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Drawing the Redline

December 21, 2011

Bank of America will be paying $335 million to clean up Countrywide’s mess for engaging in the practice of redlining its clients. No, Countrywide didn’t push its clients past 5,000 RPM, but it (now Bank of America) was found guilty of pushing “minorities into risky subprime loans rather than into safer prime loans” by charging “higher interest rates and other housing-related fees to African American and Latino home buyers than to white applicants with comparable income levels and credit scores.”

There’s no doubt this pricing discrimination contributed to the creation/bursting of the housing bubble and our current recession. Steering a majority of minorities into loans they could not afford to repay created a lot of wealth for another type of minority while creating racially segregated, and not to mention low-income, neighborhoods, some of which have many empty houses due to all the foreclosures.

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