WEBVTT 00:00:00.000 --> 00:00:01.399 I want you to close your eyes for a second. Well, 00:00:01.459 --> 00:00:03.459 actually, keep them open if you're driving or 00:00:03.459 --> 00:00:05.879 operating heavy machinery safety first. Yeah, 00:00:05.940 --> 00:00:09.660 yeah, please do. But if you can, I want you to 00:00:09.660 --> 00:00:12.839 picture a map, specifically a vintage map of 00:00:12.839 --> 00:00:16.429 Philadelphia. from 1937. It looks like your standard 00:00:16.429 --> 00:00:19.010 city planners, grid streets, avenues, rivers. 00:00:19.309 --> 00:00:22.010 Sure. But it's color coded. It looks almost like 00:00:22.010 --> 00:00:24.250 a paint by numbers puzzle that someone gave up 00:00:24.250 --> 00:00:26.309 on halfway through. You've got these patches 00:00:26.309 --> 00:00:29.309 of green, some areas washed in blue, a fair amount 00:00:29.309 --> 00:00:32.409 of yellow, and then starkly contrasting against 00:00:32.409 --> 00:00:35.350 the rest, you have these aggressive, solid blocks 00:00:35.350 --> 00:00:38.049 of red. And that map isn't just a piece of history 00:00:38.049 --> 00:00:40.189 or a cool vintage aesthetic you'd find in an 00:00:40.189 --> 00:00:43.619 antique shop. That map is a smoking gun. Those 00:00:43.619 --> 00:00:46.899 colors, green, blue, yellow, red, they weren't 00:00:46.899 --> 00:00:49.100 just categorizing architecture or traffic flow. 00:00:49.280 --> 00:00:51.439 They were determining the financial destiny of 00:00:51.439 --> 00:00:54.399 the human beings living inside those lines. And 00:00:54.399 --> 00:00:56.619 that red ink, that is the origin of the term 00:00:56.619 --> 00:00:59.640 we are unpacking today, redlining. Exactly. We're 00:00:59.640 --> 00:01:01.880 doing a deep dive into redlining. And I know 00:01:01.880 --> 00:01:03.920 you've probably heard the term. Oh, yeah. It 00:01:03.920 --> 00:01:05.739 gets thrown around a lot. It gets thrown around 00:01:05.739 --> 00:01:08.079 a lot in political debates or on Twitter threads. 00:01:08.560 --> 00:01:10.799 You might have a rough idea that it means banks 00:01:10.799 --> 00:01:14.530 being racist in the past. But today, our mission 00:01:14.530 --> 00:01:16.930 is different. We aren't just looking at the definition. 00:01:17.170 --> 00:01:19.540 We are going to look at the machinery. And that 00:01:19.540 --> 00:01:22.599 distinction is vital. It is incredibly easy to 00:01:22.599 --> 00:01:25.900 think of redlining as a few bad Apple bankers 00:01:25.900 --> 00:01:28.640 making prejudiced choices in a back room. But 00:01:28.640 --> 00:01:30.459 the reality, when you actually look at the source 00:01:30.459 --> 00:01:32.840 material, the government manuals, the sociological 00:01:32.840 --> 00:01:36.239 studies, the lawsuits, is that this was a systemic 00:01:36.239 --> 00:01:39.420 government sponsored engine. It was policy. It 00:01:39.420 --> 00:01:42.340 was policy. It was a machine designed to separate 00:01:42.340 --> 00:01:45.319 specific people from capital based on the color 00:01:45.319 --> 00:01:47.359 of their skin. OK, so before we start taking 00:01:47.359 --> 00:01:49.060 that machine apart to see it. how it works. Let's 00:01:49.060 --> 00:01:51.340 get the official definition on the table. When 00:01:51.340 --> 00:01:53.719 we say redlining, what are we actually defining? 00:01:54.299 --> 00:01:56.959 Strictly speaking, redlining is the systemic 00:01:56.959 --> 00:01:59.540 denial of services. And I mean, a whole range 00:01:59.540 --> 00:02:02.219 of services. Not just loans. Not just loans. 00:02:02.319 --> 00:02:04.879 We're talking financial, health care, retail, 00:02:05.219 --> 00:02:09.949 insurance. The denial of those services to residents 00:02:09.949 --> 00:02:12.969 of specific neighborhoods, usually based on significant 00:02:12.969 --> 00:02:16.110 numbers of racial and ethnic minorities. And 00:02:16.110 --> 00:02:17.770 usually we hear about this in the context of 00:02:17.770 --> 00:02:19.629 black history in America. That's sort of the 00:02:19.629 --> 00:02:21.909 main narrative. Predominantly, yes, that's the 00:02:21.909 --> 00:02:24.430 primary context. But the sources point out that 00:02:24.430 --> 00:02:26.800 the scope is actually broader. This practice 00:02:26.800 --> 00:02:29.639 also targeted Mexican Americans in the southwestern 00:02:29.639 --> 00:02:32.639 United States. And this part actually surprised 00:02:32.639 --> 00:02:34.879 me during the research. You too. It was prevalent 00:02:34.879 --> 00:02:38.460 in Canada, specifically Ontario, from the 1930s 00:02:38.460 --> 00:02:40.939 to the 1950s. I didn't realize it went north 00:02:40.939 --> 00:02:43.219 of the border. We tend to think of Canada as 00:02:43.219 --> 00:02:45.960 exempt from this specific brand of housing segregation. 00:02:46.620 --> 00:02:48.659 Not at all. The mechanics were slightly different, 00:02:48.759 --> 00:02:51.219 but the outcome segregation and capital starvation 00:02:51.219 --> 00:02:54.159 was the same. And the term itself, redlining, 00:02:54.259 --> 00:02:56.419 is actually credited to a sociologist named John 00:02:56.419 --> 00:02:59.139 McKnight in the 1960s. He was describing the 00:02:59.139 --> 00:03:01.280 practice in Chicago where banks would literally, 00:03:01.360 --> 00:03:04.879 physically draw a red line on a wall map to mark 00:03:04.879 --> 00:03:07.580 areas they considered hazardous. So it's not 00:03:07.580 --> 00:03:10.039 a metaphor? No, not originally. It was literal. 00:03:10.159 --> 00:03:12.259 If you lived inside the red line, you were cut 00:03:12.259 --> 00:03:15.490 off. Period. So that's the definition. But I 00:03:15.490 --> 00:03:17.889 want to get to the how, because you don't just 00:03:17.889 --> 00:03:20.550 wake up one day and have an entire national banking 00:03:20.550 --> 00:03:23.669 system agree to discriminate in the exact same 00:03:23.669 --> 00:03:27.310 way without some coordination. Who were the architects? 00:03:27.650 --> 00:03:29.949 Who built the machine? To understand the architects, 00:03:30.169 --> 00:03:32.509 we have to travel back to the Great Depression. 00:03:33.199 --> 00:03:36.780 It's the 1930s. The U .S. housing market is in 00:03:36.780 --> 00:03:39.800 absolute freefall. People are defaulting on mortgages 00:03:39.800 --> 00:03:42.500 left and right. Total chaos. Total chaos. Now, 00:03:42.580 --> 00:03:45.280 here is a detail most people miss. Before the 00:03:45.280 --> 00:03:48.419 1930s, the mortgage, as we know it, didn't really 00:03:48.419 --> 00:03:50.240 exist. What do you mean by that? People bought 00:03:50.240 --> 00:03:52.460 houses, didn't they? They did, but the terms 00:03:52.460 --> 00:03:55.099 were brutal. You usually had to put 50 % down. 00:03:55.240 --> 00:03:58.680 50. 50%. And the loan was a short -term balloon 00:03:58.680 --> 00:04:01.300 payment due in three to five years. You paid 00:04:01.300 --> 00:04:03.199 interest for a few years, and then boom, you 00:04:03.199 --> 00:04:05.439 owed the whole principal. So it wasn't amortized. 