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THURSDAY, NOVEMBER 26, 2009
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JPMorgan Chase to Lend California $1.5B

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(Newser) – After joining other major banks in snubbing cash-strapped California last month, JPMorgan Chase has changed tack and is lending the state $1.5 billion to end its IOU program a month early. The short-term loan will enable California to start redeeming on Sept. 4 the IOUs it has been using since July to pay vendors and creditors, the LA Times reports.

The loan has little risk for JPMorgan: California will pay it back in full by late September by selling $10.5 billion in revenue anticipation notes due to mature next spring. The deal benefits JPMorgan by getting it back into the state's good graces, and signals improving fortunes for California, which yesterday moved off the S&P "negative credit watch" list.

California State Controller John Chiang, issuer of the state's current IOUs, speaks at the Democratic National Convention in Denver, Tuesday, Aug. 26, 2008.
California State Controller John Chiang, issuer of the state's current IOUs, speaks at the Democratic National Convention in Denver, Tuesday, Aug. 26, 2008.   (AP Photo/Ron Edmonds)
In this May 19, 2009 file photo, an office tower known as 1Chase Manhattan Plaza, occupied by JPMorgan Chase & Co., is shown in New York.
In this May 19, 2009 file photo, an office tower known as 1Chase Manhattan Plaza, occupied by JPMorgan Chase & Co., is shown in New York.   (AP Photo/Mark Lennihan, file)
In this April 22, 2009 photo, a JPMorgan Chase & Co. office building is shown in New York.
In this April 22, 2009 photo, a JPMorgan Chase & Co. office building is shown in New York.   (AP Photo/Mark Lennihan)
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3 comments
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Timinator2K
Aug 19, 09 8:00 AM CDT
Well, now that only leaves Califoricated ONLY $23.5B in the monetarily, morally, you-name-it hole. Reply
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IN RESPONSE:
Nwambe
Aug 19, 09 9:19 AM CDT
Yep, and with a Republican governor who actually wasn't born in America, they should be out of debt really soon, because Republicans are such prudent financiers, it's really only a matter of time... Sorry, I couldn't keep a straight face.
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odowd80
Aug 19, 09 9:38 AM CDT
This is the result of demonizing tax increases. Thanks a lot GOP. You know, in certain situations it may be appropriate, to look at the revenue side of things for solutions. Imagine how crippled a company would be if their CEO said, "we will never raise our prices." Reply
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