Three large banks in California said they are accepting customers' IOUs from the state while lawmakers resolve their budget impasse.
JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. said they would accept IOUs, or registered warrants, issued to individuals and businesses who are owed money by the state, until July 10.
By the end of July, the state expects to issue nearly $3.4 billion worth of warrants while lawmakers decide how to fund the state's $26.3 billion budget shortfall. Gov. Arnold Schwarzenegger and the California Legislature failed to agree on a budget by midnight Tuesday, the end of the state's fiscal year.
B of A spokeswoman Colleen Haggerty said customers can deposit the warrants but there would be a seven-day hold before the funds would be credited to their accounts. The state has said it expects to repay banks for these warrants by October, Haggerty said. B of A set the July 10 deadline for accepting warrants because of lessons learned the last time the California Legislature issued warrants in 1992, she said.
Also, Tri Counties Bank in Chico, Calif., issued a statement that it plans to accept state-registered warrants.