Redlining: A Legacy of FDR's New Deal

Critics of Franklin D. Roosevelt have blamed his administration for many sins: a prolonged depression, the creation of a federal welfare state that fostered dependence, establishment of the imperial presidency in foreign policy, Japanese internment, the Brown Scare, retrograde civil rights policies, etc. Only a few have emphasized, however, that Roosevelt was also the father (at least indirectly) of redlining.

Amy E. Hillier has a carefully researched article on the subject in a recent issue of Social Science History. Redlining is a practice of denying credit to certain neighborhoods because of their racial or ethnic composition. The origin of the term can be traced to the color-coded “Residential Security Maps” of major American cities produced by the Home Owners’ Loan Corporation (HOLC), a New Deal agency created in 1933. Each map had four different classifications ranging from most to least desirable: green, blue, yellow, and red.

Most desirable were the green areas. They were ethnically “"homogeneous” and worthy of loans in “good times or bad.” The second and third grade areas were blue and yellow. Least desirable were the red areas. According to the maps, they had “detrimental influences in a pronounced degree” and an “undesirable population [disproportionately black] or an infiltration of it.” During the late 1930s, the Federal Home Loan Bank Board (FHLBB) used the maps as a basis for its loans. It rarely gave loans to red areas, hence the term redlining. The federal government provided the maps to banks and developers who often used them as a basis for their own loan ratings.