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Bank of America to accept California state IOUs
Market Watch ^ | Jul 1, 2009 | Michael Kitchen

Posted on 07/01/2009 7:34:48 PM PDT by Lorianne

LOS ANGELES (MarketWatch) -- Bank of America said Wednesday it would accept warrants issued by the California government on a limited basis through July 10, which the state is using as a budget crisis freezes its spending.

"Bank of America recognizes the State of California budget crisis will impact our clients and customers," it said. "To support our customers, while giving the state legislature additional time to pass a budget, we will accept California state-registered warrants -- or IOUs -- from existing customers and clients

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Government
KEYWORDS: banking; boa; credit; iou
Defacto bail out of California since BOA has access to the (perhaps unlimited) TARP funds.
1 posted on 07/01/2009 7:34:48 PM PDT by Lorianne
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To: Lorianne

They will 40% interest until they get real money.


2 posted on 07/01/2009 7:37:00 PM PDT by razorback-bert (We used to call them astronomical numbers. Now we should call them economical numbers.)
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To: Lorianne

So, does the federal government accept these, IOU’s?

What a mess.


3 posted on 07/01/2009 7:37:53 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: Lorianne
The backdoor way for the Obama Administration to bail out California...!
4 posted on 07/01/2009 7:39:18 PM PDT by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: Lorianne
Can't believe after all the spending cuts mandated that California is STILL broke. /s
5 posted on 07/01/2009 7:40:49 PM PDT by EGPWS (Trust in God, question everyone else)
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To: Lorianne

Lets see I’m unemployed. Do you think the government will take an IOU in place of money for the taxes I owe? I didn’t think so. :-{


6 posted on 07/01/2009 7:40:53 PM PDT by YankeeReb
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To: Lorianne

Our whole money system is based on IOU’s.America is BROKE.The Founders warned us.


7 posted on 07/01/2009 7:41:46 PM PDT by taxtruth
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To: Lorianne
If only California had imploded a decade or so ago, I could still smoke in NM's rural bars and restaurants.

Too bad, but I will applaud the implosion anyway.

8 posted on 07/01/2009 7:42:17 PM PDT by elkfersupper (Member of the Original Defiant Class)
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To: Lorianne

BOA also dearly loves illegal aliens and has for years.BOA also is great at outsourcing jobs to india.


9 posted on 07/01/2009 7:43:18 PM PDT by Frantzie (Remember when Bush was President and Americans had jobs (and ammo)?)
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To: Lorianne

Bank of America did this last time the state issued IOU’s.


10 posted on 07/01/2009 7:43:29 PM PDT by ThomasThomas (I eat Cheerios's with out a Prescription!)
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To: Lorianne

Good fricken grief, and it’s my stinkin state.


11 posted on 07/01/2009 7:43:53 PM PDT by DoughtyOne (_res__ent of the United States, Barack Hussein Obama)
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To: Lorianne

LOL

California follows washington and creates its own currency. I love it!


12 posted on 07/01/2009 7:47:37 PM PDT by sickoflibs (Socialist Conservatives: "'Big government is free because tax cuts pay for it'")
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To: Lorianne

Worthless paper for more worthless paper. And somehow the dollar still doesn’t fall against the yen and yuan. Let nobody say that the Japanese, Chinese and their tiger pals are manipulating currency, however. They’re friendly. /sarc


13 posted on 07/01/2009 7:47:46 PM PDT by LibertarianInExile (When Republicans don't vote conservative, conservatives don't vote Republican.)
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To: Lorianne

They will put them on their books at 100% of face value as “assets”.


14 posted on 07/01/2009 7:51:17 PM PDT by ikka (Brother, you asked for it!)
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To: Lorianne

An insolvent bank accepts IOUs from an insolvent state.

Makes perfect sense to me!


15 posted on 07/01/2009 7:52:32 PM PDT by KoRn (Department of Homeland Security, Certified - "Right Wing Extremist")
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To: YankeeReb

Will they take an IOU for my mortgage payment? Do they trust CA politicians more than they trust me?

I guess since their HQ is in CA, maybe that helps.


16 posted on 07/01/2009 7:52:34 PM PDT by Right Wing Assault ( Obama, you're off the island!)
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To: DoughtyOne

LOL!That statement made my night.


