New Orleans Gets $150M Line of Credit

A group of banks led by JPMorgan Chase & Co. agreed Monday to extend New Orleans a $150 million line of credit over three years, helping shore up city finances ravaged by Hurricane Katrina. Mayor Ray Nagin, who faces re-election on Saturday, said the money will be used primarily to ensure city services are maintained and to eliminate the threat of municipal bankruptcy.

"The city is not going bankrupt. So just stop with the `B' word," Nagin said during a news conference. Nagin's challenger, Lt. Gov. Mitch Landrieu, has called for an audit of the city's finances and has raised the possibility of bankruptcy as a last resort.

Hurricane Katrina hit New Orleans on Aug. 29, flooding 80 percent of the city and forcing evacuations. Commerce was halted during that period, and New Orleans continues to struggle after the drop in revenue. The city will have three years to repay the debt and anticipates being able to do so out of regular revenue, Nagin said.

John Kallenborn, president of Chase's New Orleans region, said his bank is confident that New Orleans' economy will rebound in the next several years. Chase is the lead bank with $55 million of the credit line. Two French banks and another domestic bank are providing the remainder of the financing, though Kallenborn said he couldn't yet disclose the names of the other institutions.

http://www.latimes.com/news/nationworld/nation/wire/sns-ap-new-orleans-finances,1,7921082.story?coll=sns-ap-nation-headlines

Could they spare the change?