3 The CRA was intended to reinforce the other statutes in addressing redlining, wherein banks declined to make loans or extend other financial services in neighborhoods of largely Black and other minority households, in part based on government maps that literally delimited these neighborhoods in red as high credit risks (figure 1).
If the residual value of the balance sheet or “public equity” is negative, then somebody has to pick up the bill at some point: either taxes have to increase – implying a loss for the taxpayer; or government expenditure has to be reduced – implying a loss for those who benefit from public services; or the value of the debt has to be reduced – which means a loss for the creditors.