California wants a piece of TARP
Hey, the amorphous TARP bailout program has been used for everything else under the sun, why not as a cover for debt-laden California?
Barney Frank thinks it’s a peachy idea:
California Treasurer Bill Lockyer on Wednesday formally requested federal help to backstop a wave of short-term borrowing the cash-strapped state will need to undertake this summer.
In a letter to U.S. Treasury Secretary Timothy F. Geithner, Lockyer asked the government to in effect guarantee the state’s debt against default, so that investors would be willing to provide the financing at reasonable interest rates…
…Major banks typically provide that guarantee, but Lockyer said they aren’t willing this time to do so on their own.
“The enormous size of the required funding together with the state’s current credit condition and the continued weakness of the municipal finance market . . . make it highly unlikely that the state can access the short-term market for its borrowing based on its own credit,” Lockyer told Geithner.
As the state’s cash shortage has worsened in the recession, Lockyer has for months been lobbying for some kind of federal backstop on new debt issuance, which he has said should be extended to all state and local governments to help pare their borrowing costs.
Lockyer has an ally in Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services committee.
Although Frank is in the process of drafting legislation that could create a long-term federal reinsurance program for municipal bonds, it isn’t clear what can get through Congress, or how quickly. Frank told Bloomberg News on Tuesday that he was “working with the administration now . . . to do something short-term” for California.
Lockyer said he believed that the Treasury could create a debt-backstop plan under terms of the financial-system bailout bills passed by Congress in 2008 and this year.
Under his proposal, major banks would provide their customary guarantees of the state’s short-term debt, and the Treasury then would agree to stand behind the banks: If the state couldn’t repay the debt on time the Treasury would agree to buy the debt, becoming a creditor to the state.
Although critics say U.S. help for California would discourage the state from solving its structural budget problems, Lockyer has insisted that his plan wouldn’t be a federal handout. The state would pay a fee to the Treasury for the temporary backstop, he said.
Riiiiight. And next they’ll tell us that taxpayers will actually make money off this “investment.”
Message from taxpayers to Washington: Let California fail.
***
Related: Firesale! Anyone wanna buy San Quentin prison? The L.A. Coliseum. Going, going…
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Categories: Arnold Schwarzenegger, Subprime crisis
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I’ll put in a bid for the Golden Gate Bridge, since I can’t get Brooklyn’s.:-)
At this point it may be better to give California back to Mexico. But they have to promise to take “Ah-nuld.”
Something tells me they won’t take the deal.
On the upside, California doesn’t have stock, so at least when they default, we won’t be forced to take ownership like we did the auto industry.
Why don’t they sell San Francisco?
Out state is doomed because the politicians here still don’t get the spending part of the problem. You hear them claim they are doing “cuts,” but in reality nothing is getting cut because what they claim as “cuts” are increases in spending that are not going to happen.
Evidently Obama’s economic “geniuses” have decided that we can all become wealthy by “lending” money we don’t have to each other.
Of course these nimrods come from the same school of economic thought that invented Social Security and other federal Ponzi schemes.
In a way you have to admire their ability to be utterly moronic and wrong every time and yet still get up and offer the same old programs, time after time, with a straight face. Is this chutzpah or is it meshuga Yiddish?
WarEagle82, too late, living here in the Coachella Valley I can tell you first hand California has already been given back to Mexico.
Barney Frank is for this deal?
You mean the same Barney Frank that said he made a mistake when he passed an ammendement that TAX DOLLARS won’t go to organizations under investigation for VOTER FRAUD so therefore tossed it out!… you mean that clear headed, good judgment, looking out for TAX PAYERS congressman? That one huh? Uh yeah right!
California = Welfare-a-fornia.
A fish rots from the Head down…and Talk about your Dysfunction from the top down. California..one “Effed” up Gov’t Operation.
What would be really great is if the Congress allowed the individual states to print money again. That way Ahnold could monetize his own debt. It would be fun to compare how California Dollars held up to, say, Montana dollars…
It’s not just Arnold. He had good ideas going in a Governor, but he couldn’t beat the state legislature, and the press sided against him (naturally). He was losing popularity, and then decided to be “bipartisan”, and that’s when it stop from “going downhill” to “falling off the cliff”.
Our local and federal governments are going to learn some hard lessons about fiscal responsibility. And while they’re learning, we’re going to suffer.
