1965.

Society has changed hugely in the last few decades. "Redlining" has become a dogwhistle word for one variant of social extremism.
Tom
Tom: I'm not sure that I'm following you. I'm a reformed banker. I was also an FDIC regulator for awhile. Redlining is literally circling a neighborhood that a bank wouldn't want to business. Often times it was because the homes were older (not as long economic life); sometimes in hazardous spill areas, lower income areas, minority areas. Fair lending act regulated redlinning. IOW, it's not allowed anymore.
I realize that de jure redlining is not allowed. Do you disagree that de facto redlining still occurs? I know it's a little long but the article I posted in #34 about recent discrimination based on race.

https://www.chicagotribune.com/business/ct-biz-modern-day-redlining-20180215-story.htmlNew Jersey-based TD Bank, which denied a higher proportion of black and Latino applicants than any other major lender, said it "makes credit decisions based on each Customer's credit profile, not on factors such as race or ethnicity."
Reveal's analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant's income, the amount of the loan, the ratio of the size of the loan to the applicant's income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.

#### Bronzeage

##### Super Moderator
Staff member
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all.

I am speaking of flood insurance.
I'm not sure why you are comparing flood insurance to racial segregation.
One is risk management. One is socially enforced race segregation.
Tom
It's not opaque. Land in flood plains was "redlined". This was economically detrimental to home owners in bv these areas, who were mostly middleclass white people. The government devised a program which enticed/coerced private insurance providers to act contrary to normal market forces.
The redline in this thread concerns the difficulty of obtaining insurance in areas where the demographic is not white, which depresses property values and investment. Lower values and investment reduces tax revenues, which reduces government services and it becomes a death spiral.
The flood insurance program shows how government intervention in the market functions to benefit a specific constituency.

It's pointless to make a chicken or the egg argument over redlining area with a non white population. It's an economic issue and the government has proven itself capable of addressing this problem when the right people demand it.

#### Harry Bosch

##### Contributor
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with.
That's not what it meant around here several decades ago.
I don't think it meant that most places in the USA.

Realtors and banks had to do business. Showing or financing homes to people on the wrong side of the redline for their race would put them out of business. That started changing by 1975. By 1985, such overt racism would destroy your business as effectively as not doing so would have done in 1965.

Society has changed hugely in the last few decades. "Redlining" has become a dogwhistle word for one variant of social extremism.
Tom
Tom: I'm not sure that I'm following you. I'm a reformed banker. I was also an FDIC regulator for awhile. Redlining is literally circling a neighborhood that a bank wouldn't want to business. Often times it was because the homes were older (not as long economic life); sometimes in hazardous spill areas, lower income areas, minority areas. Fair lending act regulated redlinning. IOW, it's not allowed anymore.
I realize that de jure redlining is not allowed. Do you disagree that de facto redlining still occurs? I know it's a little long but the article I posted in #34 about recent discrimination based on race.

https://www.chicagotribune.com/business/ct-biz-modern-day-redlining-20180215-story.htmlNew Jersey-based TD Bank, which denied a higher proportion of black and Latino applicants than any other major lender, said it "makes credit decisions based on each Customer's credit profile, not on factors such as race or ethnicity."
Reveal's analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant's income, the amount of the loan, the ratio of the size of the loan to the applicant's income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.
Well, the problem with redlinning is that it excluded many "good borrower's" from getting a loan. Residential lending criteria today is based on debt to income, credit score, appraised value, and etc. If someone doesn't have a strong enough debt to income, that means that they don't have the cash flow to service their loan adequately. A bank should never make a loan to a client who can't afford the loan. Same thing with credit score. If someone has poor credit, you're just setting them up to fail by financing a home to them. Appraisals are a different story. But at the end of the day, approving a loan to a customer who doesn't have the capacity to afford it or pay it back is doing them a great disservice. The worst mistake that I ever made as a commercial banker was financing a project that was just too tight. I loved the owners. Incredible family. But the project failed. It was too tight at the beginning. And they went bankrupt.

#### Alcoholic Actuary

##### Senior Member
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all. Most of these people are middle class whites, but a few of them are considered wealthy. The wealthy are less affected and the insurance allows them to enjoy a high standard of living in a high risk area. I am speaking of flood insurance.

This is a case where the red lines are drawn by the government because left to themselves, insurance companies would not offer flood insurance of any kind. The government regulates the flood insurance market, so that rates are kept artificially low and any single provider is not exposed to excess risk.

The result is an interesting economic model in play. Flood insurance allows land to be developed which otherwise would not be economically viable for housing, due to the risk of losing it all in a given period of time. This development changes the geography enough to increase the risk of previously marginal areas, so overall flood risk increases. Some properties have been declared 50% (and higher) losses 3 or 4 times in the past 40 years.

None of this would have happened if not for government regulation which created a insurance market for high risk properties, by drawing a red line around an area and requiring insurance companies to sell flood insurance to any who can afford it. A home owner is not required to be insured, but no bank will finance an uninsured property, which drastically affects market price.

So, if red lining is a problem, the government has shown it has a remedy. It just depends on who needs to be remediated.
I don't think that's exactly right. NFIP is a government program that takes the premium and pays the losses. There is still no insurance 'market' for flood except for gaps in what the government doesn't cover. The economic model you are describing is a government subsidy to develop land that would otherwise be too risky to occupy.

