These Big Banks Stepped in to Pay California’s Bills
The state of California has secured a $5.4 billion loan from a group of eight banks led by Goldman Sachs (NYSE:GS) as a safety net in the event that Congress fails to raise the debt ceiling. The state’s treasury is concerned that credit markets could be interrupted, hurting their ability to sell government bonds necessary to cover some of the state’s bills.
Here’s a list of the eight banks (NYSE:KBE) and the amounts they have committed: Goldman Sachs(NYSE:GS): $1.47 billion; Wells Fargo (NYSE:WFC): $1.47 billion; Citigroup (NYSE:C): $736 million; Barclays Capital (NYSE:BCS): $491 million; JPMorgan Chase (NYSE:JPM): $491 million; Bank of America Merrill Lynch (NYSE:BAC): $245 million; Morgan Stanley (NYSE:MS): $245 million; and U.S. Bancorp (NYSE:USB): $245 million.
“California had to obtain this interim financing to protect the state from the immediate, drastic consequences of a failure by Washington to resolve the debt ceiling impasse by the Aug. 2 deadline,” said Bill Lockyer, California’s Democratic treasurer. “I’m hopeful Congress and the president will do the responsible thing, solve the problem before it’s too late and not risk pushing the country into a financial and economic abyss.” The loan has a 0.237 percent interest rate and will mature on November 22, 2011. Banks bid for a piece of the loan.