Options Dwindle for Cashing California IOUs
Monday, July 13, 2009
California Thousands of California business owners are starting the week without the safety net of having major banks accept the state's IOUs.
On Monday, U.S. Bancorp became the latest to reject the pay-you-later warrants, joining Bank of America Corp. and Wells Fargo & Co. The state began issuing IOUs at the beginning of the month as a way to save cash amid a $26.3 billion deficit.
It's too early to tell whether state contractors that receive the warrants are feeling a financial squeeze. But Tom Dresslar, spokesman for the state treasurer's office, says the decision creates more uncertainty and potential hardship.
California Bankers Association spokeswoman Beth Mills says the banks had hoped their decision would force lawmakers to agree on a budget-balancing plan.
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