Update at a Glance

July 6, 2009

The Bank of New York Mellon Treasury Services Will Not Accept State of CA Registered Warrants

The State of California began to issue registered warrants (effectively IOUs) for payment of certain obligations as of July 2. Preliminary information from the State controller's office notes that, "if there is sufficient cash available, registered warrants, or IOUs, will be paid by the State Treasurer on October 2, 2009 or a maturity date as determined by the State of California." These warrants, if issued, will be drawn against a new routing transit # 1211 4507 7.

Registered warrants are neither checks nor demand drafts. Rather, they represent a future promise to pay by the State of California. As such, they will not be accepted by The Bank of New York Mellon for deposit to any accounts.

Any registered warrants received by The Bank of New York Mellon Treasury Services will be returned to you on a "best efforts basis". Any provisional credit that may have been provided for these warrants will be reversed.

Impacts on Lockbox Services:

To address this unfolding situation:

The Bank of New York Mellon Treasury Services will attempt to identify registered warrants on a "best efforts basis" in our Wholesale Lockbox sites and will return these warrants to you as unprocessable items in your daily lockbox detail packages.

• Any registered warrants that we are unable to intercept in our Wholesale Lockbox process will enter the clearing stream. These registered warrants will either be sent back by the Bank of First Deposit (i.e., The Bank of New York Mellon or our network clearing partners), or they will be presented to the State of California and will come back as return items.
• This means that you will receive these warrants as either unprocessed transactions in your daily lockbox detail package, or as return items later on if they are initially processed in Lockbox.

Most registered warrants processed in our Retail Lockbox process will be outsorted by our high speed equipment and returned to you as unprocessable, along with an image of the scannable documents that accompanied the warrants. Any warrants that are not identified by us will enter the clearing system and may be returned to you as return items.

Likewise, registered warrants should not be processed via our Remote Check Deposit Service. Any warrants that are not disallowed at the point of scanning will be returned upon identification by The Bank of New York Mellon Treasury Services Operations area. Therefore, we ask you not to attempt to process warrants using Remote Check Deposit if possible.

We will provide you with further updates on this issue if additional changes occur.

Please contact your Bank of New York Mellon Treasury Services representative if you have any additional questions.