00:04:05.439 --> 00:04:07.879 You didn't pay it down slowly. No. It was a rich 00:04:07.879 --> 00:04:09.979 man's game. If you were working class, you rented. 00:04:10.219 --> 00:04:12.740 End of story. Okay, so the concept of paying 00:04:12.740 --> 00:04:15.580 a little bit every month for 30 years, the standard 00:04:15.580 --> 00:04:18.019 American mortgage, that wasn't a thing. No, that 00:04:18.019 --> 00:04:20.300 was an invention. The federal government, trying 00:04:20.300 --> 00:04:24.300 to save the economy, stepped in. In 1935, the 00:04:24.300 --> 00:04:28.180 Federal Home Loan Bank Board asked a group called 00:04:28.180 --> 00:04:31.680 the Homeowners Loan Corporation, or HOLC, to 00:04:31.680 --> 00:04:36.259 survey 239 cities. HOLC, okay. They wanted to 00:04:36.259 --> 00:04:38.459 figure out how to stabilize housing. And to do 00:04:38.459 --> 00:04:40.379 that, they needed to know which neighborhoods 00:04:40.379 --> 00:04:43.860 were safe for this new type of long -term lending 00:04:43.860 --> 00:04:45.420 they were inventing. So they were essentially 00:04:45.420 --> 00:04:47.339 auditing the real estate of the entire nation. 00:04:47.459 --> 00:04:49.379 Precisely. They wanted to create residential 00:04:49.379 --> 00:04:52.370 security maps. And this is where that... color 00:04:52.370 --> 00:04:55.069 grading system comes in it is chillingly simple 00:04:55.069 --> 00:04:57.689 they divided every neighborhood into one of four 00:04:57.689 --> 00:04:59.569 categories okay let's break them down type a 00:04:59.569 --> 00:05:02.170 was outlined in green these were the best areas 00:05:02.170 --> 00:05:04.990 typically affluent usually suburban on the outskirts 00:05:04.990 --> 00:05:08.250 of cities okay so green is go green means money 00:05:08.250 --> 00:05:11.649 green is go then you have type b outlined in 00:05:11.649 --> 00:05:14.170 blue these are considered still desirable still 00:05:14.170 --> 00:05:18.430 a good bet okay then type c yellow labeled declining 00:05:19.370 --> 00:05:21.189 You're starting to see some warning flags for 00:05:21.189 --> 00:05:24.029 the bankers. Exclining. Okay. And finally, type 00:05:24.029 --> 00:05:26.529 D outlined in red. These were labeled hazardous. 00:05:27.329 --> 00:05:30.069 Hazardous. That is such a loaded word to use 00:05:30.069 --> 00:05:32.529 for a neighborhood. It sounds like a toxic waste 00:05:32.529 --> 00:05:35.170 dump or a place where a volcano is about to erupt. 00:05:35.370 --> 00:05:37.449 It doesn't sound like a place where families 00:05:37.449 --> 00:05:39.870 live. Well, the toxicity they were worried about 00:05:39.870 --> 00:05:42.430 wasn't chemical. It was racial. Uh -huh. This 00:05:42.430 --> 00:05:45.050 is where the explicit racism of the criteria 00:05:45.050 --> 00:05:48.069 becomes undeniable. We are inferring this from 00:05:48.069 --> 00:05:50.540 dating patterns. It is written in their manuals. 00:05:50.600 --> 00:05:53.360 The source material references a Philadelphia 00:05:53.360 --> 00:05:57.540 map specifically. It lists the detrimental influences 00:05:57.540 --> 00:06:00.160 of a red zone. And what do they list? Do you 00:06:00.160 --> 00:06:01.939 know what they listed as a detriment to property 00:06:01.939 --> 00:06:04.480 value? I'm almost afraid to ask, but lay it on 00:06:04.480 --> 00:06:07.360 us. Concentration of Negroes and Italians. Wow. 00:06:07.519 --> 00:06:09.639 It's just right there in black and white. In 00:06:09.639 --> 00:06:12.139 black and white. They literally listed human 00:06:12.139 --> 00:06:15.060 beings, specific ethnicities as a detrimental 00:06:15.060 --> 00:06:18.389 influence. on par with i don't know a sinkhole 00:06:18.389 --> 00:06:20.550 or a flood zone or being next to a factory or 00:06:20.550 --> 00:06:23.279 something Exactly. And this wasn't just the HOLC. 00:06:23.360 --> 00:06:26.040 This is key. The Federal Housing Administration, 00:06:26.439 --> 00:06:30.860 or FHA, formalized this process. They had a chief 00:06:30.860 --> 00:06:34.420 land economist named Homer Hoyt. He helped develop 00:06:34.420 --> 00:06:37.120 the first underwriting criteria for mortgages. 00:06:37.360 --> 00:06:39.160 So he wrote the rulebook. He wrote the rulebook. 00:06:39.300 --> 00:06:43.019 And the FHA manuals explicitly warned banks to 00:06:43.019 --> 00:06:45.920 steer clear of areas with inharmonious racial 00:06:45.920 --> 00:06:48.699 groups. Inharmonious racial groups. It sounds 00:06:48.699 --> 00:06:52.709 so bureaucratic, so sterile. But the impact is 00:06:52.709 --> 00:06:55.250 devastating. That's how systemic racism works. 00:06:55.329 --> 00:06:57.870 It hides behind jargon. But play devil's advocate 00:06:57.870 --> 00:07:00.790 for a second. If I'm a banker in 1940, isn't 00:07:00.790 --> 00:07:03.610 it my job to avoid risk? If the government says 00:07:03.610 --> 00:07:05.709 these areas are risky, isn't it just smart business 00:07:05.709 --> 00:07:07.910 to not lend there? That's the argument they used. 00:07:07.930 --> 00:07:10.050 Of course, they cloaked it in the language of 00:07:10.050 --> 00:07:12.569 actuarial risk. But here's the catch. And it's 00:07:12.569 --> 00:07:15.279 the whole point. The risk was a self -fulfilling 00:07:15.279 --> 00:07:18.220 prophecy created by the map itself. Walk me through 00:07:18.220 --> 00:07:20.279 that. How does the map create the risk? Okay, 00:07:20.319 --> 00:07:21.759 imagine you live in a neighborhood that gets 00:07:21.759 --> 00:07:24.639 marked red. Suddenly, no bank will give you a 00:07:24.639 --> 00:07:27.139 loan to buy a house there. More importantly... 00:07:27.230 --> 00:07:29.689 No bank will give you a home improvement loan, 00:07:29.810 --> 00:07:32.470 so your roof starts to leak. You can't fix it. 00:07:32.490 --> 00:07:34.649 You can't fix it. The landlord who owns the building 00:07:34.649 --> 00:07:37.589 next door, he can't get a loan to update the 00:07:37.589 --> 00:07:40.209 plumbing, so he lets it rot. Business owners 00:07:40.209 --> 00:07:42.310 can't get loans to open shop. Right, because 00:07:42.310 --> 00:07:44.629 capital has been cut off. The money stick it 00:07:44.629 --> 00:07:47.509 has turned off. Exactly. So the physical stock 00:07:47.509 --> 00:07:50.709 of the neighborhood deteriorates. Property values 00:07:50.709 --> 00:07:53.529 tank. Because nobody can get a mortgage to buy 00:07:53.529 --> 00:07:55.910 the homes, meaning you can only sell for cash, 00:07:56.089 --> 00:07:59.730 usually at a loss. Which shrinks the pool of 00:07:59.730 --> 00:08:02.129 potential buyers to almost nothing. Almost nothing. 00:08:02.449 --> 00:08:04.870 Five years later, the surveyors come back, look 00:08:04.870 --> 00:08:06.829 at the peeling paint and the crumbling porches 00:08:06.829 --> 00:08:10.470 and say, see, we were right. This area is hazardous. 