California may need emergency loan

Published: 9:23PM Friday October 03, 2008 Source: Reuters

• Email this article
• Print this article
• Text size + -
• Share on Twitter
• Share on Facebook

California may need an emergency loan of up to $US7 billion from the federal government within weeks, the Los Angeles Times on Friday quoted Governor Arnold Schwarzenegger as saying in a letter to US Treasury Secretary Henry Paulson.
   
In the letter dated October 2, Schwarzenegger called for the passage of the $US700 billion financial industry bailout plan which the US House of Representatives is expected to vote on on Friday, the Times said.
   
"Absent a clear resolution to this financial crisis, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing," Schwarzenegger wrote in the letter, according to the paper.
   
A top Schwarzenegger aide followed up the letter with a call to the Treasury secretary on Thursday night, the paper said.
   
The California governor's office and the US Treasury department could not immediately be reached for comment.
   
Credit markets worldwide have frozen up in the two weeks since the failure of US investment bank Lehman Brothers, prompting concerns that issuers will run into trouble rolling over previous loans.
   
In the letter, Schwarzenegger noted California's plans to issue $US7 billion in revenue anticipation notes in the coming days to fund short-tern cash needs - now put in doubt by the crisis in the credit markets.
   
On Thursday, California Treasurer Bill Lockyer said the most populous US state's cash reserves may be exhausted near the end of October, and various state-funded services are at risk of grinding to a halt.
   
He said the planned notes sale was at risk from the uncertainty gripping financial markets and the US government's lack of response to it.
   
Lockyer, who manages the bonds of the biggest issuer of public debt in the United States, said the credit market was simply frozen because financial institutions were afraid to commit capital amid enormous uncertainty.
   
"The economic fallout from this national credit crisis continues to drain state tax coffers, making it even more difficult to weather the continuation of frozen credit markets for any length of time. I will continue to do all I can to encourage the passage of the emergency rescue plan," Schwarzenegger wrote. 

• Email this article
• Print this article
• Text size + -
• more...
• Share on Twitter
• Share on Facebook

Business News Video

• Mediation provides no answers for port workers (4:11) 
• Spending down during dreary kiwi summer (1:48) 
• Midday Markets: February 10 (1:59) 

Business News

• Greece to vote on unpopular austerity bill
• Cloudy, wet summer dampens business spirits watch
• Shares rise, Fletcher reaches 4-month high
• Auckland block sells to car park operator
• Port talks bring no resolution to strikes watch
• NZX to run Fonterra's trading platform
• Weak spots despite unemployment rate drop watch

Most Popular

1. Large hailstones pelt cars and homes in Sydney
2. Repeated industrial rope falls 'not good enough' watch
3. Boy missing in river now presumed drowned watch
4. Evacuations after mall deemed quake risk watch
5. Arnold and Sly out of action

rssLatest News

• 20:05 Lee tied third at Spyglass Hill watch
• updated 19:54 Large hailstones pelt cars and homes in Sydney
• updated 19:34 One dead, three injured in Hawke's Bay crash
• 19:16 New Zealand fall to Uzbekistan in Davis Cup
• updated 19:08 Boy missing in river now presumed drowned watch

Advertising