California IOU For Sale
LIANE HANSEN, host:
You're listening to WEEKEND EDITION from NPR News.
On Friday at 6:00 PM Pacific Time, the major banks in California said they would cease cashing IOUs until October. That will leave many companies and organizations short on cash until then. But as commentator Cyrus Farivar discovered, there are ways to get cash now for a price.
CYRUS FARIVAR: Four days ago, I received an IOU in the mail. It was for $82.30, a small state tax refund. I took a picture of it and posted it to Twitter as a mere curiosity. I thought, huh, so this is what an IOU looks like. Neat. I tacked it to my wall and was planning on waiting until October to cash it, but then I got an email.
Hey, Cyrus. I'm a student at the University of Pennsylvania and an entrepreneur. I saw your tweet about getting a California IOU in the mail and I was interested in buying it for cash. You have a number that I could reach you on? Thanks, Boris.
I checked eBay and Craigslist, sure enough, there were ads like, "I want your IOU. Serious people only. Or if what you need is cash, not a piece of paper, contact us. We pay top dollars for your newly issued transferable State of California IOUs.
At first I thought it was people seeking to get a financial collectable. You know, like an Enron stock certificate or something. But then I found out that many banks were honoring them, too.
I called Boris and left him a message. Then I sent another message on Twitter, I'm selling my California IOU for $90 or best offer. Face value: $82.30. Want it? Email me within 30 minutes. There weren't any takers.
I kept scouring the Internet trying to figure out why there are more buyers than sellers. I got it once I talked to this guy, Alex Taba Tabayi, an IOU buyer in Los Angeles. I met him on Craigslist.
Mr. ALEX TABA TABAYI (IOU Buyer, Los Angeles): So there's the service of getting that cash immediately, for which there is a convenience, or a fee or, you know, value to the person purchasing it, which is the discount.
FARIVAR: And that's the key word, discount. If I wanted cash right away, I'd have to take less than face value. So I put it to Alex, what's your offer for my $82.30 IOU?
Mr. TABAYI: That's a small one. I don't know if $82 and some change would be worth the time and the paperwork, quite frankly. But, you know, for the purpose of this exercise, you know, 80 percent of that.
FARIVAR: He was offering me 80 cents on the dollar. What was the point of that? Other Craigslist posts were offering around 80 or 90 cents on the dollar, too. When I finished talking to Alex, there was still about 15 minutes left before the 6:00 PM deadline. It seemed like most of these buyers had all the class of a check-cashing shop with all the spelling skills of a Craigslist post. No offense, Alex.
In the end, it came down to trust. Who do I trust more: the state of California and Bank of America or email@example.com? Didn't I learn anything from spending an hour on Craigslist? Serious people only. Top dollars. Got it.
For NPR News, I'm Cyrus Farivar, Oakland, California.
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