Today is the first day that most large banks stop taking IOUs from individuals and small businesses. For those left holding them, the options are limited. Citibank agreed to a one-week extension, and Bank of the West will accept them – but only for existing customers. Other big banks may offer lines of credit or other short-term bridges for customers, but on a case-by-case basis. IOU holders needing cash might be able to try credit unions, or inevitably, check-cashing stores. And this all appears to suit Arnold Antionette just fine:
State Treasurer Bill Lockyer tried to persuade the big banks to change their minds about the IOUs. “We’re just trying to convince them that it would be in the best interest of their customers and the best interest of taxpayers to give it more time,” said his spokesman Tom Dresslar.
Gov. Arnold Schwarzenegger made no such attempt at persuasion. “His focus is to get a solution to our budget so we don’t have to deal with IOUs,” said his spokesman Aaron McLear. “I don’t think it was anyone’s expectation that they would honor them forever.”
Emerging from a meeting with legislative leaders Friday, the governor would say only that “IOUs are one more reason to get the budget done as quickly as possible.”
In 1992, the last time the state issued IOUs, the major banks accepted them for about a month. Their refusal to go any further was widely seen as a move to pressure officials to pass a budget.
Yes, of course, this is why he vetoed solutions that would have stopped the issuance of IOUs in the first place.
Meanwhile, John Chiang’s latest release of the state economic picture shows a $10 billion dollar shortfall in Fiscal Year 2009, and a still-contracting revenue picture that has led to a $4 billion dollar delay in payments to local school districts. They has planned on sending out the money Friday; now they will hold off until July 30.
And the Big Five have returned to the negotiating table today, where they claim “constructive” negotiations, which we’ve heard plenty of times before. No word on whether the Governor continues to hinge a budget deal on uncorroborated fictions about fraud in social services or fiscally unwise cuts to programs like welfare.
http://www.webofdebt.com/artic…
and concludes with recommended action.
California should transfer their business to those banks willing to accept the IOUs.
Mine is for less than $10–stemming from a change to my income tax filing. I’m glad I’m not trying to run my business without a big chunk of income. Or depending on it for personal living expenses.
But I wonder if I endorse it and send it back as part of my vehicle registration fee, if the state will honor it? How would they like an IOU that isn’t good until October? The banks are still reeling from their own problems. I don’t blame them for not wanting to wait for their money–even with interest. I can’t imagine that the state would like it any better. What makes them think I would either?
If we had to think about it, the IOUs are not having any effect on those that really need to feel the loss. It’s not hurting the right people!
It is not hurting the Governor because he works for free. But our Legislatures should be the ones not receiving their pay. This should of started in May if the budget was not complete for the following year.
After the bidget not getting passed by the middle of June, all State employees and those depending on the State for funds should not get paid. This would cause much more concern for correcting the budget process and making our government work for the people, not themselves.
Yes, it may hurt to less fortunate as well as those depending on states funds to make payroll. But I bet we will get a stronger and more responsible legislation representatives!