Sacramento, CA — California is planning to borrow $5 billion from private investors in case the federal government defaults on its debt.
The Associated Press reports that Treasurer Bill Lockyer has asked a select group of banks, credit unions and investment funds for bids on private loans to help the state avoid a cash shortage. California is expected to start borrowing interim notes on Tuesday, one week before the federal government faces default unless a debt ceiling agreement is reached between Congressional Republicans and Democrats.
Lockyer is taking action because he feels it is unclear whether the state could borrow that much money if the market heads downhill. He says this will ensure that funding is available for services like health and education.