Street’s powers intact

Orange County Treasurer Chriss Street successfully defended his office Tuesday from another attempt this year to strip him of his investment powers.

The county board instead voted 4-1 to hire an independent consultant who would assess the risk posture of short-term debt instruments known as structured investment vehicles (SIVs) in the county’s portfolio.

Street has been under pressure for several reasons, including a $750,000 office remodeling job and federal investigations into the way he handled the bankruptcy of a trucking company before he became treasurer.

This month, during the public comments period of a board meeting, he surprised supervisors with the news that the county faced a credit-rating downgrade on its debt securities.

“We asked you three weeks ago: Should we sell the SIVs, and you said no,” Supervisor Bill Campbell said. “I’d love to have someone else tell me that, separately, who’s not invested in the fact that he made the decision to buy.”

Supervisor John Moorlach, the lone dissenter on the board, disagreed.

“I didn’t see that that was really a necessary expenditure of county funds, since running a money market fund isn’t that complex,” Moorlach said, noting he would’ve voted for the original proposal.

Orange County is the only county in the state with public money invested in SIVs — securities in which purchasers make short-term investments, which, in turn, a bank may use for longer-term investments and subsequent profit.

While frequently receiving the highest offered investment ratings, the vehicle’s affiliation with some sub-prime mortgage brokers has made some observers nervous about their viability, Moorlach explained.

It was Street’s revelation earlier this month that Moody’s Investors Service may lower the credit rating of some of the County’s SIV holdings that prompted the board’s concern.

“It’s not like the end of the world — its just sort of a polite intermediary step,” Moorlach said. “But, it is a step, so you want to understand it, appreciate it and react calmly.”

The county has $837 million — about 14% of its total portfolio — in SIVs.

Street defended the investments, saying his office exercises “due diligence” to ensure the county does not incur unnecessary risks in its investments.

“These are high-quality assets, and our organization sought to diversify our investments across a broad range and truly avoid the sub-prime risk that people talk about in the news today,” he told the supervisors.

CHRIS CAESAR may be reached at (714) 966-4626 or at chris.caesar@latimes.com.