Offers to buy IOUs for less are plenty

SAN FRANCISCO — Online cash offers for California IOUs are proliferating on Craigslist and elsewhere as major banks stop accepting the financially strained state's promises to pay.

Eager buyers are offering anywhere from 60 to 95 cents on the dollar in hopes of scoring quick profits come October, when the state says it will pay the IOUs' face value plus interest.

"Don't wait until fall to get your money!" says one Craigslist ad. Small businesses that contract with California are tempted, saying they need the cash in hand to keep operating, but they also cannot afford the losses that would accompany selling their IOUs at a discount.

As of July 15, the state controller's office had issued 137,000 IOUs worth $640 million. The treasurer's office has promised to redeem them, plus pay interest at a 3.75 percent annual rate, by Oct. 2.