Ahhhnuld is finding out what the rest of us already know: The Big Banks SUCK

[marmar]

from Minyanville:



Banks Reject California's IOUs
Andrew Jeffery Jul 07, 2009 2:45 pm


Apparently, IOUs issued by an insolvent state aren't as good as cold, hard cash.

Last week, after state leaders failed to find a solution to an ongoing budget crisis, California began issuing IOUs to banks and other creditors. Now, despite initially agreeing to accept the IOUs in lieu of actual payments, some of the country's biggest banks are refusing to honor the promises to pay.

According to the Wall Street Journal, among the newly defiant banks are Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC). Along with an announcement yesterday by Fitch Ratings that it had dropped California's credit rating to BBB -- just a few notches above "speculative" levels, this shift in sentiment puts immense pressure on Sacramento to find a lasting solution to the state's woes.

California plans to send out $3 billion in IOUs in July alone. The IOUs mature on October 2, and promise to pay recipients 3.75% in annualized interest -- presumably, in addition to the principal. The state has said that without the IOUs it would run out of cash by the end of July.

The fear -- although there's no reason to assume this yet -- is that California's other disgruntled creditors will jump on the banks' non-acceptance bandwagon in a show of defiance. This would be a crushing blow to Governor Arnold Schwarzenegger and California state legislators, potentially forcing them to go hat in hand to Washington for a bailout. .......(more)

The complete piece is at: http://www.minyanville.com/articles/C-jpm-bac-wfc-gpm/index/a/23431

[madrchsod]

1. we gave trillions to the banks but where`s the money?

it`s just not California that`s going under. there`s going to be more states facing insolvency.

maybe the states should start selling their state land to foreign investors. i know california has some really great state parks that would certainly attract foreign buyers.

[MUAD_DIB]

6. You forgot the sarcasm icon for line 2.

[madrchsod]

8. yup....

[Confusious]

2. HOORAAY For the California Prop system!

Here's a state bankruptcy for you, and you and YOU!

[Ikonoklast]

3. I will purchase any and all IOU's issued by the State of California

For 10% of their stated value.

[tranche]

4. I bet they find a way to make money on the downside.

Then make money riding it back up with some taxpayer money thrown in somewhere.

[MUAD_DIB]

5. California will HAVE to raise its taxes.

If the CA Republicans want to obstruct what is needed then I am very comfortable of watching them being dumped into the Pacific.

[marmar]

7. Please. There's enough pollution in the Pacific.

:)

[zbdent]

9. I wonder how much of Kalifornia's GDP is in

an offshore numbered account that only Ahnuld knows the number ...