Big banks are rejecting California’s IOUs.
Even in January, it was reported that California might have to issue IOUs. Last week the state started issuing IOUs and major banks have made a promise not to cash them after today. There is a $26 billion budget deficit. The only other alternative is to go to a credit union. There are about 60 in the state that will accept them for deposit.
Most major banks reiterated that customers could not deposit the IOUs after today. Others, such as City National Corp., said they would continue accepting the registered warrants but could stop taking them at any time.
The last time the state sent out IOUs, during a 1992 impasse between then-Gov. Pete Wilson and legislators, banks also eventually rejected the registered warrants.
The 3.75% interest isn’t enough of an incentive for the banks to accept the IOUs but the credit unions are hedging their bets to gain a greater foothold in the market since there are larger financial institutions that are not accepting the cash vouchers. Some people have tried to sell them on the internet at a discount because they have no other place to turn.
Additionally…
Another way California is looking to garner income is by taxing marijuana.
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