BofA to accept California IOUs

New Mexico Business Weekly ^ | July 2, 2009 | by Mark Calvey

[Oldeconomybuyer]

Bank of America Corp. says it will accept warrants issued by California’s state government through July 10.

BofA says the state’s budget crisis prompted its decision.

“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,” Charlotte-based BofA (NYSE:BAC) says in a written statement.

[Tarpon]

LOL -— TARP recipient says ‘no problem’.

How dumb do they think we are?

[Wolfie]

Another bank bailout in the making.

[Willie Green]

Why do I smell another “too big to fail” bailout headed our way?

[RC2]

And who is supporting BofA? Federal money! Where do the Feds get the money? You!

[Tijeras_Slim]

Wonder if they’d do that with my mortgage?

[aft_lizard]

Stupid enablers. However I am betting that the Obama Administration asked them to do this.

[Slapshot68]

Think CA welfare recipients are getting IOUs?

[freekitty]

A crooked state and a crooked bank. Geez

[tflabo]

Ahhh yes..the same BOA that was issuing credit cards to illegal aliens. BOA and Ca. State Legislatures are one of a kind——’misery loves company’.

[ClearCase_guy]

I don't understand how this is implemented. If I'm a contractor with the state of CA, and they can't pay me cash, they give me an IOU. What does that look like? Is it a letter? Is it a printed certificate?

And if I go down to the Bank of America and say "My monthly mortgage is due in a few days, I want to deposit this IOU -- does the bank teller smile and say "Thanks! Have a great day!" And is my account now bulging with "money" so that my mortgage payment will be successful?

[E. Pluribus Unum]

This is required under the Community Reinvestment Act.

</sarcasm>

Or maybe it's not sarcasm. Maybe it's true.

[ScottinVA]

IOUs — the new World Currency.

[Oldeconomybuyer]

[tflabo]

I-—incompetent
O-—overspenders
U-—unaccountable

[GeronL]

time to sell that stock

[ex91B10]

Being very financially ignorant at this level, I wonder if BOA can “bundle” these IOU’s and deal them off to a third party? Is [or will there be] a market for these instruments? Will some wizz-kid on Wall Street make up a whole new market dealing with state IOU’s? What kind of discount would it take? Are TARP funds being used in these transactions?

[Oldexpat]

The answer is yes,,TARP funds are in BOA so they are being used. Their regulator must approve their assets and this is an asset class. There may develop a market, but without a maturity date it is hard to guess...

[tflabo]

[Pan_Yan]

I wonder how much this is responsible for BAC stock trading in huge volumes today.