From the book Palo Alto: A History of California, Capitalism, and the World by Malcolm Harris I learned the etymology of the term redlining:
In his acclaimed 2017 book, The Color of Law: A Forgotten History of How Our Government Segregated America, Richard Rothstein uses Palo Alto as a paradigmatic case. The federal government acted as a superbank, backing private loans under a relatively broad set of requirements. Just as California’s farms changed to fir the Bank of Italy‘s conditions, the housing industries shaped themselves according to the government’s vision, which they helped set. [Herbert] Hoover‘s lost child, the FHA still had plenty of his DNA, and the lenging program was designed to cost the government nothing. As long as it only backed solid enough borrowers, the tide of economic prosperity ensured that people could repay the loads and that the Treasury would never have to step in. That meant establishing data about where the good loans were, so the HOLC produced color-coded maps diving urban regions into districts based on the investability: Red was for black, birthing the term redlining for the practice of isolating black and integrated neighborhoods from FHA loan-eligible areas. That’s what happened when capitalists made the rules.
Harris proceeds to describe redlining’s impact on California migrants, mainly the Mexicans and Japanese whom were invited due to labor shortages and were also redlined, making it very difficult to find housing where the jobs were.
The irony is that the Bank of Italy started as a bank by Italians, for Italians, to loan money to the North Beach Italians the way local Irish and German banks loaned money to their ethic communities (p33):
While the existing players sat in their offices waiting for the money to walk in the door, the Bank of Italy pursued every Italian dollar in the state, and not only as deposits. They encouraged clients to buy into the bank, reserving shares to sell to working-class depositors. … when the state officially legalized branch banking, with its satellite storefronts, the Bnk of Italy turned Italian communities throughout the state into financial outposts. … By getting regular people’s money in the the bank and lending it out, Giannini made the savings of the Italian working class available to capitalists at his discretion, accelerating the state’s growth and tying its fortunes to the bank.
The Bank of Italy made Italians feel valued and yet directly caused redlining to come about because the bank didn’t apparently trust other ethnic groups, a similar distrust to what Italians felt when arriving in California and leading to creation of the bank. Because that’s capitalism, I guess.
