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Investigative Classics is a weekly feature on noteworthy past examples  of the reporting craft.  

Racial disparities regarding wealth and opportunity have many causes, but none so clear-cut as redlining.

This practice – the unwillingness to lend in an area because of race – was standard operating procedure in many parts of the country at least until 1968, when it was outlawed by the Fair Housing Act. Even then, like so many aspects of the Jim Crow era, redlining persisted despite the edicts of Congress and the courts.

The Atlanta Journal-Constitution shined a light on this dark practice in its 1988 series, “The Color of Money,” that earned a Pulitzer Prize in Investigative Reporting for reporter Bill Dedman.

The ambitious four-part series crunched vast quantities of data – see how they did it here – to describe a massive effort of exclusion in the metro Atlanta from 1981 through 1986. In January 1989, Dedman expanded his reporting to reveal how his local findings reflected a national trend. He wrote:

Blacks are rejected more than twice as often as whites when they apply for home loans at America's savings and loans, according to government records of $1 trillion in loan applications analyzed by The Atlanta Journal-Constitution.

The records of 10 million applications from every savings and loan in the country reveal a lending gap so pervasive and so wide that in much of the country high-income blacks are rejected at the same rate as low-income whites. …

In integrated neighborhoods, the rejection patterns appear to penalize both white and black homebuyers. Homebuyers of any race in upper-income areas that are at least 25 percent minority were rejected at the same rate as homebuyers in poor white neighborhoods. 

All told, the Journal-Constitution reported, “50 percent of blacks who fill out loan applications receive loans, compared with 65 percent of whites.” The findings were striking because they suggested an uptick in redlining since the 1970s.

Throughout the country, high-income blacks were rejected more often than low-income whites in 85 of the 100 largest metro areas in at least one of the past five years. In 35 of the 100 areas, high-income blacks were rejected more often than low-income whites in at least three of the five years.

The disparities appear to have increased substantially when compared with a more limited federal study of 17 cities in 1974 using data from both banks and savings and loans. The black-white gap has roughly doubled in 13 of the 17 cities: Atlanta, Baltimore, Bridgeport, Conn.; Buffalo, N.Y.; Chicago; Cleveland; Galveston-Texas City, Texas; Jackson, Miss.; Jersey City, N.J.; Memphis, Tenn.; Tampa-St. Petersburg, Fla.; Topeka, Kan.; and Washington. The gap narrowed in Montgomery, Ala.; San Antonio, Texas; San Diego, Calif.; and Tucson, Ariz.

The Journal-Constitution reported some of the negative consequences of being denied a loan:

Without equal access to credit, community leaders say they watch their neighborhoods slide. When people cannot borrow money to buy or fix up houses, property values stagnate or decline.

Credit discrimination also perpetuates differences in income and wealth between the races from generation to generation. Homeownership is the main way that American families accumulate and hold wealth. Americans borrow against their homes for education, for vacations, for emergencies, for retirement. For most parents, a home is the most valuable part of the estate they will leave to their children.

Evidence indicates that redlining is not as pervasive as it was in the 1980s. But recent reports suggest it is still a problem in some communities and that its legacy is felt across the nation.

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