Illinois cannot survive without Fed subsidies

Wirepoints: 

Illinois’ problems forced it to borrow $1.2 billion from the Federal Reserve in June, after the state abandoned its attempts to borrow directly from the financial markets. To date, Illinois is the only state to tap the Fed’s borrowing program, meant to be a last resort for states. All other states continue to successfully borrow from the markets.

Prior to that, Illinois did manage to borrow $800 million from the markets in May, but it had to pay an exorbitant price for the money – far higher than any other state in the country. The state borrowed at an interest rate of 5.65 percent, four percentage points higher than Georgia (5.65 percent vs. 1.5 percent).

But Illinois will need to keep borrowing, and they cannot afford the 5.6%/  They are stuck on permanent Fed subsidy, which translates into increased Fed fees on regulated, retail banking.  The banks will revolt.