Major banks to California: DIAF

[solarbird]

Good morning. Several large banks have told California they will not accept California's IOUs past Friday, despite earlier statements saying they would. Whether this is related to Fitch downgrading California to BBB and leaving them on Credit Watch Negative I don't know. A secondary market has appeared pretty much instantly, mostly on Craigslist and eBay. (The IOUs bear interest, making them theoretically more than face value.) Mish Shedlock at Global Economic Trend Analysis, no friend of California's fiscal (mis)management, is incensed:

Big banks are cutting their throats by not accepting IOUs, unless of course they have an inside information that the IOUs will go worthless, something I highly doubt Obama would let happen. ...

Every one of those blood sucking banks was bailed out by taxpayers (California taxpayers too) and now will not take an IOU from the State of California for the citizens of California. This is disgusting.

If you have an IOU that the big banks will not cash, I recommend closing your accounts and putting them someplace that will. Please tell Wells Fargo, Bank of America, JP Morgan, and Citigroup to go to hell.

This is all happening pretty quickly, so keep an eye on this - if you can make it past the Michael Jackson wall-to-wall media coverage.

eta: Here, have a partial table of those who get cash and those get IOUs. For those not feeling clickie, here's the contents; getting IOUs: Grants to aged, blind or disabled persons, People needing temporary assistance for basic family needs, People in drug prevention, treatment, and recovery services, Persons with developmental disabilities, People in mental health treatment, Small Business Vendors. Getting cash: University of California, Public Employees’ Retirement System, Legislators, legislative employees, and appointees, Judges, Department of Corrections, Health Care Services payments to Institutional Providers.

Comments

[shadesofmauve]

So...those getting cash are the ones that are A. Large enough to have the leverage to get theoretical IOUs accepted, B. Large enough to have cash reserves, and C. Large enough and with enough history to have a chance of getting credit?

While IOUs are going to groups of people who basically depend on cash?

Right.

[mojave-wolf.livejournal.com]

That is the *most* fucked up thing about this -- Legislators who can't pass the budget? Get cash. People who are old, blind or disabled, or depending on this for survival? Get IOU's. Sick sick sick sick sick sick sick sick.

[triadruid.livejournal.com]

Somebody pointed out elsewhere that the groups getting paid are written into the California Constitution (via direct ballot proposition, mostly, I'm sure) as being mandated to be paid. The others are apparently only mandated by legislation.

[dpawtows.livejournal.com]

Are the banks trying to slip this one past the news cycle under the cover of funeral footage?

[denelian.livejournal.com]

oh my fucking gods.

that is - no, that is - no...

no, i can't describe this. i HAVE FAMILY WHO NEED THAT MONEY TO FEED SMALL CHILDREN AND THEMSELVES! i mean, my MOTHER has custody of my niece and nephew and both she and her husband are permenently disabled and a large chunk of their income is from state disability! (i mean, to the point where they don't get full SSI and SSDI because they get state money). my aunt is on a program because she was(is) a heroin addict and has liver cancer because of it, and *she* has custody of her daughter's two daughters! my cousin is on temp. state disability because he and his boyfriend got jumped (for the crime of being gay in public in Stockton, CA. just so that's clear - the police *LIE* they were not *mugged*, they left my cousin's ROLEX) and he just got out of the hospital a couple weeks ago and he still can't go back to work!
and those are just the close family members! WHAT THE FUCK!!!

i am *CALLING* Chase tomorrow (JP-Morgan is under the same umbrella as Chase, right?) and Wells Fargo - i have 3 accounts at chase, and 1 wells fargo - and i live on Ohio, but if they keep this shit, and don't pay IOUs to people who fucking NEED it, i am going to a fucking credit union. they makes billions of dollars every fucking day, loaning some of it TO A FUCKING STATE is NOT horrible - and even if they never get that money back, what's the big fucking deal? it's the money they got from taxpayers anyway!

[mikec1157.livejournal.com]

Washington state has been issuing warrants since, I believe, the Great Depression...I use to work in the (mostly) central payroll office years ago, which is where I found out we didn't issue checks, they are Warrants. And as I understand, back then, state employees got paid, but there may not have been funds behind and you had to wait for the state to make a deposit. If you could, you just waited...if you couldn't you sold the warrant to your bank for pennies, maybe 90%, maybe 50%, so you had some money, but the banks then got the full amount because they could wait. So, this isn't something new. BUT, I have never verified how this worked or didn't work. All I know, is that this state could do this again....though I strongly doubt it.

The best thing to do is have a reserve fund, then run over a predatory mortgage lender.