The Smart Asset

California pleads for a bailout, but Geithner keeps walking

By Harkavy in AIG, Bailouts, Congress, Featured, Geithner

Thursday, May. 21 2009 @ 8:31PM

Now that GMAC is all lined up at the trough to snarf down another bailout, you might be whining — especially if you live in dead-ass broke California — what's it going to take to get a bailout in my state, an act of Congress?

According to Treasury Secretary Tim Geithner, that's exactly what it'll take. McClatchy's Rob Hotakainen reports:

[Geithner] said Thursday that it will require an act of Congress to have the federal government guarantee emergency loans for California, complicating the state's efforts to find a way to pay its bills.

Geithner told a House panel that federal law would not allow the Obama administration to act on its own. That's a blow to backers who had hoped to get quick approval from the Treasury Department, bypassing a fight in Congress.

Geithner has cut all kinds of deals with all kinds of banks without having to jump through too many hoops on Capitol Hill. And it's not as if California could even hope to have hoops to jump through for a payoff at the end of such an exercise. California's own Jerry Lewis (not the comedian but the member of House Appropriations) is quoted as saying:

"It's hard for me to quite imagine my colleague from Wisconsin or one of my friends from Kansas ... to say, 'Sure, we'll back your bonds, and we'll pay part of the price, indeed, because we know, we're absolutely certain you're going to reduce your spending patterns and thereby get your economy in order.'"

So as it now stands, California, whose economy is bigger than those of most countries, can't get a bailout of even a fraction of the size of the bailout money that's been given to, for instance, AIG.