Concerns Grow Over Work of Official in California
By REBECCA CATHCART
The New York Times
LOS ANGELES — Chriss W. Street was called a hero in 1994, when he sounded the alarm on high-risk investments in the Orange County portfolio and predicted the county’s $1.7 billion bankruptcy filing.
His reputation for prescience and fiscal responsibility helped elect him as county treasurer last spring.
Since then, though, the county’s Board of Supervisors and other officials have raised concerns over Mr. Street’s performance, including a $750,000 remodeling of the treasurer’s offices and a lack of transparency in his investment decisions.
His financial track record before taking office has also come under scrutiny after a series of suits and a federal investigation into the 2006 bankruptcy of an Indiana-based trucking manufacturer, Fruehauf Trailer, which Mr. Street oversaw as a trustee for seven years.
Last Friday, the Orange County district attorney subpoenaed Mr. Street’s office e-mail messages and other documents related to recent purchases and travel expenses.
On Tuesday, the Board of Supervisors voted, 4 to 1, for a three-week probationary period before deciding whether to oust Mr. Street.
Until the next board hearing, on Jan. 8, an outside consultant will review the county portfolio and monitor Mr. Street’s investment decisions.
Calls for comment from Mr. Street, who attended the Tuesday board meeting, and from his spokesman, were not returned.
If the board removes Mr. Street, it would name an interim treasurer until a new election is scheduled, a county supervisor, Patricia C. Bates, said.
Mr. Street surprised — and angered — board members during their regular meeting two weeks ago in the public comment part of the meeting when he announced that 14 percent of county investments were held in potentially risky bonds, called structural investment vehicles, that are often backed by assets tied to subprime mortgages.
Eight percent of those bonds, he said, had been put on a “creditwatch” by Moody’s Investment Service.
“When the treasurer gets up in front of public comments, he usually talks about homelessness around the civic center,” said the vice chairman of the Board of Supervisors, John M. W. Moorlach, said during the meeting Tuesday. An issue like portfolio weakness, Mr. Moorlach said, should have been handled with more sensitivity and advance notice.
Mr. Street does not inspire confidence, Mr. Moorlach said, “when he gets up and talks about S.I.V.s, and we don’t have something specific in our hands and don’t have an e-mail or anything to let us know about it.”
The concern over the investments follows Florida’s tumultuous experience with the bonds, which depreciated along with their underlying subprime mortgage assets, causing wary investors to pull out quickly.
Orange County is not as vulnerable to sudden loss, said Ian Rudge, an economic policy adviser to the board.
Although Florida’s pool of investors was large and varied, Orange County draws capital mainly from the school districts and the county.
Mr. Rudge also said the Orange S.I.V.s were backed by banks like Rabobank and others that would step in to cushion any depreciation.
The referendum on Mr. Street has been brewing for months, Mr. Rudge said, and it has more to do with problems other than the current portfolio.
“Here is a gentleman who is under various investigations, who was served with a subpoena on Friday, who has had various issues from his former company,” Mr. Rudge said. “We don’t think he’s going to be able to devote his full attention to making sure we don’t have any future problems in this current market situation while dealing with issues about his personal and professional conduct.”
The state of the county’s investments and Mr. Street’s performance with other work made it impossible for the board to decide on Tuesday whether to remove him, Ms. Bates said.
“He is adamant that judgments made on his prior investment life are very politically motivated,” she said. “We need to separate that from his work here as a duly elected official before we make the critical and very difficult decision of whether to remove this individual.”