At least 60 California credit unions will accept the state's IOUs, which the Golden State began issuing July 2 instead of employee paychecks. A growing list of participating credit unions is posted on the California Credit Union League's Web site, ccul.org.
Henry Kertman, vice president of public affairs, said budget issues are more severe than usual this year, and unlike previous years when lawmakers would settle at the last minute, he hasn't seen any optimistic signs of a resolution.
IOU creditors must hold on to them until they mature on Oct. 2, or find a financial institution that will cash them. The state notes pay a 3.75% annual rate upon maturity.
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The move could potentially grow credit union market share because Bank of America and Wells Fargo, which both have strong presences in California, were among several major banks that told the Wall Street Journal they will stop accepting the IOUs July 10.
"We're not looking at this as a prime opportunity to steal market share; but rather, an opportunity to serve members and make the general public more aware of credit unions," Kertman said.
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