Years ago, when I had just moved to San Francisco (and have moved OUT of California since then) Diane Feinstein had just ended her term as mayor. The new mayor, on his first day in office, was confronted by the city controller, who told him the city was BROKE. Mayor Feinstein had spent ALL the surplus she’d inherited when she first came into office, and as a result the city’s bond rating collapsed upon her exit. Feinstein had given the money away to any and all comers, with no consequences to herself (elected to Congress), while the taxpayers had to pony up for higher taxes to pay for higher borrowing costs by the city due to her incompetent governance. THIS is what it’s like having a Democrat liberal as mayor. It costs taxpayers money every single time it occurs.
Heads on a Stick!
If the fed gov’t bails out California, five bucks says Obama fires Arnold.
And what does Barney Fwank get out of that partnership????? Cause you know, he’ll be getting something.
I thought California IS a piece of TARP
I don’t think Obama will fire Ah-nuld after he nationalizes California. But I do think he will make him cut his advertising budget…
That sweet little number in aubergine, the one with the cuffs and feathers…
You know, I always here suggestions about states (like Texas) seceeding from the union, but what I’d really like to hear is an honest debate about expulsion. I wonder if it’s even possible. Kalifornia goverment is a disgrace, and I thank God every day that I no longer live there.
We can give New England back to England and Mexifornia back to Mexico. That would solve a lot of problems.
And we could give DC back to… Oh, wait, nobody would take DC!
Hugo Chavez would pay big bucks for it, add Hollywood to sweeten the deal, then most of our issues would be done with.
We could also give Seattle and Detroit to Canada. Although I’m not so sure Canada would want ‘em.
Understated. Sacramento on its own is a boatload : )
Um, hate to tell you, but that IS how banking works today. Look up Fractional Lending practices. Problem is that its essentialy a Ponzi scheme which only works in an expanding economy… Fractional Lending fails with any major problem in the eocnomy.
Message to DC from this California taxpayer: Let California fail. It’s the only way we will be able to slash government spending/jobs. We would rather be exporting teaching jobs than the high quality private sector jobs that are now leaving in droves to escape the hostile business environment.
The City of LA is suffering an unemployment rate that is at least 25%. Yet, every single one of those jobs lost was a private sector job. The public school population is in steep decline yet the LAUSD keeps hiring teachers while the already bloated admin budget keeps growing.
CA isn’t failing, it HAS failed.
So California wants to pay money they don’t have to get tax dollars tehy wouldn’t need if they actually lived within their means.
This is like giving an addict another fix so they can turn their life around!
California is a prime example of how Mexicans have gamed the system.
It’s legislation for illegals by anchor baby legislators.
CUT ALL ILLEGAL ALIEN SPENDING!
I wanna buy San Francisco – I’ll throw out all leftists and turn it into a right wing paradise where all will pay homage to the God of Irony lol
I assume you are referring to “fractional-reserve banking” but there is a difference between that and what we are doing now.
The feds are simply flooding the money supply with fiat scrip. Trillions of dollars of scrip have been “conjured” out of thin air in the last 8 months. And the feds are busily “lending” this imaginary scrip to anyone who will take it. And now the idiots in DC are trying to tell us we will make money doing so.
Inflating the money supply is, well, inflationary. And when inflation hits 8% or 15% or 25% a year (or a month) getting that 4% APR fee back on any money Mexifornia may have borrowed won’t seem like a great deal.
They must really think we are morons…
California needs to fail just like PasadenaPhil said. It is our only chance of whacking these idiots over the head and getting them in line. As far as giving back Cali to Mexico and having problem solved. You people better open your eyes. This problem is nationwide and growing. The person who said “anchor baby legislators voting solely for latino interests” could not have been more accurate.
Until California can enforce the border, and order all the illegal alien drains on social services of all kinds to “return forthwith to your place of origin, or the nearest convenient parallel dimension”, they will just keep running up the tab.
Mexifornia has failed. We can stop predicting it. It has happened. Gray Davis and Ahhhh-nuld have destroyed the state in the last decade.
The US central government is rapidly following the Mexifornia economic model. The only question is whether it will happen before or after 2012.
I am increasingly skeptical of the possibility of resolving these issues at the ballot box. Look at the reaction to Prop 8 in Mexifornia. Leftists don’t respect the ballot when it doesn’t go their way.
I fear for the future of my children and this nation.
Those two had plenty of destructive help from the loony legislature as well.
