Great point about accounting for them on their books. Obvious but I did not think about it. What a joke. They have a bank audit and bank is holding $300 million in IOUs were are uesless.
I mean if anyone thought CA was anywhere near solvency they could have gone back to the bond market as they always had to paper over the problem. I am not sure if the credit market is frozen but I heard it almost is.
Banks are cutting consumer lines of credit unless people have stellar credit.
Even if you could book them at par, you’d need to write them down when the due date came and they didn’t pay off, unless the regulators were directed to cut you some slack. And what is the value of a nonnegotiable instrument which is in default. Even with ‘mark to model’ instead of ‘mark to market’ you’d have a hard time making those look good.