Archive for financial meltdown
California Nears Financial “Meltdown,” Schwarzenegger Threatens To Shut Down Government
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California’s government is 50 days away from a financial “meltdown” if Governor Arnold Schwarzenegger and lawmakers fail to close the $24.3 billion budget gap. But Schwarzenegger would rather see the government screech to halt than agree to a high-interest loan.
Controller John Chiang warned of the coming crisis Wednesday:
Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said.He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.
“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement.
Schwarzenegger told the L.A. Times that a government shutdown might encourage legislators to get make deep cuts they have resisted.
State finance officials say California coffers will be empty in late July unless the projected $24-billion budget shortfall is resolved quickly. Schwarzenegger said that emergency borrowing would be too expensive and that his threat to block it was necessary to prod lawmakers into swift action.
A loan would only “give them another reason why we don’t have to do it now,” the governor said. “What we need to do is just to basically cut off all the funding and just let them have a taste of what it is like when the state comes to a shutdown — grinding halt.”
“Do they want to protect the workers that provide the services, or do they want to protect the people that get those services?” Schwarzenegger said. “The choice is up to them.”
Senate Wants $5M To Study Financial Crisis
Posted by: | CommentsThe Senate has agreed to spend $5 million to investigate the cause of the economic crisis as it moves toward passing a $245 million bill that would substantially increase the number of FBI agents and prosecutors working mortgage fraud.
The legislation is aimed at showing voters that lawmakers are serious about getting to the bottom of the nation’s financial woes, even as they struggle to agree on how to improve the economy and prevent it from getting worse.
“We must hold those responsible for this calamity to account,” said Sen. Kent Conrad, D-N.D.
President Barack Obama and congressional Democrats have vowed to complete by the end of the year an overhaul of the federal regulatory system governing the nation’s financial institutions. Democrats say that had regulations been tighter, banks would not have taken many of the risky bets that ultimately put them in danger of collapsing and required a $700 billion government bailout.
But as Republicans and Democrats debate the finer points of that longer-term effort, lawmakers are pitching ways to provide immediate relief to cash-strapped voters.
The $245 million fraud bill is “our chance to authorize the necessary additional resources to detect, fight and deter fraud that robs the American people and American taxpayers of their funds,” said Sen. Patrick Leahy, D-Vt., who co-sponsored the bill with Sen. Chuck Grassley, R-Iowa.
The Senate agreed 92-4 on Wednesday to designate $5 million for a congressionally appointed, independent “Financial Markets Commission.” The panel, which would be modeled after the 9-11 Commission that investigated the 2001 terrorist attacks, would be given 18 months to issue its recommendations.
Lawmakers also agreed to create a separate Senate committee focused on the financial meltdown.
House Speaker Nancy Pelosi, D-Calif., has said she supports the concept of an investigative congressional committee focused on the economy.
Under the Senate bill, $75 million would go toward hiring 160 more special FBI agents and 200 supporting personnel, including forensic analysts, to investigate mortgage fraud.
Currently, the FBI has fewer than 250 special agents assigned to financial fraud cases, despite caseloads having more than doubled in the past three years. According to a report on the bill, the FBI cannot investigate the more than 5,000 fraud allegations received by the Treasury Department each month.
Also under the bill, the Justice Department would receive $90 million to hire 200 more prosecutors and civil enforcement attorneys and 100 supporting personnel.
Other government entities in line to receive money include the Secret Service, Postal Inspection Service and the inspector general for the Housing and Urban Development Department.
Sen. Chuck Schumer, D-N.Y., and Richard Shelby, R-Ala., want to add $20 million to the bill for the Securities and Exchange Commission to boost its enforcement capabilities.
The White House supports the bill. In a statement released Monday, the administration said the additional resources would provide “a return on investment through additional fines, penalties, restitution, damages, and forfeitures.”
