The federal government launched a New Deal program that would reinforce segregationist boundaries in Austin and throughout the country. The program was designed to restore household wealth during the Great Depression, but it excluded most minority communities through redlining — the practice of denying or charging more for goods and services in certain neighborhoods, usually determined by race.
Government-backed mortgages wouldn’t be offered in redlined districts, and virtually all the minority neighborhoods were redlined. In Austin, the largest redlined section encompassed Koch and Fowler’s “negro district.”
Because the Homeowners Loan Corporation would not provide mortgages in those districts, most of the nation’s African-American residents could not access one of the most significant efforts to build household wealth in U.S. history. [DISCRIMINATORY POLICIES – AUSTIN]