There is still government regulation all over the insurance industry - particularly to personal lines carriers. It's just different than how flood insurance works. And if the current climate change storm trends continue, it will be increasingly difficult to find ANY kind of storm coverage from Oklahoma to Virgina down to the gulf.

aa

#### Alcoholic Actuary

##### Senior Member
Crime Score and Credit Score are routinely used in insurance and lending underwriting standards and rating. The redlining occurs when those same criteria are used as a substitute or proxy for race. I've always been on the other side of that argument - I'd love to insure the drug lord's house:
1. I can get more premium if it's in a higher crime area
2. No one is going to rob the drug lord
3. If someone did, they have "internal controls" to deal with it other than filing a claim and drawing attention to themselves

aa
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with. It was generally older areas with older homes. It was thought that these homes couldn't support a 30 year economic life (banks like to finance assets that have a longer life than the term of their loan). These areas tended to be owned by minorities.
I'm with you on that, but what about the 'new' redlining? I have data analytics that tell me how to circle the neighborhood now. Effective risk management tool or extension of racist/classist policies?

aa

#### Toni

##### Contributor
Technically, redlining was literally a bank circling a neighborhood on a map that they didn't want to do business with.
That's not what it meant around here several decades ago.
I don't think it meant that most places in the USA.

Realtors and banks had to do business. Showing or financing homes to people on the wrong side of the redline for their race would put them out of business. That started changing by 1975. By 1985, such overt racism would destroy your business as effectively as not doing so would have done in 1965.

Society has changed hugely in the last few decades. "Redlining" has become a dogwhistle word for one variant of social extremism.
Tom
Tom: I'm not sure that I'm following you. I'm a reformed banker. I was also an FDIC regulator for awhile. Redlining is literally circling a neighborhood that a bank wouldn't want to business. Often times it was because the homes were older (not as long economic life); sometimes in hazardous spill areas, lower income areas, minority areas. Fair lending act regulated redlinning. IOW, it's not allowed anymore.
I realize that de jure redlining is not allowed. Do you disagree that de facto redlining still occurs? I know it's a little long but the article I posted in #34 about recent discrimination based on race.

https://www.chicagotribune.com/business/ct-biz-modern-day-redlining-20180215-story.htmlNew Jersey-based TD Bank, which denied a higher proportion of black and Latino applicants than any other major lender, said it "makes credit decisions based on each Customer's credit profile, not on factors such as race or ethnicity."
Reveal's analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant's income, the amount of the loan, the ratio of the size of the loan to the applicant's income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.
Well, the problem with redlinning is that it excluded many "good borrower's" from getting a loan. Residential lending criteria today is based on debt to income, credit score, appraised value, and etc. If someone doesn't have a strong enough debt to income, that means that they don't have the cash flow to service their loan adequately. A bank should never make a loan to a client who can't afford the loan. Same thing with credit score. If someone has poor credit, you're just setting them up to fail by financing a home to them. Appraisals are a different story. But at the end of the day, approving a loan to a customer who doesn't have the capacity to afford it or pay it back is doing them a great disservice. The worst mistake that I ever made as a commercial banker was financing a project that was just too tight. I loved the owners. Incredible family. But the project failed. It was too tight at the beginning. And they went bankrupt.
That’s not what I was talking about. I’m not talking about buyers who are financially unable to qualify for the loan. I’m talking about being offered different t rates compared to people whose skin tone or name suggested someone not sufficient fly Anglo. Appraisals, as you mentioned, are another thing—and another opportunity for lenders to, consciously or not, keep certain prospective home buyers out of the market.

#### Bronzeage

##### Super Moderator
Staff member
I am quite familiar with redlining. I have many friends who either pay a large amount for insurance, or sometimes decide they can't afford it at all. Most of these people are middle class whites, but a few of them are considered wealthy. The wealthy are less affected and the insurance allows them to enjoy a high standard of living in a high risk area. I am speaking of flood insurance.

This is a case where the red lines are drawn by the government because left to themselves, insurance companies would not offer flood insurance of any kind. The government regulates the flood insurance market, so that rates are kept artificially low and any single provider is not exposed to excess risk.

The result is an interesting economic model in play. Flood insurance allows land to be developed which otherwise would not be economically viable for housing, due to the risk of losing it all in a given period of time. This development changes the geography enough to increase the risk of previously marginal areas, so overall flood risk increases. Some properties have been declared 50% (and higher) losses 3 or 4 times in the past 40 years.

None of this would have happened if not for government regulation which created a insurance market for high risk properties, by drawing a red line around an area and requiring insurance companies to sell flood insurance to any who can afford it. A home owner is not required to be insured, but no bank will finance an uninsured property, which drastically affects market price.

So, if red lining is a problem, the government has shown it has a remedy. It just depends on who needs to be remediated.
I don't think that's exactly right. NFIP is a government program that takes the premium and pays the losses. There is still no insurance 'market' for flood except for gaps in what the government doesn't cover. The economic model you are describing is a government subsidy to develop land that would otherwise be too risky to occupy.

There is still government regulation all over the insurance industry - particularly to personal lines carriers. It's just different than how flood insurance works. And if the current climate change storm trends continue, it will be increasingly difficult to find ANY kind of storm coverage from Oklahoma to Virgina down to the gulf.

aa
Close enough. There is no economic incentive for the private market to provide flood insurance because the at risk group is too small and too well defined. Banks require flood insurance before they issue a loan to anyone in the "Hundred Year" flood plain. This greatly increases the premium paying base. Development which increases the rate of runoff has expanded this plain, which has led to more regulation of land use.
Government flood insurance allows people to invest in property which no private insurer would touch, in other words, land that was reclined long before there was such a term.

If it works for geographically unviable land, it would work for the economically unviable land as well.