Residents Greet the News With Dismay and Disbelief

For at least a generation now, it has been Southern California’s bastion of stability--well-groomed, bountiful in creature comforts, master-planned down to the smallest cul-de-sac. And so in Orange County it was tough at first for people to think the worst.

But gradually Tuesday--as grogginess gave way to shock, and shock segued to alarm--the municipality that the BBC once crowned “the culmination of the American Dream” began slowly to absorb its predicament. Orange County--one of the richest counties in America, the county whose local economy had grown 90% during the Reagan years, the optimistic hotbed of clean-cut high-rollers--had landed itself in bankruptcy court.

“I always thought of Orange County as the last bastion of wealth and the American way. I’m shocked,” said 32-year-old Cameron Pylant, who manages a men’s clothing store in the glitzy sprawl of the county’s fabled South Coast Plaza mall.

Meanwhile, Herbert Adler, 61, felt personally slighted: “What happened to all the taxes I’ve been paying all these years?” he demanded.

Even the county’s public officials were initially flummoxed when the gravity of the situation began to sink in. One county supervisor and her husband didn’t even pick up the phone when the pre-dawn call to report to county headquarters came over their answering machine because--well, in Orange County, financial disaster doesn’t come along every day.

“I thought it was either somebody who was drunk or playing a prank,” said Supervisor Harriet Wieder’s husband, Irv. “I don’t think I recall anything of that kind happening before.”

In the end, the summons was relayed by a posse of sheriff’s deputies, who were dispatched to Wieder’s Huntington Beach home to rouse her from bed.

Supervisor William Steiner was jolted from his sleep at 2:55 a.m., as was the board chairman, Supervisor Thomas F. Riley. Their instructions were to come immediately to the Hall of Administration in Santa Ana, and the tone of the call reminded them of every other calamity that had crossed their paths in this tumultuous land.

“My husband was woken up for the Laguna fires,” shrugged Elaine Vasquez, wife of Supervisor Gaddi H. Vasquez. “So we’ve been through these things before.”

Even so, as they pulled up to the maze of high-rise government offices at the county seat, their initial thought was that they were there to shore up the county’s defenses for another day of financial uncertainty. For days, the county had been grappling with a dramatic $1.5-billion loss in the value of its investment portfolio, and the East Coast financial markets were due to open at 6 a.m. Pacific time.

Hours passed. The supervisors could not be all in one room at one time because doing so would violate the Brown Act, the state open-meetings law that prohibits more than two supervisors from gathering at any time when the public has not been notified in advance. The place assumed the aura of a war room, as staffers shuttled bad news from room to room. One hour passed, then two, then five.

Then came the afternoon, and word began to seep out--in leaks, in calls to and from the governor, in calls to and from the state’s U.S. senators.

And gradually, there it was, like a free-floating cloud looming over the Southern California sky. At the lunch counters and in the malls, Orange County residents were dazed and befuddled. The county took on the air of a giant high school math class, with the deepening financial crisis marking the start of a dreaded calculus.

“It sounds like a joke,” said Debbie Fields, a 42-year-old meeting planner from Irvine, when told that her notoriously prosperous county had just filed for bankruptcy protection. “I’m pretty amazed. I feel speechless. I don’t know what to think.”

And neither did most of her fellow taxpayers.

“I’m one of those people that doesn’t have a clue,” said Laura Conkey, 28, a waitress at Pop’s Cafe in Santa Ana, where $2.99 gets you a chili dog with fries and the only percentage people care about is 15, as in the tip.

“We lost, what, $3 billion, $3 million?” Conkey said. “I know it was up there.”

The fact that the public kitty may be $1.5 billion lighter was more difficult to digest than a heavy lunch, and it made people even sleepier.

“Like usual,” Conkey said, reprising a familiar refrain around Pop’s crowded counter, “the bureaucrats were spending our money and not thinking about where it was going.”

Many felt the quintessential Orange County distrust of big government rising in their hearts. Even the vocabulary sounded slick and fishy--”derivatives” and “reverse repurchase agreements” and other jargon that signaled that a fast one might have been pulled.

“All I know is that people who seem to be in positions of power are abusing it,” said Lesley Renvoize, a nanny from Laguna Beach who was feeding her 8-month-old charge in the food court of Newport Beach’s Fashion Island.

She didn’t understand the intricacies of the crisis, but she had a bad taste in her mouth all the same.

“To me it seems like there is some big club of people who are in power, and it seems very hard for people like me to find out what’s going on.”

At an Orange County lunch counter, electrician Jim Berkey struggled to explain the situation to his friends. His assessment, although disillusioned, was basically upbeat.

“It’s all on paper,” said Berkey, whose bushy mustache seemed to go with his bristly oratory style. “Ain’t no money lost. Yet. All right? But from what I understand, the budget is based on what’s on paper.”

Still, he said, the county’s investment practices had been ironically flamboyant in light of the area’s bedrock fiscal conservatism.

His friends looked at him, amazed. Then, as he paused for a meditative sip of iced tea, Ray Scrivner of Placentia gestured with his head and said: “He don’t talk like that around us.”

Their mood was amused. And less than despondent. Which in a place like Orange County is true to form.

Lawyer James D. Daily, for example, represents an 8-year-old child who was mauled by a dog, and whose trust fund was invested in the county pool as part of a liability settlement. Daily said that despite the crisis, he still has faith the government will take good care of his small client.

“As far as the children are concerned, I have a feeling that the county will step up to the plate and take care of these matters,” he said. “Municipalities, they can lose money and whatnot, but children . . . the whole state and our community take special interest in the lives of children.”

Meanwhile, Laguna Hills City Manager Tim Casey, whose city has $916,934 in the pool, noted that, big as it is, Orange County’s is not the only pocketbook to hit the skids in recent years in Southern California.

“Bankruptcy doesn’t mean close up shop,” Casey said, “and the county can’t do that. So if it’s a maneuver to buy time and evaluate options for handling the portfolio, then it might not be bad. I just don’t know.”

Times staff writers Matt Lait, David Haldane, Lee Romney, Martin Miller and H.G. Reza contributed to this story.