Bank of America (NYSE: BAC), CitiBank (NYSE:C), Wells Fargo (NYSE: WFC) have announced they will start accepting state-issued IOUs from customers as deposit.
Wells Fargo will begin accepting California’s state-issued IOUs on September 4th, the first that that IOUs can be redeemed by the state. Bank of America will follow up and begin accepting state-issued IOUs on September 9th.
Both institutions will credit customers’ accounts with any interest owed by the state of California. Bank of America will pay all interest, and Wells Fargo will pay any interest that totals over $5.00. Wells Fargo will stop accepting California-issued IOUs on September 30th and BofA will cancel the program on October 9th.
To cope with a $2.8 billion cash-flow started, California started issuing IOUs to taxpayers, vendors and local governments on July 2nd. The practice ended August 31st when receiving a cash-flow infusion from JP-Morgan Chase (NYSE: JPM) which would allow the state to, in essence, refinance the debt. By the time California had stopped issuing IOUs, they had issued 457,238 IOUs totaling more than $2.37 billion.
IOU holders can also redeem them by mail or in person at the state Treasurer’s office in Sacramento. The mailing address is State Treasurer’s Office, Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814. The state will redeem IOUs in person at the same address. The Treasurer’s Office walk-in office hours will be weekdays, 8 a.m. to 4 p.m., starting September 4th.
