New Initiatives to Combat Redlining Practices
After two national banks were hit by the Department of Justice ( DOJ ) and federal regulators with fair lending violations , the DOJ announced new initiatives to combat redlining practices . On Oct . 22 , 2021 , Attorney General Merrick B . Garland delivered remarks regarding this new initiative , where he talked a bit about redlining practices in United States history , and what the DOJ is planning to accomplish in the future regarding unfair lending practices . Although redlining and unfair lending practices may not directly apply to every financial institution , understanding what happens could prevent future violations .
Redlining Practices
Redlining became visible as a widespread real estate practice in the 1930s during the Great Depression . Through redlining , lenders systematically denied services to individuals living in certain neighborhoods , based on prohibited bases such as race or nationality , often literally drawing red lines on community maps around neighborhoods where loans would not be made . Over time , the insidious practice of redlining contributed to widespread racial disparity in housing , as the benefit of homeownership was made available to many White families , but minority neighborhoods were discriminated against . While redlining has long since been illegal , its lingering effect is one of the largest contributing factors to the racial wealth gap in the United States today .
Today , unfair lending practices are rarely so overt , and are often unintentional . Financial institutions often find themselves engaging in unfair lending practices as a series of smaller choices that cumulatively have a discriminatory effect , rather than one large decision harming a huge group of individuals . These unfair practices can be as simple as not opening physical
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