Nation Digest

Nation in Brief: California Prints IOUs

Friday, July 3, 2009


State Distributes IOUs For Money It Owes

Deep in debt and short on cash, California on Thursday started churning out its first batch of IOUs in nearly two decades amid grumbles from bankers, growing public outrage and scant progress in negotiations to solve the state's widening budget deficit.

The printing presses at 2 p.m. began to roll out the first of nearly 29,000 IOUs totaling more than $53 million, most of them destined for residents around the state still awaiting income tax returns.

The unusual press run came just hours after a panel of state finance officials set the interest rate for the IOUs at 3.75 percent for banks and other financial institutions that are willing to accept the vouchers.

Some banks have agreed to honor the paper, including Bank of America and Wells Fargo, which will do so until July 10.

Wells Fargo's agreement came with a nudge. "We are reluctant to take this step, but are doing so to help our customers who are not at fault and with the expectation that the Legislature and governor will complete the budget within days," Lisa Stevens, a bank executive in California, said in a statement.

The state's three-member finance panel voted 2 to 1 to set the interest rate, with the governor's representative on the board objecting, proposing instead a 1.5 percent rate, with a redemption date of June 2010.

Some smaller banks have not made a decision on accepting the IOUs.

-- Los Angeles Times


U.S., Other Nations Set Goal For Cut in Carbon Emissions

The United States and other industrialized nations have set an "aspirational" goal of curbing worldwide greenhouse gas emissions by 50 percent by 2050, according to a draft document prepared in advance of a meeting next week of leaders of those countries.

Global greenhouse gases should peak by 2020 and the average worldwide temperature should not rise more than 2 degrees Celsius, according to the draft being negotiated by government officials ahead of the Group of Eight summit meeting in L'Aquila, Italy. Developed nations would cut their greenhouse gas emissions by at least 80 percent by mid-century.

World leaders at the gathering, including President Obama, also will discuss a new climate treaty to replace the Kyoto Protocol after it expires in 2012. Almost 200 countries are set to gather in Copenhagen in December to debate terms for a new accord to combat rising temperatures and sea levels.

-- Bloomberg News


California-Vegas Route Is New Rail Corridor

The clogged tourist travel route between Southern California and Las Vegas has been designated as a federal high-speed rail corridor.

Transportation Secretary Ray LaHood says the route is now part of the California rail corridor, endorsing the viability of high-speed train travel in the region.

Officials say the designation also signals a possible collaboration between California's proposed high-speed rail system and a separate project shuttling passengers between the two regions.

-- Associated Press

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