The term comes from the supposed marking of an area on a map, defined by a red line.

It's far from a new problem: the USA has struggled with a wide range of issues relating to the provision or withdrawal of financial services over decades, including the selection of locations for the creation or, more often, the removal of branches.

In 1989, a study of data from regulators for the period 1985-1988 by New York state Senator Franz S Leichter and Assemblyman Herman D Farrell found that across New York City, those districts that had more than 40% "minority populations" suffered a disproportionate number of bank branches closing.

In the period covered by the study, new branches opened - but only 18% were in those districts with a similar makeup. In fact, the report says, that across the City, only two branches were opened in districts with "above average" minority populations. One of those banks was "black-owned" (a recognised accreditation) and the other was Chinese-owned (no special treatment and no recognised accreditation).

What the authors of the report found particularly disturbing was that this trend held true despite, in some districts with significant bank closures, were districts where the median income was "relatively high" - USD33,000 or more.

When branches closed, many people found themselves without access to ATMs.

There was a very public stink, banks were told to find a way to address the problem and there were several reports saying that they had done so, at least to a degree.

How come, then, that a quarter of a century on City National Bank, the biggest bank headquartered in Los Angeles, entered into a settlement with the Department of Justice under which it agreed to pay USD31 million. The money is not a fine or a penalty: those may come later. It's to provide "relief" to individuals and "communities" affected by the bank's alleged discriminatory policies. Sadly, we are not told what the term "communities" includes other than it's the right of "Black Americans and all communities of colour are able to access the American dream and freely access the credit needed to purchase a home." The DoJ's statement (see "Further reading" below) is laden with search-engine grabbing terms but picking through those there is important information:

“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of the residents in those communities. The complaint filed in federal court today alleges that from 2017 through at least 2020, City National avoided providing mortgage lending services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged residents in these neighborhoods from obtaining mortgage loans. The complaint also alleges that during that time period other banks received more than six times as many applications in majority-Black and Hispanic neighborhoods in Los Angeles County than City National each year. In addition, City National only opened one branch in a majority-Black and Hispanic neighbourhood in the past 20 years, despite having opened or acquired 11 branches during that time period. And unlike at its branches in majority-white areas, City National did not assign any employee to generate mortgage loan applications at that branch.

The final statement sounds like a makeweight: it doesn't refer to applications but to going out looking for applications. The money will be allocated as follows:

Invest at least USD29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighbourhoods in Los Angeles County; at least USD500,000 for advertising and outreach targeted toward the residents of these neighbourhoods; at least USD500,000 for a consumer financial education program to help increase access to credit for residents; and at least USD750,000 for development of community partnerships to provide services that increase access to residential mortgage credit.

That result, in January 2023, was then the largest award under an initiative launched in 2021 by US Attorney General Merrick Garland, a Democrat who had two unsuccessful bids to join the US Supreme Court until Barack Obama was able to press his case. As A-G, he is a Biden appointee. As a prosecutor, he handled several major cases including that of Timothy McVeigh. Since the initiative was launched, the Department has announced five redlining cases and settlements with a combined USD75 million in relief for communities that have been the victims of lending discrimination in New Jersey and one case in New Jersey, Delaware and Philadelphia. The latter case, Trident Mortgage Company, was the first case involving a non-bank lender. It's owned by Warren Buffet's Berkshire Hathaway.

It's a problem that doesn't seem to be going away. In February, there was the case of Park National Bank of Newark, Ohio.

In March, the United States Attorney for the District of Maryland Erek L. Barron and Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, along with the Consumer Financial Protection Bureau (CFPB) announced that they had filed a statement of interest to explain the application of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) to lenders relying on discriminatory home appraisals in an existing case.

In April, in Newark, New Jersey, the DOJ hosted a "Forum To Highlight Nationwide Effort To Combat Modern-Day Redlining"

“Redlining is not a relic of the past. It exists in new forms, including in the physical and digital worlds,” said Rohit Chopra, Director of the Consumer Financial Protection Bureau. “When it comes to modern-day redlining, the CFPB is prioritising efforts with federal and state prosecutors to uncover illegal digital redlining by algorithms and artificial intelligence, reverse redlining through predatory targeting, and harmful discrimination by non-banks.”

That sounds far too buzzwordy and click-baity because this doesn't appear to be anything different other than by the communications methods used. It's still discrimination based on districts defined by their racial, etc. makeup.

The tech makes no difference to the conduct complained of.

The mayor of Newark, Ras Baraka, has a far better take on the situation: “Redlining has been historically pervasive and deliberate in this country, and cities like Newark have been at the front end of the abuse. While redlining is illegal, we know that this ugly form of racism is still widely practised,” he said.

Further Reading: https://www.justice.gov/opa/pr/justice-department-secures-over-31-milli…