Orange County: Gee, We Had No Idea

DERIVATIVES? LIKE, DUH. FOR managers who once had $20 billion to invest, the folks running Orange County are trying hard to appear financial innocents. In testimony before a special state senate panel, a parade of county executives said they were unaware of the risks that led to the county's bankruptcy filing and losses of nearly $2 billion. "I had never owned a share of stock," testified former Treasurer Robert Citron, who said he relied on investment houses such as Merrill Lynch. Citron's deputy, Matthew Raabe, said he didn't grasp "the somewhat bizarre aspects" of the high-risk investments that sank the fund. Merrill said it "did not create or direct the county's investment strategy."

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