Last week, the state of California began issuing IOUs — or “individual registered warrants” — to hundreds of thousands of its creditors. State Controller John Chiang said that without IOUs, California would run out of cash by the end of this month.
But now a group of the biggest US banks, including Bank of America, Citigroup, Wells Fargo, and JP Morgan, say that they will stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.
Meanwhile, Fitch Ratings dropped California’s bond rating from A to BBB amid the budget deadlock.
