California hedges against possible U.S. default

The state plans to borrow $5 billion in short-term loans from banks and other financial institutions next week, just in case all hell breaks loose the following week if the debt ceiling is not lifted by Congress. California normally sells revenue anticipation notes in August so that there's enough cash on hand until tax revenues start arriving later in the year. The worry is that a debt ceiling impasse will rock the financial markets, quickly raising the cost of borrowing money. From the LAT:

Lockyer on Tuesday will seek competitive bids from commercial banks, investment banks and other financial firms for the $5 billion in loans. The debt will be repaid later when the plan to issue revenue anticipation notes is revived, the treasurer said. He also said he could abort the bank loan plan if the White House and Congress reach an agreement on the debt ceiling before Tuesday.