ORANGE COUNTY IN BANKRUPTCY : SEC Chairman Urges Voters to Oust Board of Supervisors

Securities and Exchange Commission Chairman Arthur Levitt Jr. has advice for Orange County voters whose Board of Supervisors’ lack of oversight led to the current financial crisis: Throw them out.

Levitt, at a luncheon meeting of the Town Hall of Los Angeles on Thursday, said the supervisors failed to adequately supervise former Tax Collector-Treasurer Robert L. Citron, who lost $2 billion in taxpayer money wagering that interest rates would fall this year.

“If your supervisors are so lax that they allow you the unique power, without oversight, to make that kind of speculation, I think the voters of that community should throw the whole bunch of (them) out of office,” said Levitt, according to Bloomberg Business News.

Levitt also came out swinging against Orange County’s chief administrative officer, Ernie Schneider, who complained over the weekend that Levitt had rebuffed his personal appeals for help.

But as Levitt told it in an interview with The Times, he telephoned Schneider repeatedly as the crisis unfolded and made several specific suggestions--all of which Schneider ignored.

Schneider wanted Levitt to impose an immediate moratorium against brokerages selling the collateral they held on loans to the county investment pool.

Levitt refused, saying that “it would be exactly like closing down the stock market.”

But what Levitt did do was telephone the chiefs of all the brokerages involved and ask them to voluntarily hold off on collateral sales. He said every executive complained that nobody in Orange County would return their calls.

“I was surprised and dismayed to see (Schneider) attack me afterwards,” Levitt said.