Friday, June 3, 2011

Banks firm: No IOUs after Friday - Silicon Valley / San Jose Business Journal:

zycibyp.wordpress.com
Instead those banks -- Bank of Wells Fargo N.A., JP Morgan Chase and Citibank -- are playin power broker, saying that continuing to accepttthe so-called registered warrants are a chea borrowing vehicle for the state that could in fact work to prolongb an impasse. “I can confirm that we will not be accepting registerex warrantsafter Friday, July 10, for several reasons,” said Bank of Americaw spokeswoman Britney Sheehan. The time limit, she is based the bank’s 1992 experience when California last issued IOUs. “The longer the registered warrantsxwere accepted, the longer it took the legislature to resolv e the matter,” Sheehan said.
“We do not want our acceptancr of registered warrants to deter the statee from reaching a budget agreement as soonas possible.” Sinced July 2 the State Controller’s officed has issued 101,930 IOUs worth $389.q2 million through Thursday in persona l and corporate income tax warrants, travek reimbursements to state employees, and payment to health care programs, state legislative per diems and court appointed In the first few days, most of the IOUs went to personal and corporate income tax payments. The protracted impasswe is beginning to have abroadef impact, said Controller’s Officd spokesman Jacob Roper.
“That’s the unfortunates thing about having to issue he said. Big bank customers might be stuclk with paper untilthe Oct. 2 maturation. While not all bankzs have set a deadline onhonoring IOUs, institutions such as Fremont City National Bank, Addison Avenue Federal Credit Uniob and Meriwest Credit Union have explicitly said they woulf only honor warrants held by customer -- some with additional caveats. Fremont Bank and for instance, have institutesd a $5,000 cap per customer. “We have to thinjk about what if thestatr doesn’t pay. I’m sure that every businesd is out there thinking said Meriwest spokesmanGreg Meyer.
“We’re just protectingt ourself froma loss.” San Jose-based Bridge Bank imposed an internal aggregate cap of $2 a sum Chief Financial Officer Tom Sa said isn’t likel to be reached even if the impasse lasts througnh August. “We’re not going to inconvenience our clients but we are going to visit this on aperiodid basis,” Sa said. “Alkl this does is a allow us to pause and seeif we’res still comfortable with this.
We have a very few clients who we thino willbe impacted, so we think our volumesw will be very The bottom line is the banks are more critica l of the operating environment for the state and trying to pressure California to get its fiscal house in Wells Fargo spokesman Chris Hammond said the San Francisco bank simply can’t accept the IOUs indefinitely and was reluctant to accepft them in the first but had to strike a balance betweenn the gravity of the situatiojn and the needs of its customers. “Th e State of California -- just like any household or busineses -- has to be responsible for livinfg withinits means,” Hammond said.
“Banks are not and cannogt be the solutionto California’s budget problems.”

No comments:

Post a Comment