Everyone is hoping they'll never actually be needed.
But in case state Controller John Chiang really does run out of cash and the state is forced to issue IOUs - it calls them "registered warrants" - to pay state workers and vendors, his office has created a special working group to get ready.
Chiang warned of a looming state cash shortage in December, telling state departments to prepare for the worst. He's doing exactly that himself.
The controller has joined several financial industry groups representing credit unions and major and independent banks. Together, they're working to identify and work out any issues or problems that might be anticipated with floating IOUs before they start circulating, Chiang spokesman Jacob Roper told The State Worker.
"That includes a very serious look at security measures," Roper added.
Beth Mills, a spokeswoman for the California Bankers Association, told The State Worker individual banks haven't decided yet whether they will accept the state IOU's or not.
Mills said the working group met privately with Chiang's staff last week and the bankers had many questions that required "technical clarifications.""It's not as easy as the state issuing a warrant and a person takes it into a bank and cashing it," Mills said. "We need to know more about how many warrants we're talking about, the volume, and how much money is involved."
Mills said CBA is hoping for answers this week. Roper said conversations are ongoing.
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