Merrill, O.C. Could Do Deals Again
Orange County Treasurer John M.W. Moorlach, who first warned about risky investments with Merrill Lynch & Co. before the county’s 1994 financial debacle, said Wednesday he wants to do business again with the giant brokerage firm.
With the ink barely dry on Merrill’s $420-million settlement with the county, Moorlach boldly asked the county’s bankruptcy attorneys to let him know if he could resume doing business with the onetime leader in the California municipal bond market.
Lawyers cautioned him to wait until the settlement is approved in federal court, which could take several months.
But his request is generating heated debate in county government, where many see the company as the major contributor to the county’s historic bankruptcy.
Resuming business with Orange County would be both symbolic and substantive for Merrill, which had been one of the busiest municipal bond issuers in California. The brokerage has seen its ranking as an underwriter in the state drop from first to seventh and its market share plunge from 18.4% in 1994 to 6.5% last year, according to Securities Data Co. in Newark, N.J.
Moorlach said the county is being deprived of the highest possible returns by being unable to deal with Merrill. As long as Merrill has settled the suit and the settlement is approved, he said, the company should be able to do business again in Orange County.
“We’re talking about a company that made some egregious judgments, but we’re all human,” said Moorlach, who replaced Robert L. Citron, the county’s former treasurer who served a year in jail for illegally diverting interest earnings from fund investors to the county.
“I have made mistakes in my past,” Moorlach said. “I’ve lost money on investments and made errors on misreading certain people. Does that mean I’m no good for the rest of my life? Maybe it means I’m smarter the next time around.”
Merrill spokesman Tim Gilles said the company and county officials anticipated thawed relations when the settlement was announced last month.
“We welcome Mr. Moorlach’s positive comments and we look forward to working again with the county in the future,” spokesman Bill Halldin said from Merrill’s New York headquarters.
But many county officials immediately criticized the idea, some saying it amounted to dealing with the devil.
“I can’t imagine that when we have so many investment firms to choose from that we would want to go back to the scene of the crime,” said Supervisor William G. Steiner, the only board member who was in office at the time of the financial collapse.
Carole Walters, head of the Committees of Correspondence, a taxpayer group formed in the wake of the bankruptcy, strongly opposes using Merrill Lynch: “Using the same people who cause the bankruptcy is crazy. How can we trust them now after everything they did to us?”