00:08:10.829 --> 00:08:13.230 But it's hazardous because they choked it. It's 00:08:13.230 --> 00:08:15.149 like tying a tourniquet around someone's leg 00:08:15.149 --> 00:08:17.449 and then blaming the leg for turning purple. 00:08:17.589 --> 00:08:20.290 That is the perfect analogy. And the FHA didn't 00:08:20.290 --> 00:08:22.649 just passively observe this. They enforced it. 00:08:22.790 --> 00:08:25.750 To get that lucrative FHA mortgage insurance, 00:08:26.029 --> 00:08:28.850 which protected the bank if the borrower defaulted, 00:08:28.889 --> 00:08:31.949 the bank had to follow the map. Ah, so there 00:08:31.949 --> 00:08:34.070 was a financial incentive to discriminate. A 00:08:34.070 --> 00:08:36.389 huge one. If you wanted the government's backing, 00:08:36.610 --> 00:08:39.490 you had to play by their rules. And their rules 00:08:39.490 --> 00:08:41.769 were racist. And what did that look like in terms 00:08:41.769 --> 00:08:44.409 of numbers? The numbers are staggering. Between 00:08:44.409 --> 00:08:48.870 1945 and 1959, less than 2 % of all federally 00:08:48.870 --> 00:08:51.190 insured home loans went to African Americans. 00:08:51.450 --> 00:08:54.460 Less than 2 % during the post -war boom. The 00:08:54.460 --> 00:08:56.600 biggest economic expansion in modern history. 00:08:56.759 --> 00:08:58.799 The biggest housing boom in American history. 00:08:59.019 --> 00:09:02.340 The era that built the white middle class. The 00:09:02.340 --> 00:09:05.460 GI Bill, the suburbs, Levittown, all of that 00:09:05.460 --> 00:09:07.740 wealth creation was subsidized by the government. 00:09:07.799 --> 00:09:10.179 And black Americans were systematically locked 00:09:10.179 --> 00:09:12.320 out of the building. So the American dream was, 00:09:12.460 --> 00:09:16.259 by design, not for everyone. By design. And it 00:09:16.259 --> 00:09:18.570 wasn't just mortgages, was it? If you mark a 00:09:18.570 --> 00:09:21.909 neighborhood as red, as hazardous, that signal 00:09:21.909 --> 00:09:24.509 travels. It's not just the bank manager looking 00:09:24.509 --> 00:09:26.870 at the map. That's right. Once you draw a hazardous 00:09:26.870 --> 00:09:29.070 line around a community, other industries take 00:09:29.070 --> 00:09:31.889 note. The web of denial spreads. Let's talk about 00:09:31.889 --> 00:09:33.629 insurance. Right, because you can't really have 00:09:33.629 --> 00:09:35.889 a mortgage without home insurance. It's the safety 00:09:35.889 --> 00:09:38.669 net. If the house burns down, the bank wants 00:09:38.669 --> 00:09:41.360 to know they get paid. Exactly. Post -World War 00:09:41.360 --> 00:09:44.820 II, homeowners insurance became standard. But 00:09:44.820 --> 00:09:47.279 urban historians like Bench Annsfield have found 00:09:47.279 --> 00:09:49.820 that insurance companies instituted rigid redlining 00:09:49.820 --> 00:09:52.639 policies. So they had their own maps. They had 00:09:52.639 --> 00:09:54.519 their own maps or they used the government's. 00:09:54.559 --> 00:09:57.500 There's a specific piece of evidence from 1964, 00:09:57.960 --> 00:10:00.879 an Aetna Billiton advising underwriters to literally 00:10:01.789 --> 00:10:05.610 use a red line around questionable areas on their 00:10:05.610 --> 00:10:08.490 maps. So even in the swinging 60s, long after 00:10:08.490 --> 00:10:10.850 this was supposedly known to be a problem, they 00:10:10.850 --> 00:10:12.990 were still using the red pen. They were. And 00:10:12.990 --> 00:10:15.110 the New York Urban Coalition put it perfectly 00:10:15.110 --> 00:10:18.250 in 1978. They said, a neighborhood without insurance 00:10:18.250 --> 00:10:20.629 is a neighborhood doomed to death. Doomed to 00:10:20.629 --> 00:10:23.299 death. That's bleak. It is, because if you can't 00:10:23.299 --> 00:10:25.139 insure a property, you can't sell it, you can't 00:10:25.139 --> 00:10:27.059 buy it, and you certainly can't build wealth 00:10:27.059 --> 00:10:29.700 from it. It freezes the real estate market completely. 00:10:29.860 --> 00:10:32.220 It's a death sentence. It even trickled down 00:10:32.220 --> 00:10:34.299 to things that seem totally unrelated to high 00:10:34.299 --> 00:10:36.899 finance. I saw a note in the research about pizza 00:10:36.899 --> 00:10:39.649 delivery. It sounds trivial compared to mortgages, 00:10:39.710 --> 00:10:43.169 but yes, this is about the daily indignities 00:10:43.169 --> 00:10:45.750 of living in a redlined area. It's about the 00:10:45.750 --> 00:10:48.529 quality of life. The sources mentioned that grocery 00:10:48.529 --> 00:10:51.269 chains and even pizza delivery companies would 00:10:51.269 --> 00:10:54.529 redline areas refusing service or investment. 00:10:54.750 --> 00:10:56.409 They literally wouldn't deliver. They wouldn't 00:10:56.409 --> 00:10:59.610 deliver. Or, more systemically, if you can't 00:10:59.610 --> 00:11:01.289 get a grocery store to open in your neighborhood 00:11:01.289 --> 00:11:03.830 because corporate HQ has redlined the zip code, 00:11:04.009 --> 00:11:06.480 what do you get? You get a food desert. You get 00:11:06.480 --> 00:11:08.720 gas station food and convenience stores. Exactly. 00:11:08.779 --> 00:11:11.559 Or what activists now call food apartheid because 00:11:11.559 --> 00:11:14.299 desert implies it's a natural phenomenon. This 00:11:14.299 --> 00:11:17.000 was a man -made decision. It forces residents 00:11:17.000 --> 00:11:20.179 to travel further and pay more for basic nutrition. 00:11:20.500 --> 00:11:23.139 It's the poverty tax. Yeah. It is expensive to 00:11:23.139 --> 00:11:25.700 be poor. It's expensive to be poor and it's exhausting. 00:11:26.039 --> 00:11:28.289 So you can't buy a house. You can't insure the 00:11:28.289 --> 00:11:30.769 house if you manage to buy it. And you can't 00:11:30.769 --> 00:11:32.750 even get a fresh vegetable or pizza delivered 00:11:32.750 --> 00:11:36.029 to your door. It's total isolation. It is economic 00:11:36.029 --> 00:11:38.970 suffocation. And that creates a deep systemic 00:11:38.970 --> 00:11:41.909 desperation. And that desperation leads us to 00:11:41.909 --> 00:11:44.889 the next and arguably darker phase of this history. 00:11:45.289 --> 00:11:48.029 Because eventually the laws changed. The civil 00:11:48.029 --> 00:11:50.389 rights movement happened. The Fair Housing Act 00:11:50.389 --> 00:11:53.590 of 1968 made redlining denying loans illegal. 00:11:54.250 --> 00:11:56.710 But the banks didn't just say, OK, we'll treat 00:11:56.710 --> 00:11:59.929 everyone fairly now. They figured out a new strategy. 00:12:00.210 --> 00:12:02.169 And this is where it gets really interesting 00:12:02.169 --> 00:12:04.950 or really infuriating. We move from redlining 00:12:04.950 --> 00:12:08.110 to reverse redlining. Correct. It's a pivot. 