A Fresh Start in Investing

The Orange County treasurer’s office is about to get one of its jobs back: investing money. Not all the money, but about $100 million. It is a sensible test of the office’s ability to handle funds wisely and to heed new restrictions barring risky investments.

When Robert L. Citron was treasurer-tax collector, his office ran a fund containing as much as $7.5 billion. But the loss of $1.64 billion led to the 1994 county bankruptcy.

Agencies and cities that had invested in the fund understandably were reluctant to put their money there again. As a result, the pool now contains a bit under $3 billion.

Citron is gone, having pleaded guilty to six felony charges connected to his handling of the county fund. His successor, John M.W. Moorlach, has wanted to start investing some of the county’s money for about a year now. Wisely, the county supervisors held off.

Instead, Salomon Brothers Asset Management invested the funds. For its work, the company was paid more than $1 million last year. It has done well, according to county officials, realizing returns of about 5%.

Salomon Brothers will continue to invest the bulk of the county’s money, at least for a while. Moorlach, although a certified public accountant, lacked experience investing large sums. County officials rightly were worried by that and by the lack of controls over the office.

But since the bankruptcy, Moorlach has hired people experienced in investing large sums of municipal money and two committees have been established to oversee the operations of the treasurer’s office. That was a good idea. However, those committees will be worth little unless the supervisors heed committee reports and monitor the treasurer’s office operations. They must demonstrate that they have come away from the bankruptcy experience having learned the importance of oversight.