California Treasurer Wants TARP Funds For States

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California's Treasury Bill Lockyer is calling on U.S. Treasury Secretary Timothy Geithner to allow states access to the remaining Troubled Asset Relief Program, or TARP, funds. Lockyer is requesting that Geithner open up TARP funds to states struggling with rising unemployment and declining tax revenues.

In a letter sent Wednesday to Geithner, Lockyer warned of potentially devastating impacts on state and local governments without access to TARP for debt relief.

"If we cannot obtain our usual short-term cash flow borrowings there could be devastating impacts on the ability of the state or other governments to provide essential services to their citizens," Lockyer said. "Such a scenario could also cause major disruption to financial markets."

The foreclosure crisis hit California especially hard, and the state has taken several steps - including stopping spending on public projects, delaying income tax refunds, and a shortened workweek for some public employees, just to stay afloat.

The state needs short-term borrowing, which is "highly unlikely" to be obtained through banks, Lockyer warned. Therefore, Lockyer is proposing that Geithner lead the charge to create a TARP program to help states, prompting banks to make short-term credit available for state and local governments.

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