Chapter

Lessons Learned from the Bankruptcy

Mark Baldassare

in When Government Fails

Published by University of California Press

Published in print January 1998 | ISBN: 9780520214859
Published online March 2012 | e-ISBN: 9780520921368 | DOI: http://dx.doi.org/10.1525/california/9780520214859.003.0008
Lessons Learned from the Bankruptcy

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The biggest municipal bankruptcy in U.S. history is now over. There remain some nagging questions about what we can learn from Orange County's mistakes. When the surprising losses in the Orange County Investment Pool were discovered in December 1994, many seemed to think that this strange event could only occur in this unusual suburban county. County Treasurer Bob Citron and the Wall Street investors that lent him money were not the sole causes of the Orange County financial crisis. But Citron was the catalyst for this event. The bankruptcy was made possible by the political, organizational, and fiscal context in which these actors were operating during the 1990s— specifically, the political fragmentation of local government, voter distrust of local government officials, and fiscal austerity in the state government. A resilience of the political fragmentation is seen in the local government reforms that were a product of the bankruptcy. This chapter informs policymakers and scholars about the lessons to be learned from Orange County in order to limit the chances of a repeat of the fiscal crisis.

Keywords: Orange County; bankruptcy; fiscal crisis; Bob Citron; investors; political fragmentation; voter distrust; fiscal austerity; local government reforms; local government officials

Chapter.  10185 words. 

Subjects: Social Research and Statistics

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