17 posted on 07/01/2009 7:54:19 PM PDT by taxtruth
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To: KoRn
An insolvent bank accepts IOUs from an insolvent state.

LOL!

18 posted on 07/01/2009 8:00:20 PM PDT by dragnet2
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To: Lorianne

NOW people are only starting to consider the possibility - these IOU’s are NOT money! They are unsecured debt, never seen before, from a Government this is effectively bankrupt.

This could start sliding downhill with increasing speed.


19 posted on 07/01/2009 8:00:25 PM PDT by PGR88
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To: Lorianne

....but some people will need their money. I expect a market will spring up in discounted IOUs and people will sell for spot cash.


20 posted on 07/01/2009 8:01:35 PM PDT by STONEWALLS
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To: Right Wing Assault
I guess since their HQ is in CA, maybe that helps.

More of the "Chicago Way". My guess is Obama used the same kind of threats he used when they bought Merrill-Lynch. I think they're headquarters are in Charlotte, N.C.

21 posted on 07/01/2009 8:02:09 PM PDT by optiguy (Government does not solve problems; it subsidizes them.----- Ronald Reagan)
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To: Lorianne

lol...who is supposed to be getting these IOUs? And For what?

I really hope it’s state government vendors.


22 posted on 07/01/2009 8:02:18 PM PDT by dragnet2
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To: optiguy

headquarters = headquartered


23 posted on 07/01/2009 8:03:23 PM PDT by optiguy (Government does not solve problems; it subsidizes them.----- Ronald Reagan)
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To: Lorianne
The United States Constitution:

Article I - Section 10 - Powers prohibited of States

"No State shall ... coin Money; emit Bills of Credit ... "

From http://www.usconstitution.net/const.html footnotes:

Bill of Credit: A bill of credit is some sort of paper medium by which value is exchanged between the government and individuals. Money is a bill of credit, but a bill of credit need not be money. An interest-bearing certificate that was issued by Missouri, and usable in the payment of taxes, was thus ruled to be an unconstitutional bill of credit.

Remember when the Constitution meant something?

24 posted on 07/01/2009 8:04:07 PM PDT by magellan
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To: optiguy

Upon further reflection, I’m an idiot. they’re = their


25 posted on 07/01/2009 8:04:56 PM PDT by optiguy (Government does not solve problems; it subsidizes them.----- Ronald Reagan)
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To: Lorianne

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45 posted on Wednesday, July 01, 2009 12:41:31 PM by Jim Robinson (Follow me on Twitter: http://twitter.com/jimrobfr)

26 posted on 07/01/2009 8:09:05 PM PDT by glock rocks (... just tryin to make do...)
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To: Lorianne

So, the marketplace is moving off the fiat cash all on it’s own? I understand Scrip was the coin of the whelm during the depression, and we’re moving to that now.


27 posted on 07/01/2009 8:12:05 PM PDT by Cyber Liberty (Pretending the Admin Moderator doesn't exist will result in suspension.)
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To: Lorianne
"Bank of America recognizes the State of California budget crisis will impact our clients and customers,"

I assume the IOUs are for people/companies doing business with the state government..

Seems to me they deserve everything they get for doing business with a corrupt criminal entity, that aids and abets illegal aliens, while forcing the legitimate working men and women to pay for it.

28 posted on 07/01/2009 8:12:13 PM PDT by dragnet2
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To: STONEWALLS
What assets?American’s got tricked into a fiat paper thinking it was money.History proves a different story.Stay with a redeemable commodity.Andrew Jackson really hit the nail on the head.
29 posted on 07/01/2009 8:20:54 PM PDT by taxtruth
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To: taxtruth

If their regulator accepts these assets..meaning the Treasury, Fed and FDIC..then BOA can do it. So it has the backing on the USG. No surprise here, but it just passes from one bad balance sheet to another..State..Bank..USG.


30 posted on 07/01/2009 8:27:39 PM PDT by Oldexpat
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To: Oldexpat

This was probably another decision that BOA made with a gun to their head.


