Search Results
Showing results 1 to 10 of approximately 10.
(refine search)
Newsletter
How FAIR Plans Confronted Redlining in America
Access to financial services, including insurance, is vital for the growth and development of communities. Without banks issuing residential mortgages and business loans, it is extremely difficult for people to purchase homes and grow their businesses. Without property insurance, banks will be reluctant to provide such loans. Thus, the inability to access property insurance makes communities more vulnerable to cycles of disinvestment and decline. In this Chicago Fed Letter, I examine the Fair Access to Insurance Requirements (FAIR) plans, how they addressed the issues of insurance ...
Working Paper
The Effects of the 1930s HOLC \"Redlining\" Maps
In the wake of the Great Depression, the Federal government created new institutions such as the Home Owners' Loan Corporation (HOLC) to stabilize housing markets. As part of that effort, the HOLC created residential security maps for over 200 cities to grade the riskiness of lending to neighborhoods. We trace out the effects of these maps over the course of the 20th and into the early 21st century by linking geocoded HOLC maps to both Census and modern credit bureau data. Our analysis looks at the difference in outcomes between residents living on a lower graded side versus a higher graded ...
Newsletter
Neighborhood Redlining, Racial Segregation, and Homeownership
Redlining was the practice of selectively classifying neighborhoods as most likely to default on repayment of a mortgage loan. Houses in redlined neighborhoods held little value as collateral, and lenders would only offer mortgage loans for these houses at above-average interest rates. Over time, these neighborhoods had the largest concentrations of African Americans. The September 2021 issue of Page One Economics explains how residents in redlined neighborhoods could not afford to become homeowners and accumulate wealth at the rates other groups did. It also points out how only when the ...
Working Paper
Does Giving CRA Credit for Loan Purchases Increase Mortgage Credit in Low-to-Moderate Income Communities?
Under the Community Reinvestment Act (CRA) banks can fulfill their affirmative obligation to meet local credit needs by lending in low-to-moderate-income (LMI) communities or by purchasing loans made by others. This paper evaluates whether giving CRA credit for purchases has had its intended effect of increasing LMI credit availability by making LMI loans more liquid. Analyses using a regression discontinuity design show that CRA increases loan purchases without affecting LMI originations. Instead, banks purchase loans that are temporarily diverted from the Government Sponsored Enterprises, ...
Working Paper
New Evidence on Redlining by Federal Housing Programs in the 1930s
We show that the Federal Housing Administration (FHA), from its inception in the 1930s, did not insure mortgages in low income urban neighborhoods where the vast majority of urban Black Americans lived. The agency evaluated neighborhoods using block-level information collected by New Deal relief programs and the Census in many cities. The FHA's exclusionary pattern predates the advent of the infamous maps later made by the Home Owners' Loan Corporation (HOLC) and shows little change after the drafting of those maps. In contrast, the HOLC itself broadly loaned to such neighborhoods and to ...
Newsletter
Examining Racial Wealth Inequality
The March 2022 issue of Page One Economics covers the topics of income and wealth through the lens of racial inequality. Learn the difference between income and wealth, how the racial wealth gap has endured over time, and the reasons that certain groups have been limited in their wealth-building potential.
Working Paper
Long-term Effects of Redlining on Environmental Risk Exposure
Climate change exacerbates environmental risks such as intensifying extreme precipitation and heat events. Urban design, in turn, can further amplify these background climate stressors through the well-known urban heat island and rainfall effects, which are largely controlled by the local dominance of impervious land covers, surface roughness, and lack of mature tree canopy. While the extent to which present-day exposures and outcomes related to these climate-exacerbated environmental risks in urban areas can be linked to historical policies has received recent attention (Mujahid et al. 2021; ...
Periodic Essay
Reflections: Place Matters
Today, I would like to share some reflections on place and why it matters when working toward expanding economic opportunity and inclusion. A body of research has shown that economic opportunity is tied not only to individual circumstances but also to place. Upward mobility – the probability that a child will be better off economically than his or her parents – is dependent not only on the family’s characteristics but also on neighborhood characteristics such as neighborhood income, the quality of schools, access to social services, and racial integration.
Working Paper
The Lasting Impact of Historical Residential Security Maps on Experienced Segregation
We study the impact of the 1930s HOLC residential security maps on experienced segregation based on cell phone records which track visits out of and into home neighborhoods. We compare adjacent neighborhoods, one of which was assigned a lower grade for creditworthiness than the other. We use a sample of neighborhood borders which, based on estimated propensity scores, are likely to have been drawn for idiosyncratic reasons. Neighborhoods on the lower graded side of the border are associated with more visits to other historically lower graded destination neighborhoods. Today, these destination ...
Working Paper
The Long-Run Effects of the 1930s HOLC “Redlining” Maps on Place-Based Measures of Economic Opportunity and Socioeconomic Success
We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps on census tract-level measures of socioeconomic status and economic opportunity from the Opportunity Atlas (Chetty et al. 2018). We use two identification strategies to identify the long-run effects of differential access to credit along HOLC boundaries. The first compares cross-boundary differences along actual HOLC boundaries to a comparison group of boundaries that had similar pre-existing differences as the actual boundaries. A second approach uses a statistical model to identify boundaries ...