WASHINGTON — California Treasurer Bill Lockyer on Monday warned that discussions about states going bankrupt are misguided and lead to higher interest rates on state debt that hurts both issuers and investors.

“Even the threat or the discussion raising the possibility of a bankruptcy can substantially increase the interest that we have to pay on bonds that finance necessary infrastructure — bridges, schools, transit and parks,” he told reporters during a conference call sponsored by the Economic Policy Institute. It also leads to higher rates for short-term notes states issue when their tax collections lag cash-flow needs, he said.

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