Cash for California IOUs on Craigslist
"Investors" are looking to cash in on interest rate
By JACKSON WEST
Updated 2:00 PM PDT, Mon, Jul 6, 2009
There is already a market for the IOUs being issued by State Controller John Chiang, if postings on Craigslist are any indication.
The state is unable to issue proper checks because the fiscal year ended without a budget in place.
So for only the second time since the Great Depression, the state is sending out registered warrants to settle debts instead.
Bank of America, Wells Fargo and Bank of the West are all offering to honor the notes like cash, at least until Friday.
But if you're more the money-under-the-mattress type, there are folks happy to buy them from you.
"If what you need is cash, not a piece of paper, contact us. We pay top dollars for your newly issued, transferable State of California IOUs," reads one ad.
It's not clear if the offers are legitimate, or why one would sell warrants to a stranger on Craigslist as opposed to cashing them in at a bank. Craigslist offers users detailed warnings against financial scams.
$3.4 billion of the notes will be issued, according to Chiang, and they pay 3.75 percent annual interest -- better than most certificates of deposit offered by banks.
Jackson West is surprised Schwarzenegger hasn't put up most of the state's land and other assets for sale on Craigslist.
Copyright NBC Local Media
First Published: Jul 6, 2009 1:21 PM PDT on NBC Bay Area
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