CA Treasurer calls on U.S. Treasury for help...TARP now for states and municipal gov?

Now we are going to be using TARP money to bail out states and municipal governments, this is getting out of control, as I said months ago the SYSTEM is broken.....




Thursday, May 14, 2009, 8:11am PDT
California State Treasurer calls on U.S. Treasury for help
Sacramento Business Journal - by Mark Calvey San Francisco Business Times





California Treasurer Bill Lockyer asked in a letter to U.S. Treasury Secretary Timothy Geithner to extend financial assistance for the nation’s most populous state and other financially strapped states and cities.

Specifically, Lockyer wants Treasury to expand its Troubled Asset Relief Program -- designed to bailout the nation’s largest banks -- to include states and municipal governments.

“I am writing today to ask that you authorize extending TARP assistance to the State of California and other financially strapped states and local governments which face a severe cash flow crunch in the near term due to eroding tax revenues resulting from the current economic downturn,” Lockyer wrote in his May 13 letter to Geithner.

Lockyer is concerned that the state will not be able to raise short-term funding to smooth out its cash flows without credit enhancements from banks or the federal government. Bankers have said they may be limited in how much credit guarantees they can provide the state given the nation’s most severe banking crisis since the Great Depression.

Lockyer says that if the state cannot access the capital markets for short-term borrowing needs, California could have trouble providing essential services such as police and fire, education and social programs.

“Such a scenario could also cause major disruptions to financial markets,” Lockyer warned.

An inability to access the short-term capital markets through the issuance of so-called tax and revenue anticipation notes, or TRANs, would also trigger trouble for the state in obtaining long-term bond financing. The state of California already has the lowest credit rating among the nation’s 50 states.

“This, in turn, would slow and could eventually even halt our infrastructure construction programs,” Lockyer said.

That would be a huge hit to the nation’s unemployment picture.

The state treasurer spelled out in detail a proposed program that could help California and other troubled state and local governments raise short-term financing with the help of banks and the federal Treasury.

“Even with a balanced budget,” Lockyer wrote, “California believes its cash flow shortfall in fiscal 2009-2010 will be in excess of $13 billion.

“The enormous size of the required funding together with the state’s current credit condition and the continued weakness of the municipal finance market,” Lockyer continued, “make it highly unlikely that the state can access the short-term market for its TRAN borrowing based on its own credit.”

 

The government is going to back EVERYTHING.

 

Sure, what the hell... I'm sure Goldman Sachs holds some munis somehwhere on their balance sheet....

 

We find this somewhat humerous now. Wait until the taxes start going up big time to pay for all this money the government has spent.

They are already talking about a national sales tax in addition to income taxes and taxing softdrinks, fat foods, etc. We all need to write or email our congressmen and senators and deluge them with mail to stop the spending and taxing and to get out of private business.

http://www.usa.gov/Contact/Elected.shtml