Orange Country Votes to Resume Business Dealings With Merrill Lynch

June 4, 2003 ( - Orange County California has voted to resume a business relationship with brokerage house Merrill Lynch & Co., ending an unofficial moratorium on dealings with the firm.

Orange County Treasurer John Moorlach made the argument that access to the firm’s substantial commercial paper inventory could save millions of dollars for the county.   The county’s Board of Supervisors agreed, voting 3 to 2 to use Merrill Lynch as a broker for the money-market investments in its $5-billion portfolio, according to a Reuters report.

The decision means Merrill Lynch will be conducting transactions on behalf of the county for the first time since 1994.   That year, Orange County was forced to declare bankruptcy after the disclosure of more than $1.6 billion in investment losses stemming from moves made into interest-rate derivatives.

Orange County’s bankruptcy rocked Wall Street and embroiled several top financial firms in legal battles over the advice they gave and their other actions leading up to the bankruptcy.   Eventually, Orange County recouped some $865 million, including $400 million from Merrill Lynch to settle allegations that the brokerage’s bad advice contributed to the bankruptcy.

Last August officials voted to require approval by the Board of Supervisors before resuming business with Merrill Lynch even though Moorlach estimates the county’s $5-billion portfolio has suffered because of the reduced competition for its business.

“I am being pushed out of half the marketplace by not using Merrill,” Moorlach said. “We proved the point. It is an old war. Let’s move on.”