Orange County financial fiasco causes little damage at L.A. banks.The Orange County investment disaster has caused limited damage at California banks and thrifts, and Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County-based financial institutions have been left unscathed, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. industry experts. The revelation this month that Orange County's investment fund lost $2 billion and the county's filing for Chapter 9 bankruptcy protection have perturbed per·turb tr.v. per·turbed, per·turb·ing, per·turbs 1. To disturb greatly; make uneasy or anxious. 2. To throw into great confusion. 3. investors in California banks and thrifts. They are concerned because financial institutions routinely invest in municipal bonds and extend credit to California municipalities. Orange County's financial problems place in doubt the value of bonds issued by Orange County agencies and the agencies' ability to pay back any outstanding debt to banks and thrifts. Immediately after the scandal broke, investors were calling Keefe, Bruyette & Woods Inc. a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of investment which specializes in banks and thrifts, said analyst Joe Morford. "We have gotten some questions and I know bankers have gotten a lot of questions," Morford said. "At this point, we have not discovered any significant exposure." Only one L.A. County-based financial institution holds securities issued by an Orange County government agency, according to bank and thrift experts and an informal survey by the Business Journal. Exposure limited Pasadena-based CenFed Bank holds two bonds issued by Centralia School District in Orange County, but those bonds are fully insured by New York-based Municipal Bond Investor Assurance Corp. for any potential loss of principal and interest, said Mark Taylor People known as Mark Taylor include:
And those bonds total $900,000 in value amid CenFed's municipal bond portfolio of $95 million, Taylor said. At least one San Francisco-based institution, Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , has some exposure to the Orange County financial disaster. Spokesman Cary Walker said BofA is one of several firms which have loaned money to the Orange County investment fund. Walker declined to reveal the amount of the loans, but said it was "significantly less than $650 million." The loans, called reverse repurchase agreements Reverse Repurchase Agreement The purchase of securities with the agreement to sell them at a higher price at a specific future date. For the party selling the security (and agreeing to repurchase it in the future) it is a repo for the party on the other end of the , "are backed with investment-grade securities and, as a result, the company does not expect its relationship with Orange County to have a material impact on either earnings or our financial position," Walker said. Campbell Chaney, analyst at the Chicago-based investment firm Rodman & Renshaw Inc., said his understanding of the BofA situation is "they may have to take some small loss (on the loans in the future) but it would be immaterial." Two investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company sold to the public through Bank of America branches and a BofA 800 phone number contain small percentages of Orange County bonds, said Greg Berardi, bank spokesman. About 1.5 percent of the Pacific Horizon California Tax Exempt Money Market Fund, which has $300 million in assets, is invested in an uninsured Orange County bond issue, Berardi said. Loss coverage minor In addition, 8 percent of Pacific Horizon California Tax Exempt Bond Fund's $130 million in assets is made up of Orange County bonds, Berardi said. He added that more than half the bonds are insured for loss. At San Francisco-based Wells Fargo Bank, some of its 16 different Stagecoach stagecoach, heavy, closed vehicle on wheels, usually drawn by horses, formerly used to transport passengers and goods overland. Throughout the Middle Ages and until about the end of the 18th cent. Funds contain small percentages of Orange County securities, ranging from 1.5 percent to 2.9 percent, said Lorna Doubet, bank spokeswoman. The Stagecoach Funds, with assets totaling $5 billion, are sold through Wells Fargo branches throughout the state, she said. Wells Fargo is also the investment adviser of another group of funds group of funds See family of funds. sold by investment firms, the Overland Funds, Doubet said. Those funds, with assets totaling $3.5 billion, contain zero to 3.5 percent Orange County bonds, she said. Wells Fargo itself does not hold any Orange County bonds in its investment portfolio, Doubet said. |
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