May 19, 2024
December 6 is the 25th anniversary of Orange County’s infamous bankruptcy, but don’t expect officials there, in Sacramento, or anywhere else to have learned a thing.
When it comes to pension debt and other liabilities, California lawmakers really don’t want to know. It will be interesting to see whom they blame when the stock market goes south and takes public pensions with them.
When it comes to pension debt and other liabilities, California lawmakers really don’t want to know. It will be interesting to see whom they blame when the stock market goes south and takes public pensions with them.

Sacramento

When Orange County went belly up in 1994, the stories seemed to write themselves. One of the nation’s richest counties couldn’t pay its bills. Quirky Treasurer Bob Citron was the only Democrat elected to countywide office, yet Republican officials hailed him as a financial wizard as his Vegas-style investments raked in incredible returns. The county political establishment circled the wagons around him and took potshots at the messengers giving them sober news.

Citron, who died at age 87 in 2013, was indeed a colorful figure. Shortly after the bankruptcy, the Orange County Register described him as a man who “lived up to the penny-pinching stereotype of a treasurer–tax-collector” — known for his “well-worn suits, the calculator wristwatch to divvy up restaurant bills, the publicized spat with the county years back when he claimed he had been shortchanged $12 in a paycheck.”

That tightwad image, however, contrasted with his wild investment portfolio, which eventually collapsed like a house of cards — leading him to plead guilty to six felony counts related to falsifying information. Citron was never accused of personally benefiting from these dealings, but he was fined $100,000 and sentenced to a year in prison. He served his time at the jail commissary in a work-release program and quietly lived out his days in his modest Santa Ana home.

Citron had no degree or investment experience. He didn’t invest in stocks himself. (His defense even filed psychological reports claiming that he only had seventh-grade math skills and might be borderline brain-damaged.) Yet after a stint in the county’s tax bureaucracy, he won election as tax collector. The county merged that office with the treasurer to save on administrative costs, leaving billions of dollars in the hands of someone who had scant experience and who reportedly consulted with a mail-order astrologer for interest-rate advice. That all looks rather crazy in hindsight.

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See Also:

(1) Update On New York’s Self-Inflicted Energy Crunch

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