California turns to Feds for loan

(CNN) - California may need a quick $7 billion loan from the federal government to pay for "teachers' salaries, nursing homes, law enforcement and every other State-funded service" this month, Gov. Arnold Schwarzenegger warned in a letter sent Thursday to the U.S. Treasury secretary.

The letter, posted on the Los Angeles Times Web site Friday, echoes a statement issued a day earlier by California State Treasurer Bill Lockyer, saying the state has been locked out of credit markets for the past 10 days because of the national financial crisis.

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing," Schwarzenegger wrote.