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October 3rd, 2008
11:28 AM ET

California Bailout?

You can read the entire letter from California Gov. Arnold Schwarzenegger to Treasury Secretary Henry M. Paulson here. (courtesy Los Angeles Times)
You can read the entire letter from California Gov. Arnold Schwarzenegger to Treasury Secretary Henry M. Paulson here. (courtesy Los Angeles Times)

Marc Lifsher and Evan Halper
Los Angeles Times Staff Writers

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.

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Filed under: Raw Politics
soundoff (20 Responses)
  1. Camina T. in Arroyo Grande CA

    Also the snow pack is down and it is not ever raining much in CA. I can't blame Arnie or Sacramento for that. There are lessons to learn for everyone in this financial mess. Cindy there are a HUGE HUGE amount of poor people in California and very few movie stars.. If you hate the new hollywood watch the old hollywood ? Or do you dislike all hollywood films? I am not in disagreement . Brothers and sisters will we share the dimes?

    October 4, 2008 at 3:02 am |
  2. Jim

    Can't imagine WHY we would need a bail out here in California- could it be all the ILLEGAL Aileans that took jobs from American Citizens & Pay no taxes & drain our Medical resorces? Who is controlling Sacramento? Republicans or Democrats? Want to see the Nation? Look to Sacramento people .

    October 4, 2008 at 12:52 am |
  3. Jim M

    No Maria, the California funding problem is not another republican administration problem, nor is it a matter of immigration alone. Illinois with its democrat governor, is short 1.8 billion for outstanding payments and is 42 working days behind in its payments being made[IL State Comptroller Hynes (D), 02OCT08]. Its just a case of state governments 1. trying to plug holes in the loss of federeal funds; 2. un/underfunded federal mandates; and, 3. state politicians not being able to admit to their voters that their states do not have the resources to maintain many existing programs. – As a Nation we have been living beyond our means (Federal, state and personal) for too many years

    October 3, 2008 at 8:48 pm |
  4. Heather,Ca

    It was just a matter of time until all those here illegally finally cost us. Im hoping they will see that its better south of border.

    October 3, 2008 at 4:24 pm |
  5. Maria

    This is an example of the republican administration

    October 3, 2008 at 3:45 pm |
  6. JC- Los Angeles

    Ever since 9/11 and with each Greenspan rate cut, the California mortgage lending fraud factories produced endless fraud while Arnold rolled out the welcome mat to all comers.

    Since there was money to be made, it made no sense to notice the "white out" or "photo shop" applied to all loan documents and appraisals.

    Since the fraudulent lenders were producing, since Wall Street, Fannie Mae and Freddie Mac were buying and since everyone was hiring, Arnold looked like the champion for gainful employment and a booming economy.

    As Toto artfully showed us in The Wizard of Oz, eventually the smoke and mirrors become exposed.

    Our entire nation became one big California and now we need $700 billion to have any hope of once again seeing the rays of hope.

    October 3, 2008 at 3:04 pm |
  7. Terra Hoskins

    I'm...speechless. This is a disaster.

    October 3, 2008 at 2:17 pm |
  8. M. from California

    Has anyone ever thought about the possible connection between the national debt and illegal immigrants?

    October 3, 2008 at 1:58 pm |
  9. chris formerly from California

    This is what happens when people hire Republicans to run the country. Wonder if Gov. Arnold govenator Schwarzenegger was for or against the bush administration policies. Californian people shocked me when they voted a republican gov. to office. Not 1 time but 2. I look at the republicans as like a kid with a new credit card...they over spend, charge it up, and then cry to mom and dad for help. I look at the democrats as like the mom and dad that bails them out. This has happened time and time again. When will people start realizing that republicans only care about getting this country into debt at the cost to the tax payers. Their policies make the rich richer and the poor poorer. Always has and always will. OPEN YOUR EYES PEOPLE!!! QUIT LETTING YOURSELF BE DECIEVED!!!!

    October 3, 2008 at 1:56 pm |
  10. earle,provincetown

    Wel, well,well,these "Illegal Aliens",(with their gangs&drugs) crossing the border,flooding our school's,hospital's(e-rooms),and paying no taxes, (excepting cash payments, that only undercut wages) has finally come home to roost. Why doesn't Governor Arnold ask the Mexican Government for financial help? Your Welcome....

