The biggest U.S. banks, including Wells Fargo & Co. and Bank of America Corp., JP Morgan Chase and Citibank announced plans to stop exchanging the registered warrants for cash after Friday.
The longer the registered warrants were accepted, the longer it took the Legislature to resolve the matter, BofA said. We do not want our acceptance of registered warrants to deter the state from reaching a budget agreement as soon as possible.
IOU holders can still have their IOU's honored at any of the state's more than 60 credit unions.
The state is battling a $26-billion budget deficit. The world's eighth-largest economy had its credit rating cut on July 6 for the second time in two weeks by Fitch Ratings as Schwarzenegger and lawmakers remained deadlocked over how to fill the hole in the $100 billion annual budget.
California last week issued 90,000 IOU's for a total value of approximately $355 million.