BofA puts hold on California IOUs
Charlotte Business Journal - by Mark Calvey San Francisco Business Times
Bank of America Corp. will accept California IOUs, but it won’t credit depositor accounts for as long as a week or more. It put a hold of up to seven business days on the IOUs.
The fine print was included in an interview in Monday’s American Banker with a BofA spokeswoman.
Last week, Charlotte-based BofA became the first major U.S. bank to say it would accept California’s IOUs. The bank said its decision was prompted by the state’s budget crisis
BofA (NYSE:BAC) described the move as part of an effort “to support our customers.” BofA said the hold is a security measure.
“There’s a hold placed on the deposit of California’s registered warrants to give us time to check with the state to be sure the warrants are valid,” a bank spokeswoman said.
Wells Fargo & Co. says it will generally accept the state’s IOUs without a hold. “In most instances, we will provide you with next-business day credit for the face amount of the registered warrant,” Wells Fargo says on its Web site. But the San Francisco bank (NYSE:WFC), which owns Charlotte-based Wachovia Corp., says it retains the right to place a hold on the IOUs until they’re redeemed by the state, or to not accept the state’s IOUs at all.
Most banks said they plan to accept the IOUs through July 10.
The state has said it will redeem the IOUs by October and pay a 3.75 percent annual rate on them.
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