00:12:08.230 --> 00:12:11.610 Classic redlining is, I won't lend to you because 00:12:11.610 --> 00:12:14.539 of where you live. Reverse redlining is, I will 00:12:14.539 --> 00:12:16.600 specifically target you because of where you 00:12:16.600 --> 00:12:19.320 live, but I'm going to give you a terrible, expensive, 00:12:19.559 --> 00:12:22.539 predatory loan. So instead of starving the neighborhood, 00:12:22.840 --> 00:12:25.039 they decided to poison it. That is a very apt 00:12:25.039 --> 00:12:28.019 way to put it. The mechanism works because, remember, 00:12:28.240 --> 00:12:30.500 these neighborhoods had been starved of credit 00:12:30.500 --> 00:12:33.429 for decades. There was no competition. If you 00:12:33.429 --> 00:12:35.590 lived in a black neighborhood in Chicago or Baltimore, 00:12:35.789 --> 00:12:37.889 you didn't have five banks competing for your 00:12:37.889 --> 00:12:39.789 business. You had no options. You had no options. 00:12:40.190 --> 00:12:42.809 So when a lender finally showed up offering money, 00:12:43.029 --> 00:12:45.070 people were desperate to say yes. They'd been 00:12:45.070 --> 00:12:48.289 told no their entire lives. But why would a bank 00:12:48.289 --> 00:12:51.009 want to give out bad loans? I thought the whole 00:12:51.009 --> 00:12:52.909 point of banking was lending to people who can 00:12:52.909 --> 00:12:55.700 pay you back. If you give someone a loan they 00:12:55.700 --> 00:12:58.200 can't afford, don't you lose money when they 00:12:58.200 --> 00:13:00.940 default? Ah, see, that's the old model of banking. 00:13:01.379 --> 00:13:04.159 By the 2000s, the banking model had changed. 00:13:04.220 --> 00:13:07.159 This is the era of securitization. Okay, that's 00:13:07.159 --> 00:13:09.490 a big word. Break it down. Banks weren't keeping 00:13:09.490 --> 00:13:11.610 the liens they made. They weren't holding them 00:13:11.610 --> 00:13:14.649 on their books. They were bundling them up by 00:13:14.649 --> 00:13:18.269 the thousands, good loans, bad loans, all mixed 00:13:18.269 --> 00:13:20.649 together and selling them to Wall Street as bonds, 00:13:20.710 --> 00:13:23.009 as mortgage -backed securities. The big short 00:13:23.009 --> 00:13:26.210 stuff. Exactly. The bank made its money off the 00:13:26.210 --> 00:13:29.009 fees for originating the loan. Once they sold 00:13:29.009 --> 00:13:31.230 it, the risk wasn't theirs anymore. It was some 00:13:31.230 --> 00:13:33.840 pension funds problem in Norway. So they had 00:13:33.840 --> 00:13:35.700 no incentive to make sure the loan was actually 00:13:35.700 --> 00:13:37.580 a good one. They had an incentive to make as 00:13:37.580 --> 00:13:39.740 many loans as possible as quickly as possible. 00:13:39.899 --> 00:13:41.980 And this created a perverse incentive called 00:13:41.980 --> 00:13:44.799 the yield spread premium. Yield spread premium. 00:13:44.919 --> 00:13:47.220 That sounds like jargon designed to hide something 00:13:47.220 --> 00:13:50.259 nasty. Break that down for us. It was nasty. 00:13:50.419 --> 00:13:52.960 Essentially, it was a kickback, a bonus paid 00:13:52.960 --> 00:13:55.559 to loan officers if they could get a borrower 00:13:55.559 --> 00:13:57.700 to sign a loan with a higher interest rate than 00:13:57.700 --> 00:14:01.220 they actually qualified for. Wait, pause. You're 00:14:01.220 --> 00:14:04.120 saying if I walk into a bank with perfect credit 00:14:04.120 --> 00:14:07.960 and I qualify for a 4 % interest rate, the loan 00:14:07.960 --> 00:14:11.059 officer gets a bonus for tricking me into a 7 00:14:11.059 --> 00:14:14.590 % rate? Yes, that's exactly what it means. They 00:14:14.590 --> 00:14:16.610 made more money by selling you a worse product. 00:14:16.750 --> 00:14:18.649 It's like going to a doctor who gets a bonus 00:14:18.649 --> 00:14:20.769 for prescribing you a drug that makes you sicker. 00:14:20.809 --> 00:14:23.129 That's just fundamentally corrupt. And this is 00:14:23.129 --> 00:14:25.009 where the racial targeting becomes surgical. 00:14:25.450 --> 00:14:28.190 The Wells Fargo investigation is the smoking 00:14:28.190 --> 00:14:31.009 gun here. It showed that they specifically targeted 00:14:31.009 --> 00:14:33.909 emerging markets, their internal code word for 00:14:33.909 --> 00:14:36.789 black communities. Emerging markets. Right. They 00:14:36.789 --> 00:14:38.330 knew these communities had been historically 00:14:38.330 --> 00:14:40.870 excluded and might not have the financial literacy 00:14:40.870 --> 00:14:43.490 or the. generational experience to spot a bad 00:14:43.490 --> 00:14:46.549 deal. They saw vulnerability and exploited it. 00:14:46.610 --> 00:14:48.950 They exploited the desperation created by the 00:14:48.950 --> 00:14:51.830 original redlining. Explicitly. The evidence 00:14:51.830 --> 00:14:54.309 in the affidavits from former loan officers is 00:14:54.309 --> 00:14:57.870 stomach -churning. Wells Fargo cultivated relationships 00:14:57.870 --> 00:15:00.909 with centers of influence, specifically black 00:15:00.909 --> 00:15:04.289 churches. The churches. Yes. They held wealth 00:15:04.289 --> 00:15:06.830 -building seminars after Sunday service. The 00:15:06.830 --> 00:15:09.090 pastor, trusting the bank, would endorse them 00:15:09.090 --> 00:15:11.610 from the pulpit. The bank would make a donation 00:15:11.610 --> 00:15:13.690 to the church for every application filled out. 00:15:13.950 --> 00:15:17.090 That is distinctively evil. Using the pulpit 00:15:17.090 --> 00:15:20.210 to sell subprime toxic assets to your own congregation. 00:15:20.210 --> 00:15:22.970 It was a betrayal of trust on a massive scale. 00:15:23.029 --> 00:15:25.529 And here's the data point that destroys the it's 00:15:25.529 --> 00:15:28.649 just economics argument. A high income black 00:15:28.649 --> 00:15:31.490 borrower, someone earning over $68 ,000 a year 00:15:31.490 --> 00:15:34.549 in the 2000s, was almost twice as likely to get 00:15:34.549 --> 00:15:37.029 a subprime loan as a low income white borrower. 00:15:37.279 --> 00:15:39.200 Let me say that again. A high income black person 00:15:39.200 --> 00:15:41.580 was a bigger subprime target than a low income 00:15:41.580 --> 00:15:43.460 white person. It wasn't about income. It wasn't 00:15:43.460 --> 00:15:45.379 about credit score. It was a race tag. It was 00:15:45.379 --> 00:15:47.960 about race. And the internal communications proved 00:15:47.960 --> 00:15:50.620 it. The lawsuit revealed that loan officers referred 00:15:50.620 --> 00:15:53.539 to black borrowers as mud people and called the 00:15:53.539 --> 00:15:57.399 subprime products ghetto loans. Mud people. That 00:15:57.399 --> 00:16:01.720 is just it's pure hate masked as banking. It 00:16:01.720 --> 00:16:04.080 means you realize that the mentality of the 1937 00:16:04.080 --> 00:16:07.279 map didn't die. It just put on a different suit 00:16:07.279 --> 00:16:09.879 and learned some new jargon. It did. And while 00:16:09.879 --> 00:16:12.240 Wells Fargo settled that lawsuit for one hundred 00:16:12.240 --> 00:16:14.940 and seventy five million dollars regarding discrimination 00:16:14.940 --> 00:16:17.840 between 2004 and 2009, they weren't the only 00:16:17.840 --> 00:16:20.240 ones. This was an industry wide practice. Right. 