Budget Crisis, Promissory Notes | featured news

Bank of America and other big institutions plan to enforce a cutoff, making it harder to cash vouchers. To protect IOU holders from third-party speculators, the SEC defines the vouchers as securities.

California's lawmakers failed to agree on a balanced budget by the start of its new fiscal year on Wednesday morning, clearing the way to suspend payments owed to the state's vendors and local agencies, who instead will get "IOU" notes promising payment.

California lawmakers and Gov. Arnold Schwarzenegger duel over ways to cut into a $24.3 billion budget deficit or face having to issue promissory notes to cover the state's bills.