California’s largest banks will stop honoring the state’s IOUs after today, adding further insult to a state that is fast becoming the laughingstock of the nation. The move by banks means that taxpayers and private companies that have received IOUs will have to wait until the state solves it budget crisis before they can cash them. The banks’ decision also has triggered a black market on eBay and Craigslist in which unscrupulous vendors are paying desperate taxpayers and companies pennies on the dollar for their state-issued IOUs in hopes of making a substantial profit when the state is finally solvent again. The fear that this black market will get out of hand prompted the US Securities and Exchange Commission to announce yesterday that it will attempt to regulate the buying and selling of IOUs, according to the Chron.
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