Gov. Arnold Schwarzenegger just sent another letter to Treasury Secretary Henry Paulson regarding the possibility that California might need a $7B loan to get it through the month.
In the letter, the governor says State Treasurer Bill Locker is in the process of trying to sell the first $4 billion in "bond anticipation notes." If that happens -- Massachusetts was able to get a loan yesterday -- it could make it easier for California to get all the credit it needs to the market to make it through the month.
But Lockyer hasn't yet sold the notes, so Schwarzenegger's letter leaves the door open on California seeking a federal loan if the credit market remains in a semi-panic.
Gov's letter is on the jump.
October 9, 2008
The Honorable Henry M. Paulson, Jr.
Secretary of the Treasury
Dear Mr. Secretary,
I congratulate you on the passage of the Emergency Economic Stabilization Act (EESA). As I've said before, bringing stability and liquidity to the
Last week, I alerted you to the immediate challenges
Yesterday, California State Treasurer Bill Lockyer officially began the process of selling the first $4 billion tranche of $7 billion in Revenue Anticipation Notes, our normal short-term cash flow borrowing instrument. Although it's difficult to assess market conditions with perfect precision, the passage of EESA and ongoing actions by the Federal Deposit Insurance Corporation and the Federal Reserve System appear to be improving liquidity. We are also encouraged by the state of