Employees of the state of California are caught in the state budget vise yet again. The legislature and governor are at war over a projected $19 billion deficit, and a Sacramento state appellate court has just upheld an order compelling the state to reduce employee pay until a budget is finally passed. That order affects about 200,000 state employees who work under civil-service contracts, notes Bloomberg. Most are expecting their pay to be cut somehow.

This spells opportunity for California banks and credit unions to score some points by offering zero-interest loans and other services to help people get through the crunch. Bank of America (BAC), for example, says it will waive fees and extend emergency credit and mortgage relief to customers who experience a pay cut from the state. The Golden 1 Credit Union has announced it will offer zero-interest "state budget payroll loans" to affected customers. The thrift has estimated that as many as 55,000 people may participate if state pay is cut to minimum wage. Schools Financial has launched a similar "Budget Impasse Loan" program.

So what do banks and thrifts get out of this? It will not likely hurt their bottom line (or they certainly wouldn't do it). But it's great PR, and all banks could use that right now. A chance to be seen as a problem solver would be a welcome change. 

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