    October 3, 2008 at 1:11 pm |
  11. gpriley1

    What are people taking about? The only thing Sarah Palin talk about was Alaska and energy. She didn’t stand on her own, she didn’t meet any expectation, and she didn’t answer any question! You do the MATH!!!!

    October 3, 2008 at 1:10 pm |
  12. D.Mills

    Seems to me like there is alot of two faced talk by both candidates.John McCain says he would not vote for a bailout that was full of earmarks,but votes yes to 110 billion dollars of tax cuts to the business of there chioce.On the other hand Barack Obama says we need to reign in gov. spending and also supports bailout.What is up with that ?

    October 3, 2008 at 1:03 pm |
  13. Catherine Frost

    Why haven't you, or anyone one else told the American people about the billions in pork that is in the "bailout bill". If you could get off knit picking the candidates for a minute, and start more reporting on what is happening to us this week we would be better informed as a nation..

    October 3, 2008 at 12:46 pm |
  14. Mike, NC

    For the first time in my life, I can honestly say that I am truly concerned for the future of our nation. The federal government doesn't have the money to give $700 billion and now individual states are asking for billions on top of that...I just don't see how we can overcome such a huge obstacle. Cuts on educational funding and cutting state employees, that is a serious issue, especially education cuts...school spending is already scarce and inadequate in many large cities. I am just hoping for the best for all of our citizens out there. It is a rough time right now, and I can see it getting worse and worse.

    October 3, 2008 at 12:45 pm |
  15. Vince Velardo

    AC, question to pose on the show:

    If Wall Street wants the bailout (or as many WS firms call it, a "Capital Infusion"), and if the government is buying the securities/infusing capital into the firm, then the employees of those WS firms should be considered government employees, and receive government salaries.

    Thanks, great show!

    Vince

    October 3, 2008 at 12:33 pm |
  16. Becky

    And so it goes.......the line starts here

    October 3, 2008 at 12:10 pm |
  17. George Biggar

    Here's a unique perspective from a Canadian who probably understands more than the average American when it comes to U.S. politics, and loves your country as much as his own, having spent much time their on business and travel over the years, with many close U.S. friends:

    With all the talk of the financial bailout, and having read a recent article on Burma, I believe that the U.S. should leave Wall Street to its own devices, and spend that money to buy Burma. Yes – Burma. It is in a very strategic position in the world for decades to come, it has good oil reserves, and immense natural resources. It neighbors India and China, whom both require cooperation from Burma for huge economic reasons, and with those neighbors comes a couple billion new customers for U.S. industries. The investment that would suddenly be poured into the country would offset capital losses and bring much needed capital back to the U.S., and would essentially hold China hostage if they wanted deep water ports and strategically / economically important pipelines from those ports to the southern and western portions of their country.

    The cost of purchasing Burma would likely be less than the bailout, because the current ruling parties would split the money and run, and this idea would immediately give the U.S. a permanent base for military presence in the region (again, a very strategic one for the U.S. in the coming decades). The icing on the cake? Democracy instantly gets a very strong foothold in the region.

    Now how's that for a plan?!

    P.S.: I'm available for President, but since I'm not born in the U.S. I'll settle for a senior cabinet position...

    -gb

    October 3, 2008 at 11:44 am |
  18. Nicole Yancey

    I think that congress is bailing out the wrong people. There are approx. 300 miilion people in the USA. Give every tax paying person a check for $50,000.00 and let them pay off there debts. This money would go back into the economy and would help the people. The people should have the right to vote on this bail out it should be put on the vote ticket for November. It would cost much less than $700 bill to give each American a relief check. We are not going to see any relief only the companies that helped us get to this place will see relief. I just don't understand why this has never been on the table for debate. I would like to no a reason why this would not work. I know that $50,000.00 would mean the world to my family. We all have jobs work everyday and still are just getting by.

    October 3, 2008 at 11:41 am |
  19. Cindy

    UMM...California needing a bailout!? Why don't they make all of those mega rich stars that live there pay more taxes and they wouldn't have that problem. Why should we bail them out when they are one a few states that have the most richest people living there? PLEASE!!

    Cindy...Ga.

    October 3, 2008 at 11:37 am |
  20. J from DC

    All of this is a real sign of serious trouble in the county. Someone please get this message out. Please put stories like this in the forfrout of the news. The contry needs to see, that trouble is on the harizon. We need to know, that wall street is not the only ones in trouble. People need to see and understand this. ASAP

    October 3, 2008 at 11:37 am |