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When Government FailsThe Orange County Bankruptcy$
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Mark Baldassare

Print publication date: 1998

Print ISBN-13: 9780520214859

Published to California Scholarship Online: March 2012

DOI: 10.1525/california/9780520214859.001.0001

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Lessons Learned from the Bankruptcy

Lessons Learned from the Bankruptcy

Chapter:
(p.216) Chapter 8 Lessons Learned from the Bankruptcy
Source:
When Government Fails
Author(s):

Mark Baldassare

Publisher:
University of California Press
DOI:10.1525/california/9780520214859.003.0008

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

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