00:16:20.340 --> 00:16:22.480 Who are the others? Associated Bank settled for 00:16:22.480 --> 00:16:24.879 two hundred million for rejecting black and Latino 00:16:24.879 --> 00:16:28.259 applicants in Chicago and Milwaukee. Hudson City 00:16:28.259 --> 00:16:30.519 Savings Bank settled for thirty three million 00:16:30.519 --> 00:16:32.899 for avoiding majority minority communities. That's 00:16:32.899 --> 00:16:35.379 classic redlining. And for their broker. election 00:16:35.379 --> 00:16:37.259 practices. And there was a recent one too, right? 00:16:37.379 --> 00:16:40.500 Yes. City National Bank paid $31 million just 00:16:40.500 --> 00:16:44.019 last year in 2023 to resolve redlining allegations. 00:16:44.480 --> 00:16:46.399 2023. That's what I want listeners to catch. 00:16:46.519 --> 00:16:48.759 We started talking about 1937, but we are talking 00:16:48.759 --> 00:16:50.840 about settlements happening now. This is an ancient 00:16:50.840 --> 00:16:53.000 history. It's current events. Because the practice 00:16:53.000 --> 00:16:56.299 creates a legacy that is very, very hard to undo. 00:16:56.440 --> 00:16:58.820 And that brings us to the economic fallout. We 00:16:58.820 --> 00:17:00.649 need to talk about the racial wealth gap. Because 00:17:00.649 --> 00:17:02.850 wealth isn't just about income, what you make 00:17:02.850 --> 00:17:05.730 in a year. It's about assets, what you own and 00:17:05.730 --> 00:17:09.130 what you pass down. Home equity, stocks, savings. 00:17:09.490 --> 00:17:11.549 Right. It's the difference between being able 00:17:11.549 --> 00:17:13.910 to pay rent and being able to pay for your kid's 00:17:13.910 --> 00:17:16.349 college without loans. It's the safety net. Exactly. 00:17:17.240 --> 00:17:19.119 There's a study on intergenerational mobility 00:17:19.119 --> 00:17:21.059 that highlights a stuck -in -place phenomenon. 00:17:21.480 --> 00:17:24.099 It shows that black children born in the bottom 00:17:24.099 --> 00:17:27.819 income quintile, the poorest 20%, have only a 00:17:27.819 --> 00:17:31.000 2 .5 % chance of rising to the top quintile. 00:17:31.000 --> 00:17:33.980 Only 2 .5%. For white children born in that same 00:17:33.980 --> 00:17:37.460 bottom quintile, that chance is 10 .6%. That 00:17:37.460 --> 00:17:40.140 is a massive difference in opportunity. It basically 00:17:40.140 --> 00:17:42.799 says the American dream. The idea that if you 00:17:42.799 --> 00:17:45.440 work hard, you rise up works four times better 00:17:45.440 --> 00:17:47.440 for one group than the other. And the raw wealth 00:17:47.440 --> 00:17:50.680 numbers are even starker. For every $100 in wealth 00:17:50.680 --> 00:17:52.559 that a white family holds, the average black 00:17:52.559 --> 00:17:57.920 family holds just $5 .04. $5 .04 versus $100. 00:17:58.220 --> 00:18:00.660 That's not a gap. That's a chasm. It's almost 00:18:00.660 --> 00:18:03.329 nothing. Think about what that $100 represents. 00:18:03.869 --> 00:18:06.009 It's a down payment on a first home for your 00:18:06.009 --> 00:18:08.329 kid. It's a safety net if you lose your job. 00:18:08.549 --> 00:18:11.230 It's the capital to start a small business. And 00:18:11.230 --> 00:18:14.049 if you only have $5? If you only have $5, you 00:18:14.049 --> 00:18:17.490 have no margin for error. One flat tire, one 00:18:17.490 --> 00:18:20.390 medical bill, and you spiral into debt. And a 00:18:20.390 --> 00:18:22.869 huge chunk of that disparity comes from home 00:18:22.869 --> 00:18:25.490 equity. Because the homes in those red line type 00:18:25.490 --> 00:18:28.130 D neighborhoods from the 30s... They still have 00:18:28.130 --> 00:18:30.509 lower values today. So the government effectively 00:18:30.509 --> 00:18:33.809 subsidized wealth creation for white families 00:18:33.809 --> 00:18:36.829 in the suburbs while suppressing it for black 00:18:36.829 --> 00:18:39.650 families in the cities. And now we are seeing 00:18:39.650 --> 00:18:42.670 the compound interest of that decision over 80 00:18:42.670 --> 00:18:45.289 years. Precisely. It's the compound interest 00:18:45.289 --> 00:18:47.809 of discrimination. And it affects business, too. 00:18:48.069 --> 00:18:50.109 A study by Dan and Mergluck showed that black 00:18:50.109 --> 00:18:52.309 neighborhoods receive fewer commercial loans 00:18:52.309 --> 00:18:54.470 even when you account for business density and 00:18:54.470 --> 00:18:56.329 credit quality. So you can't build a business 00:18:56.329 --> 00:18:58.529 to close the gap either. The machinery is still 00:18:58.529 --> 00:19:00.930 grinding. It just has different gears now. It 00:19:00.930 --> 00:19:03.410 feels like every deer is locked. Yeah. But it's 00:19:03.410 --> 00:19:05.289 not just money, is it? We have to talk about 00:19:05.289 --> 00:19:07.349 the physical toll. This is the part of the research 00:19:07.349 --> 00:19:09.690 that really surprised me. I knew about the money, 00:19:09.730 --> 00:19:12.150 but I didn't know about the health impact. If 00:19:12.150 --> 00:19:14.549 I walk from a historically green -lined suburb 00:19:14.549 --> 00:19:18.069 to a red -lined neighborhood today, what am I 00:19:18.069 --> 00:19:20.829 physically experiencing? You are experiencing 00:19:20.829 --> 00:19:22.950 a different environment entirely. And this is 00:19:22.950 --> 00:19:25.109 where we get into environmental racism. Okay. 00:19:25.170 --> 00:19:28.880 It turns out... Those hazardous red lines didn't 00:19:28.880 --> 00:19:32.160 just signal financial risk. They invited environmental 00:19:32.160 --> 00:19:35.720 hazards. African -Americans are 75 percent more 00:19:35.720 --> 00:19:38.380 likely to live near hazardous waste facilities. 00:19:38.660 --> 00:19:40.940 75 percent. That's not a coincidence. That's 00:19:40.940 --> 00:19:42.740 city planning. That's a choice someone made. 00:19:42.839 --> 00:19:45.680 It is. If you are a city planner in the 50s or 00:19:45.680 --> 00:19:48.240 60s deciding where to put a highway, a waste 00:19:48.240 --> 00:19:50.789 treatment plant. Or a refinery. Where do you 00:19:50.789 --> 00:19:53.190 put it? You face the least political resistance 00:19:53.190 --> 00:19:55.450 in the area with the least political power and 00:19:55.450 --> 00:19:57.190 the lowest property values. You put it in the 00:19:57.190 --> 00:19:59.009 red zone. You put it in the red zone. The source 00:19:59.009 --> 00:20:01.690 material mentions a specific refinery in Philadelphia 00:20:01.690 --> 00:20:04.789 Gray's Ferry. Yes, responsible for the majority 00:20:04.789 --> 00:20:07.009 of the city's toxic emissions. And who lives 00:20:07.009 --> 00:20:09.059 there? It's a community that was historically 00:20:09.059 --> 00:20:13.319 marginalized. A 2022 study looked at 202 cities 00:20:13.319 --> 00:20:16.220 and found that redlined areas had consistently 00:20:16.220 --> 00:20:19.880 higher levels of nitrogen dioxide and fine particulate 00:20:19.880 --> 00:20:22.400 matter in the air. So you are physically breathing 00:20:22.400 --> 00:20:25.380 worse air because of a map drawn. 