31 posted on 07/01/2009 8:29:07 PM PDT by Oldexpat
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To: Oldexpat

I must add that when I did business in the Philippines with Marco running the show..BOA was required by him to finance certain companies owned by his cronies as the cost of doing business in the PI. They did the loans and Marcos signed for the RP..obligating the govt to guarantee. Sound familiar?


32 posted on 07/01/2009 8:31:31 PM PDT by Oldexpat
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To: Lorianne

Does the BoA alos accept Monopoly money?


33 posted on 07/01/2009 8:37:17 PM PDT by cranked
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To: Oldexpat

Yep,that’s why wall street crashed and the bankers are trying to get the big train on the tracks again,and do it all over.Bankers love this game.Money for NOTHING.


34 posted on 07/01/2009 8:38:34 PM PDT by taxtruth
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To: Lorianne

[from existing customers and clients]

And what about those who are not customers of BofA??


35 posted on 07/01/2009 8:51:23 PM PDT by oldteen
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To: magellan

And like anything in the Constitution, someone would have to file a lawsuit if they feel something clearly unlawful was happening.

If nobody files a lawsuit about this, nothing will happen.

I would be wary if the state of Calif. owed me money. If you “deposit” it in the bank, if Calif. doesn’t at some point pay back the bank, then the bank is simply going to debit all of their customer’s accounts back for these IOUs.

Also, why is Calif. issuing IOUs? I know they don’t have a budget, but, they are still collecting sales tax and gas taxes, still collecting withheld taxes from employee’s paychecks. They still have money coming in. If they are trying to say that without a budget they can’t spend any money, then how can they legally be collecting money without a budget?


36 posted on 07/01/2009 9:00:39 PM PDT by Dilbert San Diego
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To: optiguy

You’re right about Charlotte. I know it was founded in SF but I guess they moved about 10 years ago.


37 posted on 07/02/2009 3:46:34 AM PDT by Right Wing Assault ( Obama, you're off the island!)
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To: taxtruth

My state is so screwed up. It’s sad to see really, but I do think it’s funny in a macabre sort of way.

Where’s Larry, Moe, and Curly when you really need good governance?


38 posted on 07/02/2009 7:25:54 AM PDT by DoughtyOne (_res__ent of the United States, Barack Hussein Obama)
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To: razorback-bert
They will 40% interest until they get real money.

That's an interesting comment... I wonder what the going interest rate on California IOUs will be. It's not like they're rated securities, is it?

39 posted on 07/02/2009 10:22:31 AM PDT by Pearls Before Swine (Is /sarc really necessary?)
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To: razorback-bert

Yeah, makes you wonder who paid SEVEN percent (7.00%) Tuesday night, when all other banks are borrowing at less than ONE-HALF of a percent (0.50%) ... another troubled bank or a cash-strapped state?

New York Fed

Federal Reserve Bank of New York

|
Federal Funds Data
 
date
daily1



Range
std. dev.


[XML]
target rate2


[XML]
 
low 
[XML]
high
[XML]
daily
 
07/01*
0.20
0.10
3/8
0.04
0.00 - 0.25
 
 
06/30
0.22
0.01
- 7 -
0.56
0.00 - 0.25
 
 
06/29
0.17
0.05
3/8
0.05
0.00 - 0.25
 
 
06/26
0.18
0.05
3/8
0.04
0.00 - 0.25
 
 
06/25
0.19
0.05
3/8
0.05
0.00 - 0.25
 
 
06/24
0.21
0.10
1/2
0.05
0.00 - 0.25
 
 
06/23
0.24
0.10
3/8
0.04
0.00 - 0.25
 
 
06/22
0.24
0.10
0.38
0.04
0.00 - 0.25
 
 
06/19
0.25
0.10
0.40
0.03
0.00 - 0.25
 
 
06/18
0.25
0.05
3/8
0.04
0.00 - 0.25
 
 
06/17*
0.24
1/8
3/8
0.03
0.00 - 0.25
 
 
06/16
0.22
0.10
3/8
0.05
0.00 - 0.25
 
 
06/15
0.22
1/8
3/8
0.05
0.00 - 0.25
 

40 posted on 07/02/2009 11:17:55 AM PDT by BP2 (I think, therefore I'm a conservative)
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