SACRAMENTO – Governor Schwarzenegger and Democratic lawmakers are hoping the Obama administration and members of Congress will lend some help in getting California out of its financial problems.
State leaders are not asking for a cash bailout, but are asking the federal government for loan guarantees.
The proposal would have Washington act as a sort of co-signer on the state’s borrowing, with the loans backed up by the Troubled Asset Relief Program.
With the state now with the worst credit rating in the nation, California leaders say the backing of the federal government would make it cheaper for the state to borrow money on the bond market.
That cheaper money would save taxpayers hundreds of millions of dollars.
So far, the Obama administration has responded cautiously to the idea.
The proposal’s prospects in Congress are also uncertain.