Federal Agencies to Advise Governments on Investment : Program: O.C. officials have mixed reaction to involvement by SEC, Treasury Department.

Two federal agencies said Monday they will offer guidance to state and local governments to discourage the investing pitfalls that plunged Orange County into bankruptcy.

The Securities and Exchange Commission and the Treasury Department said they will cooperate to advise local officials on “prudent management of public funds.”

SEC Chairman Arthur Levitt Jr. said the plan involves educating state and local finance officers about the basics of risk management through speeches, articles and a video education program.

Levitt, in a speech before the National Assn. of State Treasurers at Lake Tahoe, Nev., repeatedly cited the Orange County bankruptcy, but added, “What is at stake here is not just the fate of one or two municipalities: It is the entire mechanism of public finance, which is based on the public’s trust.”

“Your councils, boards and oversight bodies should review lists of authorized investments regularly, and monitor the results closely,” Levitt added.

Levitt said that he and Treasury Secretary Robert E. Rubin plan many meetings with municipal officials.

Orange County Treasurer-Tax Collector John M.W. Moorlach, who oversees the county’s finances, said advice is welcome as long as it’s not mandatory.

“We don’t need the federal government telling us how to invest,” he said. “The federal government has nothing to brag about--the SEC didn’t catch this whole thing when it was happening. They’re as culpable as anyone else.

“If it’s accurate and helpful, let’s see it. Offering ongoing educational efforts, that’s a proper venue.”

County Supervisor William G. Steiner praised the federal initiative. “I fear that there are other potential Orange Counties out there, including many unsophisticated municipalities that can be taken advantage of,” he said.

The county sought bankruptcy protection in December, 1994, after sustaining about $1.7 billion in investment losses. The county released a timetable earlier this month for emerging from bankruptcy by June 30.

The SEC informed many of the county’s securities firms, advisers and officials last month that it is considering legal action against them.