In early 1975, Chicago community organizer Gale Cincotta announced a damning report on her city’s financial institutions. She and other activists had spent the past three years accusing these firms of “redlining”—refusing to make loans in aging, integrated, and majority-minority neighborhoods. Bankers, for their part, had spent the past three years denying the accusations. But in 1975, for the first time, activists had evidence to support their claims. A new federal law gave them access to financial institutions’ records, which they analyzed to reveal where the institutions issued loans compared to where their offices were located. The patterns were striking. Local banks collected savings from the city’s older, racially changing neighborhoods, but rarely lent money there. On the West Side, one financial institution collected over $10 million in deposits from customers but made zero mortgage loans in return. Of the forty-one Chicago banks examined, thirty-nine lent less than 0.1 percent of their combined $42 billion in assets to redlined neighborhoods over the course of an entire year. In contrast, these institutions lent plenty of mortgage money in the suburbs and in wealthier neighborhoods. What was happening, the activists argued, was that “the banks serve as one-way conduits for the deposits from the [city] neighborhoods, taking them in and depositing them along the lake shore or in the suburbs.”...
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