J. D. Swampfox

Do California IOUs Carry an Implicit Guarantee from the Federal Government?

While whatever banks choose to invest in does not have an implicit guarantee, the banks themselves ARE implicitly guaranteed. I suspect that, since it's not politically acceptable for the government to directly guarantee California IOU's, the government has already directed its captive banks to invest aggressively in those IOU's. The banks will do exactly as they are told-just as they did in the Chrysler and GM bankruptcies. If the banks take losses on those "investments", it doesn't cost the banks anything...only the US taxpayer.