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Archive for Tuesday, May 16, 2006

Banks agree to extend $150M line of credit

May 16, 2006

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— 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 Saturday, said the money will be used primarily to ensure city services are maintained and to eliminate the threat of municipal bankruptcy.

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.

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