Big banks stop cashing California IOUs

[Hans]

Californians have fewer places to redeem IOUs issued by the cash-strapped state.

At least three major banks, Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500), stopped accepting the IOUs after Friday.

State Controller John Chiang started issuing the IOUs on July 2 to conserve cash, while lawmakers and Gov. Arnold Schwarzenegger tussle over closing a $26 billion budget gap. Friday also marked the start of a mandatory third furlough day for most state employees.

The state, the world's eighth largest economy, has issued more than 90,000 IOUs worth nearly $355 million. Also called registered warrants, the IOUs pay an interest rate of 3.75% and can be redeemed on Oct. 2 or earlier if divided state officials reach a budget deal.

Recipients will include state contractors, social service agencies and those owed income tax refunds.

http://money.cnn.com/2009/07/09/news...ion=2009071212

[Huggy85]

California, California hhmmmmmmmmm

Wasn't that the state that someone has bragged about having an GDP that is bigger than all of Canada's?

Not that impressive being that big when you need to pay your bills with IOUs. Sounds a bit like paying off credit cards with other credit cards.

[Hans]

Now that you mention it, I think someone named Slow mentioned something about it having a bigger GDP than Canada.