California To Borrow $5 Billion Ahead Of Federal Debt Deadline

SACRAMENTO, Calif. (AP) -- California plans to borrow about $5 billion from private investors next week to protect itself in case the federal government defaults on its debt.

   State Treasurer Bill Lockyer announced Thursday that he 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. He's concerned the state could be shortchanged on health care and education funding.

   Lockyer's spokesman, Tom Dresslar, said the state will borrow interim notes on Tuesday. That's one week before the federal government faces default unless a deal is reached to extend the government's borrowing authority.

   The treasurer's office is taking the precaution because it's unclear whether California would be able to borrow that much money if the market is thrown into turmoil.

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