California Plans $5 Billion Loan Package To Combat U.S. Debt Drama
A small group of college students who are Facebook friends make an appeal to President Obama and Congressional leaders meeting inside the White House to reach a compromise on the debt limit, in Washington, Saturday, July 23, 2011. (AP Photo/J. Scott Applewhite)
California plans to borrow a tidy $5 billion from private investors should the federal government fail to raise its debt ceiling, as reported by KABC. The current limit on U.S. borrowing is $14.3 trillion.
The treasurer’s office is taking this precaution in the event of chaotic global credit markets, as it is unclear whether California would be able to borrow such a large sum should economic turmoil ensue.
State Treasurer Bill Lockyer has already selected and asked a group of banks, credit unions and investment firms for bids on private loans.
The loan is slated for one week before the federal government faces default unless a deal is reached to extend the government's borrowing authority. Congress must approve a plan to raise America’s debt ceiling before the August 2 default deadline.
California’s current credit ranking, “A-,” is the lowest of all 50 states.
The loan’s effect on California taxpayers is unclear.
President Obama rejects a short-term deal on debt limit, as reported by CBS News.
