2007: The Great Recession: The Loss of Homes & Jobs

Due to its long-segregated neighborhoods and municipalities, St. Louis was seriously affected by the Great Recession.

Also known as the subprime mortgage crisis, the crash began in December 2007 and lasted until June 2009. Banks like Wells Fargo and Bank of America saw an opportunity to expand into a market desperate to own a home after decades of segregation and systemic racism that had forced them into renting. These lenders offered low-income African Americans what looked like a dream come true: low closing costs, low mortgage rates, and low monthly payments. What was kept hidden from many people of color were the terms of these subprime mortgages. As Coates (2014) notes,

When subprime lenders went looking for prey, they found black people waiting like ducks in a pen…in 2005, Wells Fargo promoted a series of Wealth Building Strategies seminars…but the “wealth building” seminars were a front for wealth theft. In 2010, the Justice Department filed a discriminatory suit against Wells Fargo alleging that the bank had shunted blacks into predatory loans regardless of their creditworthiness. 

When interest rates rose on adjustable rate mortgages (ARMs)–which were the loans given to low-income people of color–their monthly payments increased. As banks bundled these loans and sold them to investors, rating agencies considered them a good risk, and so no one saw the crash coming. As interest rates rose in the mid-2000’s, more and more families missed their ever-increasing mortgage payments. And as more and more mortgage payments were missed, more and more banks, like Wells Fargo and Bank of America, foreclosed on properties that were, in most respects, dream homes for families who had been targeted for predatory loans. By July 2008, thousands of people in the St. Louis area had lost their homes due to foreclosure. 

The Great Recession further devastated the working class and African American communities in the St. Louis area with the production pauses and eventual closure of several factories in Fenton, Missouri, and in North St. Louis.

First, the crippling effect of the recession was exacerbated by the closure of the Chrysler minivan plant in Fenton, Missouri, causing a total loss of “43,000 jobs, when factoring the impact the layoffs had on suppliers and businesses that catered to its workers” (Delach Leonard, 2018, par. 17). Then the situation further deteriorated for the St. Louis African American community when in May 2009, Chrysler closed its north St. Louis plant “which built Ram trucks” (Delach Leonard, 2018, par. 32). Similarly, in December 2008, “U.S. Steel idle[d] its century-old Granite City plant for the first time in its history and laid off about 2,000 workers. The plant would reopen in mid-2009, but halt steel production again in 2015” (Delach Leonard, 2018, par. 23).

The compounding losses of homes and jobs particularly affected those poorer, working class communities within the St. Louis area. Though the Great Recession had affected the entire region, the years of strategic municipal siloing of low-income housing paired with industrial zoning practices led to a situation where communities of color in St. Louis City and North St. Louis County experienced a disproportionate impact.