Insufficient Funds

California banks say they will no longer cash the state's IOUs

The jig is up. After three weeks of paying its workers with IOUs because it has been unable to resolve a deadlock over an $8 billion budget deficit, California's state government has been called by its banks. Three of the state's largest -- Bank of America, Wells Fargo and Union Bank -- have curtly informed Sacramento that they will no longer honor the IOUs, nearly $2 billion of which will be outstanding by the end of this week. Bank of America had been handling about 30% of the IOUs since California began issuing them on July 1. Said a spokeswoman for...

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