ORANGE COUNTY IN BANKRUPTCY : How the Crisis Unfolded

THURSDAY, DEC. 1

* Rumors that Orange County has cash-flow problems jolt Wall Street.

* After the market closes, local officials say the county’s investment portfolio has lost nearly $1.5 billion of its value this year.

FRIDAY, DEC. 2

* Investors, elected officials and federal regulators try to evaluate the loss from the county portfolio, which holds money from 185 municipalities, school districts and other government entities.

* County Treasurer-Tax Collector Robert L. Citron comes under increasing scrutiny for borrowing billions of dollars to gamble on risky investments called derivatives. He bet that interest rates would go down, but they went up instead. The amount owed on the loans increased while the value of the investments fell, resulting in the $1.5-billion paper loss.

* Two major credit-rating agencies say they may lower the rating for Orange County bonds.

* Two legislators call for Citron’s resignation.

* Securities and Exchange Commission launches an inquiry into the matter.

SATURDAY, DEC. 3

* County officials say three school districts and the County Department of Education borrowed a total of $200 million to invest through the treasurer’s office. Later, officials of another school district, Placentia-Yorba Linda Unified, said they had also borrowed and invested about $50 million.

* As the county tries to reassure its investors, two of the largest ones--the city of Newport Beach and the Irvine Ranch Water District--say they may demand their money.

SUNDAY, DEC. 4

* County supervisors hold emergency briefing sessions and set a meeting for the next day.

* Critics weigh a recall campaign against Citron, the county’s only elected Democrat.

MONDAY, DEC. 5

* Officials disclose that Citron resigned Sunday from the treasurer’s post he had held for 24 years.

* Investors who try to sell Orange County bonds find few buyers.

* Moody’s Investors Services says it may lower the county’s credit rating, which would raise the cost of borrowing for local agencies.

TUESDAY, DEC. 6

* With investors clamoring for their money, Orange County files for bankruptcy protection, freezing the assets of the investment pool.

* The five school agencies that collectively borrowed hundreds of millions of dollars to invest in the pool say they face a severe cash crunch.

WEDNESDAY, DEC. 7

* Municipal bond prices plunge on Wall Street and a major credit-rating agency lowers Orange County’s grade to junk-bond level.

* Residents flood county offices to learn if they must still pay their taxes.

THURSDAY, DEC. 8

* An internal audit shows that the county auditor warned officials more than a year ago that the investment pool was not adequately supervised.

* Wall Street brokerages dump nearly $9 billion in collateral put up by the county to back its loans.

* The county authorizes its attorneys to file suit against the brokerages, saying their action violates the U.S. Bankruptcy Code.

FRIDAY, DEC. 9

* County officials disclose that investment firms have sold $11.4 billion in bonds they held as collateral on loans to the county, leaving its investment pool with a residue of shaky holdings.

* Citron, who has remained largely in seclusion since resigning Sunday, hires Costa Mesa attorney David Weichert. The district attorney’s office says it will expand its inquiry into allegations that Citron might have accepted improper gifts from financial investors.

* The county files a lawsuit against Nomura Securities Co., a brokerage that sold $900 million worth of the county’s bond holdings during the week. Officials promise further action against other Wall Street firms.

SATURDAY, DEC. 10

* County officials suggest that a shortened workweek and layoffs of county employees are possible because of the crisis, and say they intend to halt all but the most essential spending. Supervisors indicate they are likely to postpone the purchase of a $94-million police communications system and the widening of the Santa Ana Freeway.

* County officials seek bailout help from several banks.

TODAY

* Montebello City Council, concerned about $47-million stake in the Orange County investment fund, meets in special session to consider hiring a bankruptcy attorney.

* Orange County supervisors scheduled to meet, though they likely will postpone the session.

MONDAY

* Bond markets to reopen after weekend break.

* Deadline for county residents to file property taxes.

Source: Times reports