California’s state Treasurer is borrowing money from Wall Street about a month early, amid concerns about the debt ceiling gridlock in Washington. Bill Lockyer says the state took out a nearly five-and-a-half billion dollar bridge loan Tuesday. Treasurer Lockyer says he’d ordinarily head to the stock market in late August, but this year he thought it was prudent to get there before a possible federal debt meltdown.
“The worry is basically that there’s so much uncertainty, there’s so much expected problem and turmoil in the financial markets that it may make it difficult, impossible or very expensive to do the routine borrowing that we’re accustomed to doing,” said Lockyer.
California takes out short-term loans every year to ensure it has a healthy cash flow during low-revenue months.
Lockyer plans to go back to the market again in late August, but says this money should hold the state over until October of November if necessary.