JPMorgan Chase & Co., almost the only big U.S. bank that can still afford to lend big piles of money, has approached cash-strapped Philadelphia with an offer to lend the city $275 million at 3% yearly interest to help get the city through November, Mayor Nutter said in a statement this afternoon.
The city would use most of the money to pay vendors and contractors it's been stiffing since July. "As soon as" the stalled sales-tax and pension-reform measure (House Bill 1828) is passed by the General Assembly, the City expects to borrow from the money markets "at a lower rate," Nutter's statement noted. But if Philadelphia can't repay JPMorgan by Dec. 1, the interest rate jumps to 8 percent.
JPMorgan has made similar offers to California, which is using $1.5 billion in 3%, no-fee JPM money to tide it over till revenues rise this fall; and New Jersey, which is sitting on a $2 billion JPM credit line.