It was easier to re-call Davis, but the entire mob in Sacramento should have been sent packing. Preferably on rail…tarred and feathered, and that would be taking it easy on these clowns. Better would be a tree, rope, and some assembly for most of ‘em.
Look for the Obama administration to NOT let this crisis go to waste! Look for Federal government control of California in the near future.
As for the ‘Mayor Feinstein’ comments. As Mayor, Feinstein’s major fiscal accomplishment was getting SF military funding for ship building. As she added social give away programs on a grand scale, and destroyed SF’s budget. She then created a new ‘employer only’ tax in an effort to balance the budget. This caused several major long term employers (PG&E, Pacific Bell, Chevron, etc) to move many jobs out of SF. Feinstein declared victory and ran for senator!
SF has never been the same since. Even the short spike from the dot com bubble did not reach the previous levels.
Now, Feinstein wants to come back as governor. It would probably be a lot easier for her to simply be appointed as the new ‘Czar of California’ by the Obama administration!
doesn’t matter…the US is done for…we become (ARE) a fascist state…
Ah-nuuuld is making some really weird noises here in PSRK. He is threatening to cut services, release up to 40,000 inmates from PSRK prisons and sell PSRK property, including San Quentin and OC Fairgraounds.
And God save us from a “Governor Feinstein”. Thats’ just what PSRK needs, a person in charge SIGNING bills into law to make more money for her husband!
I really don’t understand how people can demand more government to fix the problems more government has caused over the last 60 years.
I guess it boils down to that old definition of insanity which is “doing the same thing over and over again and expecting a different outcome.”
Obama was elected, so they have reason to believe so.
Alas, the empirical evidence would tend to support that conclusion.
*I’m guessing California won’t be stepping up soon to reassert its’ 10th amendment position any time soon as other states have done; The state needs to be allowed to bleed out, then the resurrection can begin.
*And that square head of a Governor could make E-Verify mandatory for all government services, employment through employers, agencies, contractors and subs; The mass exodus south would begin, and California could have a balanced budget within 12 months.
*But no, instead they will take more of my dollars to waste, put Newsom in office, and have a gay old time, literally.
California. In Home Supportive Services.$6.7 billion Porkulus.SEIU…
Follow the dots.
“Union officials claim they are merely insisting that existing contracts between the unions and the State and/or Counties are followed. The SEIU and other state and county public employee unions have used their member’s mandatory dues, paid for by taxpayers, to donate millions to key legislative and initiative races around the State. The Los Angeles Times also reported the powerful SEIU set aside $1 million to support two statewide union backed 1A and 1F initiatives, both are lagging in recent polls.”
Marin Republican Examiner article
Funny how unions don’t care about the unilateral abrogation of other private contractual obligations that federal and state government officials are breaking.
And besides, bankruptcy sets aside those contractual obligations between parties. And the state of California is bankrupt, morally, politically and financially. Now they want Virginians and South Carolinians to pay for California union dues? I certainly don’t want to!
One down and 49 to go…………… Oh, by the way, screw the unions!
Maybe if Californians had not spent millions of dollars on sex-change operations, abortion-on-demand, chasing the Military our of town, paying school teachers to sit at home and do nothing, and protecting their salt marsh harvest mice, but I guess we all have our priorities.
I find it absolutely delicious that a state with all of those wealthy people is broke.
Oh, how I don’t hear the calls from actors to invest in Cali or to pool their own money to help their fellow man (because it ain’t Darfur or some other flavor of the month cause). The silence is deafening.
Maybe Bono could do a series of benefit concerts in Africa and Asia to raise money for suffering people in California.
He could call it “Save the Stars” or “Star-Aid” or just “Drink the Kool-Aid.”
With more debt than most third world countries combined, maybe California should apply for aid from a “lender of last resort” like the World Bank or the IMF? They seem to meet the main requirement of being unlikely to ever pay it back…
Based on my experience:
California is a great place to be from.
Could not agree more. Arnold tried to do what Reagan did, gave the people some very common sense propositions which the people here voted against because they fell hook line and sinker for the union lies broadcast on tv 24/7. When Californians rejected the prop which would stop legislators from drawing their own districts, I realized this state, like an addict, must hit rock bottom before it can save itself. Arnold got whipped, when he saw how indoctrinated Californians are, he must have thought, if I can’t beat them, well….. How sad, Washington D.C. is making the failure that is Sacramento their model.