80 years ago. 00:20:25.460 --> 00:20:27.920 Every single day. And it's not just the air, 00:20:28.039 --> 00:20:30.900 is it? It's the heat. The urban heat island effect. 00:20:31.019 --> 00:20:33.500 I've heard of this. Right. In many cities, the 00:20:33.500 --> 00:20:35.799 redlined neighborhoods are on average 5 to 12 00:20:35.799 --> 00:20:38.039 degrees hotter than the greenlined ones in the 00:20:38.039 --> 00:20:40.480 summer. 12 degrees. That's the difference between 00:20:40.480 --> 00:20:43.019 a hot day and a dangerous, life -threatening 00:20:43.019 --> 00:20:45.359 heat stroke. Why is it so much hotter? It comes 00:20:45.359 --> 00:20:48.420 down to impervious surfaces. Concrete, asphalt. 00:20:48.980 --> 00:20:51.779 Brick. These materials absorb solar radiation 00:20:51.779 --> 00:20:54.380 all day and radiate it back out at night. Like 00:20:54.380 --> 00:20:57.339 a giant radiator. Exactly. Green neighborhoods 00:20:57.339 --> 00:20:59.579 were designed with setbacks, lawns, and tree 00:20:59.579 --> 00:21:02.059 canopies. Red neighborhoods were zoned for high 00:21:02.059 --> 00:21:05.019 density, mixed use industry, and pavement. They 00:21:05.019 --> 00:21:07.380 have far less green space. So the city didn't 00:21:07.380 --> 00:21:09.480 plant trees there. And they often don't maintain 00:21:09.480 --> 00:21:12.609 the ones that are there. Cities often use property 00:21:12.609 --> 00:21:15.210 taxes to fund local maintenance, like parks departments. 00:21:15.569 --> 00:21:18.029 If you suppress the value of the homes via redlining, 00:21:18.230 --> 00:21:22.109 the tax base crumbles. No tax base means no budget 00:21:22.109 --> 00:21:24.690 for pruning trees or cracking up concrete to 00:21:24.690 --> 00:21:27.529 plant new ones, so you get a concrete oven. And 00:21:27.529 --> 00:21:29.470 that heat isn't just uncomfortable, it kills. 00:21:29.710 --> 00:21:33.200 It acts... as a stress multiplier. If you have 00:21:33.200 --> 00:21:35.359 asthma, which you're more likely to have because 00:21:35.359 --> 00:21:37.720 the zoning laws allowed the diesel bus depot 00:21:37.720 --> 00:21:40.859 to be built next to your house, the heat exacerbates 00:21:40.859 --> 00:21:43.579 it. We see higher rates of cardiac arrest during 00:21:43.579 --> 00:21:46.160 heat waves, specifically in these zip codes. 00:21:46.380 --> 00:21:48.839 This brings us to that shocking stat about life 00:21:48.839 --> 00:21:51.950 expectancy, the death gap. It's the most visceral 00:21:51.950 --> 00:21:54.210 outcome of all of this. In Baltimore, neighborhoods 00:21:54.210 --> 00:21:56.750 that were rated red have a life expectancy five 00:21:56.750 --> 00:21:58.690 years shorter than the green neighborhoods. Five 00:21:58.690 --> 00:22:01.250 years is a lot. It is. But in Richmond, Virginia, 00:22:01.490 --> 00:22:05.319 the gap is 21 years. Wait, what? 21 years? 21 00:22:05.319 --> 00:22:08.079 years. Between a historically black neighborhood 00:22:08.079 --> 00:22:10.240 and a nearby white one, it's one of the most 00:22:10.240 --> 00:22:12.920 extreme examples in the country. That is an entire 00:22:12.920 --> 00:22:16.220 generation of life lost. That's hard to even 00:22:16.220 --> 00:22:18.720 process. How is that possible? It includes higher 00:22:18.720 --> 00:22:21.460 odds of late -stage cancer diagnoses, lower screening 00:22:21.460 --> 00:22:25.200 rates. The sources say 64 % lower for colorectal 00:22:25.200 --> 00:22:27.920 cancer in redlined areas. And science is starting 00:22:27.920 --> 00:22:29.880 to look at this through the lens of epigenetics 00:22:29.880 --> 00:22:33.140 and allostatic load. Break that down. Epigenetics. 00:22:33.480 --> 00:22:36.420 Basically, the constant chronic stress of living 00:22:36.420 --> 00:22:40.099 in a loud, hot, polluted, financially precarious 00:22:40.099 --> 00:22:42.980 environment literally weathers the body. It keeps 00:22:42.980 --> 00:22:45.000 your cortisol levels, your stress hormone high 00:22:45.000 --> 00:22:47.839 constantly. Over time, that changes your DNA 00:22:47.839 --> 00:22:50.559 expression. It accelerates aging at a cellular 00:22:50.559 --> 00:22:53.160 level. So the map isn't just influencing your 00:22:53.160 --> 00:22:56.130 wallet. It is rewriting your biology. That's 00:22:56.130 --> 00:22:57.769 what the evidence is pointing towards. And then 00:22:57.769 --> 00:23:00.170 COVID -19 happened. And I imagine that just laid 00:23:00.170 --> 00:23:02.349 all of this bare. It was a perfect storm. It 00:23:02.349 --> 00:23:05.509 was a tragic real world experiment. When researchers 00:23:05.509 --> 00:23:08.450 overlaid maps of high COVID -19 impact infection 00:23:08.450 --> 00:23:11.269 rates, death rates, they matched almost perfectly 00:23:11.269 --> 00:23:14.349 with the 1930s HLC redlining maps. Because of 00:23:14.349 --> 00:23:17.450 everything we just said. Everything. overcrowding 00:23:17.450 --> 00:23:20.170 due to housing segregation, a higher percentage 00:23:20.170 --> 00:23:22.130 of essential workers who couldn't stay home and 00:23:22.130 --> 00:23:24.569 work on Zoom, and all those pre -existing conditions 00:23:24.569 --> 00:23:27.390 we just discussed, like asthma and heart disease 00:23:27.390 --> 00:23:30.430 caused by the environmental racism. So the machinery 00:23:30.430 --> 00:23:33.029 of redlining weakened the collective immune system 00:23:33.029 --> 00:23:35.430 of these neighborhoods, making them tragically 00:23:35.430 --> 00:23:37.869 vulnerable when the pandemic hit. That's a perfect 00:23:37.869 --> 00:23:39.589 way to put it. So we've covered the history, 00:23:39.750 --> 00:23:42.309 the economics, and the health. But now I want 00:23:42.309 --> 00:23:44.430 to pivot to the present. Because you mentioned 00:23:44.430 --> 00:23:47.089 earlier that the map has changed form. It's not 00:23:47.089 --> 00:23:49.630 paper anymore. It's digital. This is one of the 00:23:49.630 --> 00:23:52.430 most insidious mutations of redlining. Digital 00:23:52.430 --> 00:23:54.910 redlining. We think of the internet as this great 00:23:54.910 --> 00:23:57.950 equalizer, right? Information wants to be free. 00:23:58.450 --> 00:24:00.170 But you're saying the algorithms have learned 00:24:00.170 --> 00:24:02.470 the same bad habits. Algorithms are trained on 00:24:02.470 --> 00:24:05.799 data. If the historical data is biased, if it 00:24:05.799 --> 00:24:07.940 reflects decades of biased lending decisions, 00:24:08.319 --> 00:24:11.319 the algorithm learns that bias. It sees a correlation 00:24:11.319 --> 00:24:14.160 between a certain zip code and defaults, and 00:24:14.160 --> 00:24:16.640 it perpetuates the pattern without a human ever 00:24:16.640 --> 00:24:19.500 making a racist choice. The machine learns to 00:24:19.500 --> 00:24:22.940 be racist. Exactly. But it's also about how ad 00:24:22.940 --> 00:24:26.000 platforms work. Take the Facebook case from 2019. 