Money and Cities

You’ve probably heard about residential mortgage-backed securities and the global financial crisis. But did you know corporate mortgage-backed securities were reshaping American cities at the same time?

During the Great Recession, the housing bubble took much of the blame for bringing the American economy to its knees, but commercial real estate also experienced its own boom-and-bust.

“… somebody would still be interested in the building they were putting up because it was viewed less as a space and place for economic activity to take place in and more as a financial commodity” 

Professor Rachel Weber

We’re talking to Rachel Weber about her book From Boom to Bubble, and the role of tax increment financing and corporate mortgage-backed securities in the city of Chicago. Rachel debunks the idea that booms occur only when cities are growing and innovating. Instead, she argues, even in cities experiencing employment and population decline, developers rush to erect new office towers and apartment buildings when they have financial incentives to do so.

Focusing on the main causes of overbuilding during the early 2000s, Rachel documents the case of Chicago’s “Millennial Boom,” showing that the Loop’s expansion was a response to global and local pressures to produce new assets. An influx of cheap cash, made available through the use of complex financial instruments, helped transform what started as a boom grounded in modest occupant demand into a speculative bubble, where pricing and supply had only tenuous connections to the market. Innovative and compelling, From Boom to Bubble is an unprecedented historical, sociological, and geographic look at how property markets change and fail—and how that affects cities.

In Chicago, for example, law firms and corporate headquarters abandoned their historic downtown office buildings for the millions of brand-new square feet that were built elsewhere in the central business district. What causes construction booms like this, and why do they so often leave a glut of vacant space and economic distress in their wake?


Professor Rachel Weber is an urban planner, political economist, and economic geographer who researches the relationship between finance and the built environment. Rachel’s focus has been on instruments (tax increment financing, auction rate securities, crowdfunding, mortgage backed securities, tax credits) and infrastructures (school facilities, toll roads, commercial real estate). She is interested in why cities adopt certain instruments and how the use of particular methods of raising capital affects who benefits from and pays for urban infrastructures. In her work she has advanced the concept of financialisation as shorthand for how these tools bring new politics, kinds of knowledge, and risks to bear on policy and development decisions.

This post is based on the blurb for Rachel’s book, which you can read here FROM BOOM TO BUBBLE: HOW FINANCE BUILT THE NEW CHICAGO

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