Tuesday, December 04, 2007

Add Orange County, California to the list of potential toxic waste bagholders

"They're all highly rated assets" - Until they are downgraded!

From Bloomberg:

Dec. 4 (Bloomberg) -- Orange County, California, the county that in 1994 was bankrupted by bad bets on interest rates, has about 20 percent of a fund it runs invested in structured investment vehicles that may face credit-rating cuts.

In the $2.3 billion short-term fund, the county holds $460 million under review for a possible downgrade by Moody's Investors Service, said Keith Rodenhuis, a spokesman for the treasurer.

In all of its funds, the county holds a total of $837 million of SIV debt, including $152 million in its $3.5 billion of money-market fund that isn't under ratings review, he said.

A Florida local-government investment pool lost half its $27 billion in assets to withdrawals from cities and school districts after they learned it held downgraded and defaulted commercial paper sold by SIVs. Florida officials froze the fund to prevent a further run on assets.

Finance officials with the Orange County Treasurer's office said the SIV debt it holds continues to meet its obligations and there is virtually no exposure to risky mortgages in them. All the debt still carries top ratings.

``We don't have the same kind of debt that Florida has,'' said Paul Cocking, the chief portfolio manager for the county. ``They're all highly rated assets.''


Tyrone said...

They're all highly rated assets.

Cow_tipping said...

1997 OJ county went bankrupt.
Isn't one in 10 years sorta par ???

Adam said...

Ah, this story makes me feel so warm and fuzzy inside, as a form of karmic justice. Many of these collapsed sub-prime outfits called OC home.

In a sense, you've gotta hand it to them: rarely does one's criminality and greed take out an entire COUNTY!

At least those working in the mortgage business peed in their own community pools, too, so now have to face angry neighbors to explain why their greed bankrupted the county.

Anonymous said...