Friday, May 24, 2013

Municipal Bankruptcies in California

At the end of last month, Marc Joffe and I submitted a report titled "Assessing Municipal Bond Default Probabilities" to our sponsors for peer-review.  We are currently addressing some criticisms received from referees.  However we plan to finish these revisions by June 30th, and will update the link then.  In the meantime, we'd welcome further comments on our paper.

After submitting the draft report last month, I turned my attention to other things.  Work has been hectic for me since then, with the end of the semester, graduation, and numerous other demands on my time, so that I haven't been able to keep up with some of the media attention this report has already received, until now.

Even though the report is still a work in progress, several reporters have picked up on it, including this one from the Bond Buyer. My co-author was quoted in stories by FT.com and in a USAToday.com op-edThis Bloomberg.com story discusses our report, and so did this Reuter's MuniLand blog post.

A recent USA Today story explores the same question we do, and (I believe) refers to our study but does not mention it by name.  Interestingly, USA Today provides a ranking of cities likely to default, though unlike ours, their methodology is not transparent (i.e. I can only guess at how they came up with their list.)

I am very happy to have the chance to continue to work with Marc Joffe on this.  Currently, his company's webpage is hosting a site that makes the data we gathered for this study easily accessible to the general public.  The data we gathered for this study is also available as an Excel file.  This data was gathered by downloading the Comprehensive Annual Financial Reports from individual city's webpages, and then entering the data into spreadsheet format.  Thus, a major contribution of our study is making this data available.  As you can see from reading through my previous blog posts, I am a big believer in making data accessible and open source production processes, and it is great to team up with someone who shares these beliefs.

Now that my attention is back on this project, I plan to blog more about this project in the days and weeks ahead.  There is lots more work to do in this area and I hope to be able to dedicate more time to exploring the fascinating and important issues surrounding municipal bankruptcy.
Please feel free to contact me if you have any questions and I will do my best to respond!