How has redlining historically affected wealth accumulation among marginalized communities, and what are the policy implications of this practice?

Redlining was a practice in the United States where banks and insurance companies refused to provide services to certain neighborhoods, often based on racial demographics. This meant that families in marginalized communities could not get loans to buy homes or start businesses, which are important ways to build wealth. For example, a family denied a mortgage in a redlined area missed the chance to own a home, which typically increases in value over time, leaving them at a financial disadvantage compared to families in more privileged areas. The long-term consequence is that many marginalized communities have less wealth and fewer opportunities, which perpetuates cycles of poverty and inequality. Policy implications of redlining highlight the need for reforms that promote fair lending practices and support investment in historically disadvantaged neighborhoods to help close the wealth gap.