00:24:26.559 --> 00:24:29.079 HUD, the Department of Housing and Urban Development, 00:24:29.160 --> 00:24:30.700 charged Facebook with housing discrimination. 00:24:31.369 --> 00:24:33.329 How does a social network discriminate in housing? 00:24:33.509 --> 00:24:36.630 That seems strange. Facebook allowed advertisers 00:24:36.630 --> 00:24:39.930 to target or, more importantly, exclude users 00:24:39.930 --> 00:24:43.829 based on affinity groups. So if I'm a landlord 00:24:43.829 --> 00:24:45.609 and I want to rent an apartment, I could tell 00:24:45.609 --> 00:24:48.170 Facebook, show this ad to people, but exclude 00:24:48.170 --> 00:24:50.470 anyone with an affinity for Hispanic culture. 00:24:50.750 --> 00:24:52.990 Wow. So they aren't drawing a red line around 00:24:52.990 --> 00:24:54.970 a neighborhood. They are drawing a red line around 00:24:54.970 --> 00:24:57.950 a user profile. It's redlining the person. not 00:24:57.950 --> 00:25:01.009 the place. Exactly. It's non -geographic redlining. 00:25:01.230 --> 00:25:03.690 It uses proxies. They might not have a checkbox 00:25:03.690 --> 00:25:05.950 that says race, but they use your interests, 00:25:06.150 --> 00:25:08.369 your likes, the zip code you log in from, and 00:25:08.369 --> 00:25:10.569 your browsing history to achieve the same exclusion. 00:25:10.849 --> 00:25:13.230 And it happens in milliseconds inside a black 00:25:13.230 --> 00:25:15.769 box that no regulator can easily say. And this 00:25:15.769 --> 00:25:17.849 extends to politics too, right? This isn't just 00:25:17.849 --> 00:25:20.690 about ads for apartments. Absolutely. The sources 00:25:20.690 --> 00:25:24.210 call it political redlining. Campaign managers 00:25:24.210 --> 00:25:27.049 use the same kind of data to decide who is worth 00:25:27.049 --> 00:25:30.130 talking to. They might restrict political information 00:25:30.130 --> 00:25:33.789 to specific demographics they see as likely voters. 00:25:33.930 --> 00:25:36.809 Or worse. Or worse, they identify communities 00:25:36.809 --> 00:25:39.450 to discourage from voting voter suppression efforts 00:25:39.450 --> 00:25:42.410 targeted with surgical precision based on data 00:25:42.410 --> 00:25:45.130 that correlates with race. They can micro target 00:25:45.130 --> 00:25:48.130 disinformation to specific groups to lower turnout. 00:25:48.710 --> 00:25:52.119 It's terrifying because it's invisible. At least 00:25:52.119 --> 00:25:54.000 with the old maps, you could go to the library, 00:25:54.079 --> 00:25:55.460 you could find the map, you could see the red 00:25:55.460 --> 00:25:57.500 line. With an algorithm, you don't even know 00:25:57.500 --> 00:26:00.019 you're being excluded. You just don't see the 00:26:00.019 --> 00:26:02.039 ad for the house. You don't see the ad for the 00:26:02.039 --> 00:26:05.819 job. Your world is quietly curated for you. That 00:26:05.819 --> 00:26:07.880 is the challenge of the 21st century. How do 00:26:07.880 --> 00:26:10.480 you audit a black box? How do you prove intent 00:26:10.480 --> 00:26:13.559 when the intent is just a mathematical correlation? 00:26:13.960 --> 00:26:15.579 Okay, we've been pretty heavy on the doom and 00:26:15.579 --> 00:26:17.319 gloom, and rightfully so. This is heavy stuff. 00:26:17.599 --> 00:26:19.920 But we can't talk about redlining without talking 00:26:19.920 --> 00:26:22.019 about the people who fought back. Because there 00:26:22.019 --> 00:26:23.859 were people who saw this machinery and tried 00:26:23.859 --> 00:26:26.380 to throw a wrench in the gears. Absolutely. We 00:26:26.380 --> 00:26:27.980 have to talk about the grassroots movements, 00:26:28.200 --> 00:26:31.380 specifically National People's Action, or NPA. 00:26:31.680 --> 00:26:34.500 This started in Chicago in the 1970s. And the 00:26:34.500 --> 00:26:36.289 leader was... wasn't a politician or a banker, 00:26:36.390 --> 00:26:38.450 right? She was just a regular person. No, it 00:26:38.450 --> 00:26:41.690 was Gail Sincotta. She was a mother, a Chicago 00:26:41.690 --> 00:26:44.309 housewife from the Austin neighborhood. She and 00:26:44.309 --> 00:26:47.150 a community organizer named Shell Trap realized 00:26:47.150 --> 00:26:49.529 something crucial. They looked around their neighborhood, 00:26:49.710 --> 00:26:52.089 which was changing rapidly, and they saw things 00:26:52.089 --> 00:26:55.450 decaying. But they realized it wasn't just bad 00:26:55.450 --> 00:26:57.849 landlords or bad neighbors. They saw the invisible 00:26:57.849 --> 00:27:00.750 hand of the banks. They did. They realized the 00:27:00.750 --> 00:27:03.349 banks were taking the community's deposits, their 00:27:03.349 --> 00:27:06.049 savings accounts, their paychecks, and refusing 00:27:06.049 --> 00:27:08.250 to lend that money back to the neighborhood for 00:27:08.250 --> 00:27:10.799 mortgages or homework. repairs. They were exporting 00:27:10.799 --> 00:27:13.500 the capital to the new Green Line suburbs. So 00:27:13.500 --> 00:27:15.579 what do they do? How do you fight a bank? They 00:27:15.579 --> 00:27:18.579 got loud. They organized protests. They did things 00:27:18.579 --> 00:27:20.859 that were considered really radical at the time. 00:27:20.980 --> 00:27:23.279 They would bus hundreds of people to the private 00:27:23.279 --> 00:27:25.740 homes of bank presidents on Sunday mornings to 00:27:25.740 --> 00:27:28.000 demand answers. Oh, wow. They took it right to 00:27:28.000 --> 00:27:30.069 their doorstep. They embarrassed the establishment 00:27:30.069 --> 00:27:34.670 and they fought for a specific tool disclosure. 00:27:35.109 --> 00:27:37.369 Transparency. Right. They knew they couldn't 00:27:37.369 --> 00:27:39.849 win if the data was secret. They demanded that 00:27:39.849 --> 00:27:42.700 banks reveal where they were lending. This pressure 00:27:42.700 --> 00:27:45.299 is what led directly to the Home Mortgage Disclosure 00:27:45.299 --> 00:27:49.000 Act, or HMDA, in 1975. HMDA. And the Community 00:27:49.000 --> 00:27:53.079 Reinvestment Act, the CRA, in 1977. The Community 00:27:53.079 --> 00:27:54.700 Reinvestment Act. That's the one that requires 00:27:54.700 --> 00:27:56.819 banks to serve the communities they are physically 00:27:56.819 --> 00:27:59.839 located in. Right. It sounds so obvious. It sounds 00:27:59.839 --> 00:28:02.400 obvious, but it was revolutionary. It essentially 00:28:02.400 --> 00:28:05.740 made redlining illegal. It forced banks to demonstrate 00:28:05.740 --> 00:28:08.220 that they were lending in low to moderate income 00:28:08.220 --> 00:28:11.019 areas if they wanted regulatory approval for 00:28:11.019 --> 00:28:13.099 things like mergers or new branches. It was a 00:28:13.099 --> 00:28:15.420 massive victory. It didn't fix everything, but 00:28:15.420 --> 00:28:17.920 it gave activists the data they needed to sue. 00:28:18.099 --> 00:28:19.619 And there were banks that tried to do it right, 00:28:19.680 --> 00:28:23.119 too. We should mention SureBank. Shore Bank is 00:28:23.119 --> 00:28:25.819 a fascinating case study. Founded in 1973 in 00:28:25.819 --> 00:28:28.859 Chicago, their entire mission was to combat redlining 00:28:28.859 --> 00:28:31.319 by lending specifically in black communities. 