A video is circulating of US presidential candidate and former New York City mayor Michael Bloomberg defending “redlining” – a long-sanctioned practice of racial discrimination in housing and financial services.

Redlining is the practice of denying housing, services and products to particular neighbourhoods, and takes its name from the literal red lines that would be drawn around those areas on city maps by agencies and businesses.

Banks, lenders and federal agencies deliberately used redlining to target and exclude neighbourhoods of colour, meaning that residents would find it hard or impossible to access credit, loans or mortgages. Congress has legislated against the practice in various ways over the years, starting with the Fair Housing Act of 1968.

On the tape, Bloomberg blames the ban on redlining for the 2008 financial crisis, saying that the practice had prevented banks from issuing predatory loans to low-income people with bad credit.

“Redlining, if you remember, was the term where banks took whole neighbourhoods and said, ‘People in these neighbourhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas.’

“There was a lot of pressure on banks to make loans to everyone ... and then Congress got involved – local elected officials, as well – and said, ‘Oh that’s not fair, these people should be able to get credit.’

“And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.”

A campaign spokesperson defended the remarks, saying: “He’s saying that something bad – the financial crisis – followed something good, which is the fight against redlining that he was part of as Mayor.”

But in a Twitter thread responding to the video, Nikole Hannah-Jones, co-founder of the Ida B Wells Society for Investigative Reporting, said the reality of redlining did not match Bloomberg’s description.

“Redlining was an explicitly racist policy that ensured that until 1968, 98 per cent of federally insured loans went to white Americans. It created one of largest white affirmative action programmes we’ve seen and is a direct cause of the devastating black/white wealth gap.

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“The impact of redlining is still felt, the harms still devastate, as identical homes in black neighbourhoods are worth less than those in white neighbourhoods, black people were pushed into predatory loans, and entire communities face generational disinvestment. I’m disgusted.”