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Category: Money

In Case US Defaults: California Borrows $5.4 Billion

Written on July 27, 2011 by Japhet Writ

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In the event that Congress fails to meet its deadline, the bridge loan would be used to help California pay its bills.

Gearing up for bond market turbulence, the state of considered asking for a . It is now reported that the state’s Treasurer Bill Lockyer already secured $5.4 billion from short-term loans, with Goldman Sachs and Wells Fargo carrying out the loan bulks. This will aid the state in case the Congress fails to raise the $14.3 trillion by August 2.

However, the Treasurer Bill Lockyer fears that could lock California out of the municipal market. Moreover, the shock wave is believed to reverberate across the financial system, causing state and local finance crises.

In addition to this, Moody’s Investors warned that US’ loss of AAA credit rating would push automatic ranking cuts on at least 7,000 municipal ratings.

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