The downgrading of the US debt by Standard and Poor’s on Friday, Aug 5th, has been extensively covered in the news, so I won’t recap what we all know. But there are a few important points I would like to make regarding the topic.
1. Our customer deposits are protected and safe. First County Bank is itself in a sound position, due to conservative reserves that exceed requirements by a substantial margin. In addition, the Federal Deposit Insurance Corporation has the resources it needs to protect customer deposits. The F.D.I.C. is funded by premiums paid by the banks and is backed by the banking industry with $1.53 trillion in capital to assure its continued strength.
2. Despite the downgrading of our debt, the US economy is still the largest in the world and our bonds are rated by Standard and Poor’s as AA+–and still rated by Moody’s as AAA—and the strongest evidence of the world’s regard was provided on Monday, the 8th, after the rating change, when demand for US Treasuries remained strong enough to increase their price, and thus to drive interest rates down, not up, on the news.
3. I want to affirm the Bank’s long-term faith in the economy and in the investment markets. We believe that a recovery,while slow in coming, is inevitable, and we will continue to offer our customers support and advice and a safe haven for their funds during the near-term and the long-term investment horizon.