O.C. Investment Policy Tightened

The Board of Supervisors made four changes Tuesday to the county’s formal investment policy, intending to thwart a repeat of two questionable county purchases last year in struggling Edison International.

Among the edicts: Orange County Treasurer John M.W. Moorlach or his assistant must approve all investments by the close of the next business day.

The changes were triggered by the discovery in January of $40 million in Edison notes. The first $20 million was purchased last September, after Edison had been placed on credit watch by ratings agencies because of the state’s looming utility crisis.

Moorlach said he wasn’t aware for a week that the first investment had been made by his staff. He later apologized for both purchases.

“The board was very clear when we delegated the ability to make investments to the treasurer that we meant the treasurer,” not staff, was to make the decisions, Supervisor Todd Spitzer said Tuesday.

Either Moorlach or Assistant Treasurer Richard Hilde must now sign off on county purchases by the close of business the next day.

Among other changes approved by the board: Securities under negative credit watch by any of three nationally recognized rating agencies cannot be purchased, and no security purchased can have a rating less than the minimum required for that class of investment.

Also, the board agreed that Moorlach can delegate investment authority to those within his office, though ultimate oversight rests with him.

The changes put Orange County investments on the shortest leash since the county’s 1994 declaration of bankruptcy. The county’s investment pool lost $1.64 billion to risky investments by former Treasurer Robert L. Citron; about half was later recovered.

Moorlach said his office can live with the changes, although they will restrict what can be bought and the return available.

“Time will tell what kind of impact it will have,” he said.

The first $20-million note bought by the county matures on July 18. So far, Edison International has made all of its scheduled interest payments. A second $20-million bond, bought Dec. 7, was repaid.

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