Robert Citron

Robert Lafee Citron (April 14, 1925 – January 16, 2013) was a Democratic Party politician who was the longtime Treasurer-Tax Collector of Orange County, California, when it declared Chapter 9 bankruptcy on December 6, 1994. Citron was the only Democrat to hold office in heavily Republican Orange County at the time. The bankruptcy was brought on by Citron's investment strategies, which seemed to be an effort to earn high incomes for the county, without raising taxes, through risky, leveraged positions in bonds. The strategy paid out at first. In 1994, a cash crunch occurred when interest rates increased and financiers for the county required increased collateral from the county.

Born in Los Angeles, Citron grew up in Burbank and Hemet. His father, Jesse, was the doctor who put an end to alcoholic W. C. Fields's love of scotch. The younger Citron made his career in the Treasurer-Tax Collector's department before winning election to the top job. He attended the University of Southern California but did not graduate.

Citron controlled several Orange County funds including the General Fund, the Investment Pool, and the treasury Commingled Pool. He sent out the county's tax bills with catchy slogans, such as "Taxes paid on time never draw fines." He won re-election seven times; in his last election victory, his opponent, John Moorlach, charged that his handsome gains were the result of risky betting.

As controller of the various Orange County funds, Citron had taken a highly leveraged position using repurchase agreements (repos) and floating rate notes (FRNs). The loss incurred by the use of these financial instruments reached the amount of $2 billion and was caused by being too highly leveraged for rising federal interest rates. In other words, if federal interest rates had not risen, the massive trading position would have been a substantially profitable position; if interest rates did rise, the trading position would result in substantial losses. In fact, rates rose.

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