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Abstract: 

University of Michigan Professor Dr. Davon Norris joins Kristina Vaccaro, Director and Fixed Income Tax-Exempt Analyst for Bank of America, N. A., to discuss Dr. Norris’s research on political and systemic racial bias in government ratings. In one analysis, for example, using the factors in Moody’s rating “scorecard” to predict credit ratings, Norris shows how credit performance on scorecard criteria translates into higher or lower scores, and therefore lower or higher interest burdens, varies depending on the political leaning of the municipality—a poor-performing conservative city is estimated to have an almost two-notch higher rating than an average-performing liberal-leaning city. This article is based on a panel entitled “Credit Bias Part 2: Political & Systemic Racial Bias in Government Ratings,” presented at the 2023 Annual Conference of the National Federation of Municipal Analysts held in Lake Buena Vista, Florida, May 16-19, 2023.

Keywords: City Credit Ratings; City Median Family Income; Liberal and Conservative Biases in Credit Ratings

Affiliations:  1: University of Michigan; 2: Bank of America, N. A..