Federal Reserve Board chairman Ben Bernanke is suggesting that state and local governments facing fiscal difficulties seek grants, loans, or guarantees from the Treasury, while a Treasury official contends they should ask the Fed about participating in its commercial paper purchasing program.

Neither of the officials believe their own agencies can offer any assistance to state and local governments, according to separate letters they sent earlier to Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services capital markets subcommittee. The letters were not publicly released until yesterday, when the congressman disclosed them.

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