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Question: Who benefits from California issuing IOUs? Answer: The Big Banks

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posted on Jul, 9 2009 @ 09:02 AM
In this Wall Street Journal article, Banks' plan to refuse California IOUs takes heat , there were several interesting quotes.

The banks, including JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. and some regional banks, are trying to pressure lawmakers to end the impasse by warning that, after Friday, they won't accept IOUs issued by the state. The move would leave many businesses and families with pieces of paper and fewer options for getting their money immediately.

Yep. Just as in the case of the Federal Government, they are showing the California State Government who's boss. This only comes at the expense of everyday people as shown in the following quote. They have absolutely NOTHING to lose by doing this and everything to gain.

"They're certainly not just abandoning their customers as of July 10," Beth Mills, a spokeswoman for the California Bankers Association said. Mills said that while banks might stop accepting the IOUs, many might issue loans or establish lines of credit with customers instead. Bank customers could then repay the short-term loans in October after the state makes good on paying the IOUs.

Do you think that these loans and credit lines will be interest free? Nope, they won't be.

But, on the other hand,

The banks could also find themselves losing customers to institutions willing to keep accepting IOUs. Some credit unions have been more flexible by not setting a deadline, according to the California Credit Union League. Nearly 60 have already said they would accept the IOUs and only two might stop accepting them on Friday, league spokesman Henry Kertman said.

If they lose enough customers, then they'll be back begging US, the taxpayers, to bail them out again. And, we will, because we all know AND MORE IMPORTANTLY, THEY KNOW that TPTB have deemed them too big to fail. But, I doubt they will lose many customers over this because people will not see this for what it is and will be grateful to the banks for allowing them to borrow money from them (at interest).

So... either way, they will make their money and the average citizen will LOSE.

The only way to force big banks to deal morally with it's customers is to stop enabling them through bailouts, let them go bankrupt and then break them up.

Edit to add:
I just read this in another Wall Street Journal article, Big Banks Don't Want California's IOUs.

The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July.

They previously committed to accepting them. But now that California is issuing them, they conveniently change their minds. Hmmm.... sounds like when they committed to the state to accept them that they knew they could make money off of the IOUs and just simply lied.

[edit on 9/7/2009 by Iamonlyhuman]

posted on Jul, 9 2009 @ 09:25 AM
Of COURSE that's how it's going to work out, who REALLY expected anything different?

It's like a guy I used to work for, worked out for himself that if he delayed payments of our checks by 2 weeks, and kept the money in a high interest account, he could make a bit of profit off of the interest that he would make, by keeping it in there, and then claiming to us employees that "The company is having difficulty right now in making good on your hourly wages. Please be patient with us! We'll mail out the checks in 2 weeks..."

Do this even a few times, you'll earn some profit.

Once one of us found out the truth, he DID get into trouble with the law over it, BUT, that's not the point. He still did it.

Same process of thinking can be said for the banks themselves. How much money did they get from us, the taxpayers, again? How much did they scream and cry about not having enough funds to get through, and to please be patient with them, they'll get back on their feet soon enough?

Yep... Gotta love greed.

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