Reading risk : credit rating and the politics of municipal debt

Since the Great Recession, the dynamics of municipal debt have moved to the center of American urban politics. In this context, the once obscure credit rating agencies have become key institutions in the processes of financialization and austerity unfolding across the municipal landscape. The following thesis seeks to interrogate this new urban “regime of financial control,” unpacking the credit rating process and exploring how local actors relate to its imperatives. Drawing on interviews with credit rating analysts in New York and local financial professionals in New Jersey, it follows the ratings from the headquarters of the agencies to the city finance departments which mediates their impact on urban everyday life. Chapter 1 introduces the thesis by discussing the “return” of the urban fiscal crisis since the breakdown of the subprime mortgage market in 2007-2008, arguing that the dynamics of the municipal bond market are crucial to comprehended at this historical moment. Thereafter, Chapter 2 provides an overview of that market and its shifting character since the 1970s. Building on these foundations, Chapter 3 opens the “black box” of the rating process. Drawing on renewed interest in value theory under conditions of financialization, it argues that the rating process pivots around a key contradiction between on the one hand understanding the concrete uncertainties of investing in place and on the hand inevitably having to abstract from these to compare investment risk across space. Stepping outside the agencies, Chapter 4 examines the nature of credit rating power. Drawing on a case study of New Jersey it argues that, rather than descending from above, the urban politics of “creditworthiness” is co-constructed in the interactions between rating analysts, local financial professionals and the state’s regulation of municipal finance. Lastly, Chapter 5 concludes the thesis by highlighting the violent effects of municipal indebtedness.Arts, Faculty ofGeography, Department ofGraduat