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Banks won't cash California's IOUs

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  • Shalodge
    Addicted
    • Mar 2008
    • 934

    #1

    Banks won't cash California's IOUs

    Thousands of vendors who do billions of dollars of business with the state of California are scrambling as major banks say they will no longer honour the state's promissory notes.

    Despite pressure from the state treasurer, JPMorgan, Bank of America, Wells Fargo and Citigroup and other major banks planned to stick to their plans and not honour California's warrants.

    The bankers are trying to pressure legislators into closing the state's US$26.3 billion ($41.6 billion) budget shortfall, though there have been few signs of progress.

    Some businesses say they may find it difficult to survive or hold on to their employees if they can't find a way to quickly redeem their promissory notes, known as IOUs.

    Latest breaking news articles, photos, video, blogs, reviews, analysis, opinion and reader comment from New Zealand and around the World - NZ Herald
  • Shalodge
    Addicted
    • Mar 2008
    • 934

    #2
    Anyone want to give me a perspective on this? .. The US fed prints money but it appears that states cannot get 'top ups'.. only GM and banks??

    This sounds serious.. potentially Police Departments will not be able to pay their wage bills etc.. Is this a case of mismanagement by State Government and how far will it go before the Fed intervens??

    The article quotes October 2 as a repayment date for the IOU's... is that significant or is just a date when California hopes the reccession will be over? I just cant quite understand what is going on here?

    Comment

    • donna
      Administrator
      • Aug 2003
      • 10069

      #3
      Their financial year is Oct - Sept so that probably has something to do with the 2 Oct date.



      Cheers,

      Donna
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      Comment

      • Perry
        Geriatric
        • Sep 2004
        • 16861

        #4
        Banks would be quite averse to the State
        effectively running a money business, in
        competition with them.

        Comment

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