- I Need to…
Will County Treasurer Steve Weber released a White Paper today explaining what it could mean for Will County if the government defaults on its debt next week. The White Paper, called “What a US Default or Credit Downgrade Means for Will County,” is available online here.
“Hardly anyone has explained what a default really means to you and me,” Weber said, “We’ve written this White Paper so county residents can understand what we are doing to keep their money safe.”
“We also explain what we intend to do if the government defaults,” Weber added, “We’re offering our plan as advice for local school districts, park boards, and towns and villages who have concerns over protecting their own investment portfolios.”
“It is our job to protect taxpayer’s money even if you don’t believe the government will default next week,” Weber said, “Our top priority is the safety of the money entrusted to us.”
How a US Downgrade Affects Will County’s Credit Rating
“Our research uncovered a surprising risk for local government and private companies,” Weber said, “If the US debt is downgraded next week, credit rating agencies could downgrade local government and private companies as well. There is a rule that says no one can have a better credit rating than the national government. In Will County, a downgrade of the US could bring a downgrade to us as well through no fault of our own.”
Quoting from the White Paper, here is an explanation of the Sovereign Ceiling Rule:
“According to the world’s largest and most prominent asset manager, BlackRock, a downgrading of US debt will cause several unintended consequences. The most important to Will County (and other local government) is a concept in finance called the ‘sovereign ceiling rule.’
“The sovereign ceiling rule says that, with few exceptions, the private sector cannot have a higher credit rating than the government. This follows the fact that the S&P said they would downgrade other AAA-rated companies such as Fannie Mae and US insurance agencies.
“The sovereign ceiling rule also can apply to municipal bond issuers, such as Will County.”
Recommendations for Local Government
Because Will County is one of the area’s largest government investors, the Treasurer’s Office describes its strategy in detail as an advisory for other local governments and private companies. The recommendations, which cover default and credit downgrades of current holdings, are available in the White Paper on line at www.WillCountyTreasurer.com.
About the Will County Treasurer’s Office
The Will County Treasurer’s Office receives tax revenue and other public money, safely keeps those funds, and disburses that money pursuant to law. The office also provides guidance for the management of long-term debt and investments with the assistance of the Will County Board’s Finance Committee and the County’s Director of Finance.
As County Treasurer, Steve Weber, CPA (R-Mokena) is dedicated to providing reliable banking services for county agencies, secure investment of your tax dollars, and trustworthy accounting services that provide transparency for county residents. The office has a professional staff of 21 employees.
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