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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.
"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.
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.
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.