00:28:31.480 --> 00:28:33.480 So they were a greenlining bank. You could call 00:28:33.480 --> 00:28:35.700 them that. They proved that you could lend in 00:28:35.700 --> 00:28:38.380 these neighborhoods and be profitable. They debunked 00:28:38.380 --> 00:28:40.720 the myth that these areas were inherently hazardous. 00:28:41.099 --> 00:28:43.299 They showed that if you provide capital, the 00:28:43.299 --> 00:28:45.500 neighborhood thrives. Proved that the risk was 00:28:45.500 --> 00:28:49.240 manufactured all along. And today... The fight 00:28:49.240 --> 00:28:52.259 continues in new ways. I saw notes about covenants. 00:28:52.519 --> 00:28:55.759 Yes. Many old property deeds, I mean thousands 00:28:55.759 --> 00:28:59.380 of them all over the country, still have racially 00:28:59.380 --> 00:29:02.319 restrictive covenants written on them. What does 00:29:02.319 --> 00:29:04.319 it mean? It's language that says, for example, 00:29:04.579 --> 00:29:07.160 this property shall not be sold to anyone of 00:29:07.160 --> 00:29:10.519 African or Asian descent. Now, those are unenforceable 00:29:10.519 --> 00:29:12.619 by law since the Supreme Court struck them down 00:29:12.619 --> 00:29:15.220 in 1948, but they are still physically written 00:29:15.220 --> 00:29:17.559 on the paper deeds in county offices. It's a 00:29:17.559 --> 00:29:19.960 ghost in the paperwork. A remnant of that old 00:29:19.960 --> 00:29:22.119 machinery. It is, and it's a painful reminder 00:29:22.119 --> 00:29:25.019 for homeowners. States like California, Washington, 00:29:25.220 --> 00:29:27.599 and Minnesota are now passing laws to help homeowners 00:29:27.599 --> 00:29:29.920 formally remove that racist language from their 00:29:29.920 --> 00:29:32.579 deeds. It's symbolic, but it's about cleaning 00:29:32.579 --> 00:29:35.160 up the historical record. And there is also work 00:29:35.160 --> 00:29:38.019 being done in the medical field. This loops back 00:29:38.019 --> 00:29:40.319 to the health impacts we discussed. This is really 00:29:40.319 --> 00:29:42.599 encouraging. Wayne State University in Detroit 00:29:42.599 --> 00:29:44.740 has a course called Healing Between the Lines. 00:29:44.880 --> 00:29:47.180 Healing Between the Lines. I like that. They 00:29:47.180 --> 00:29:49.279 are teaching medical students about redlining. 00:29:49.480 --> 00:29:51.900 The idea is that a doctor needs to understand 00:29:51.900 --> 00:29:55.579 that a patient's asthma isn't just biology, it's 00:29:55.579 --> 00:29:59.799 geography and history. If you treat the asthma 00:29:59.799 --> 00:30:02.380 with an inhaler, but send the patient back to 00:30:02.380 --> 00:30:04.759 a moldy apartment in a heat island next to a 00:30:04.759 --> 00:30:07.859 refinery, you aren't really healing them. That's 00:30:07.859 --> 00:30:10.740 powerful. Treating the patient means understanding 00:30:10.740 --> 00:30:13.319 the map they live in. You have to treat the environment, 00:30:13.440 --> 00:30:15.819 too. Exactly. It's about a more holistic view 00:30:15.819 --> 00:30:18.740 of public health. So we've gone from 1935 to 00:30:18.740 --> 00:30:21.339 today. We've seen the maps, the devastating statistics, 00:30:21.640 --> 00:30:24.779 the health impacts, and the digital future. If 00:30:24.779 --> 00:30:26.579 we have to boil this down, what does this all 00:30:26.579 --> 00:30:28.359 mean for the listener? Why does this matter to 00:30:28.359 --> 00:30:30.140 someone who maybe just bought their first house 00:30:30.140 --> 00:30:32.809 or is just renting an apartment today? I think 00:30:32.809 --> 00:30:35.029 the most important takeaway is destroying the 00:30:35.029 --> 00:30:37.670 myth of the level playing field. You often hear 00:30:37.670 --> 00:30:40.730 this sentiment of pull yourself up by your bootstraps. 00:30:40.789 --> 00:30:44.069 It's a core American ethos. Sure. But when you 00:30:44.069 --> 00:30:46.230 look at the history of redlining, you see that 00:30:46.230 --> 00:30:48.349 for 80 years, the government and the financial 00:30:48.349 --> 00:30:51.289 sector actively conspired to steal the boots 00:30:51.289 --> 00:30:54.190 from entire communities. They stole the boots 00:30:54.190 --> 00:30:56.470 and then they charged extra for the laces. Right. 00:30:56.839 --> 00:30:59.559 It explains why we see the disparities we see 00:30:59.559 --> 00:31:01.660 today. It's not a culture problem. It's not an 00:31:01.660 --> 00:31:05.119 effort problem. It's a structural problem. The 00:31:05.119 --> 00:31:07.500 machinery was designed to produce this result. 00:31:07.680 --> 00:31:10.220 And the machine is still humming in the background, 00:31:10.400 --> 00:31:12.660 just maybe a little quieter now, hidden behind 00:31:12.660 --> 00:31:15.220 algorithms and credit scores. And that leads 00:31:15.220 --> 00:31:16.980 me to my final thought for everyone listening. 00:31:17.119 --> 00:31:20.180 We talked about algorithmic redlining. The original 00:31:20.180 --> 00:31:22.599 redlining was done with pen and paper, and it 00:31:22.599 --> 00:31:26.890 took 50 years of activism to outlaw. Today? Decisions 00:31:26.890 --> 00:31:29.410 about your mortgage, your job application, your 00:31:29.410 --> 00:31:32.109 insurance rates are made by AI. In a fraction 00:31:32.109 --> 00:31:33.849 of a second. So the question I want to leave 00:31:33.849 --> 00:31:37.390 you with is, how do we police redlining that 00:31:37.390 --> 00:31:40.829 happens in milliseconds inside a black box? If 00:31:40.829 --> 00:31:43.349 we don't figure out how to audit the code, are 00:31:43.349 --> 00:31:46.690 we just doomed to repeat 1937 forever, but at 00:31:46.690 --> 00:31:48.589 the speed of light? It's the question of our 00:31:48.589 --> 00:31:51.650 time. Awareness is the first step, but vigilance 00:31:51.650 --> 00:31:54.630 is the price of fairness. On that note, thank 00:31:54.630 --> 00:31:56.890 you for taking this deep dive with us. It wasn't 00:31:56.890 --> 00:31:58.809 a light topic, but it's an essential one if you 00:31:58.809 --> 00:32:00.930 want to understand how our cities and our society 00:32:00.930 --> 00:32:02.990 actually work. Always a pleasure to connect the 00:32:02.990 --> 00:32:05.190 dots. We'll see you on the next deep dive. Keep 00:32:05.190 --> 00:32:05.769 asking questions.