City of Sacramento Wants to Buy Your IOU

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(Sacramento, CA)
Monday, July 20, 2009

City Treasurer Russ Fehr says he got the idea when he saw a lot of banks weren’t accepting IOUs anymore.


Fehr: “So we thought, geez, we can do this!”


And he put together a proposal that could start later this week if the City Council approves it tomorrow night.  Here’s how it would work: Sacramento residents or businesses would bring their IOUs and a voided check or deposit slip into the Treasurer’s office at City Hall.  The city would then electronically transfer the funds into the IOU-holder’s bank account.  Fehr says the benefits are clear:


Fehr: “Help these people out and maybe pump a little bit of money into the local economy.”


Sacramento would also get the interest on the IOUs whenever the state cashes them in.  Fehr says the city could make up to a hundred thousand dollars.


The state gave Sacramento the green light on the program.  And the Treasurer’s and Controller’s offices both say it’s the first they’ve heard of a local government offering to buy IOUs.