The Worst Investment in Pension Fund History (w/ Senator John Moorlach)

TL;DR

John Moorlach went from being a certified financial planner to the California state senator representing the 37th district after uncovering the risky investment practices of the Orange County Treasurer.

Transcript

Mike Green I'm here in Sacramento for real vision I'm really excited to sit down with John more like John you're the California state senator representing the 37th district of california which Huntington Beach the Orange County Costa Mesa area wanted to briefly dig back into your background though because you didn't start in public service you actu... Read More

Key Insights

• ❓ John Moorlach's background as a certified financial planner gave him the expertise to identify risky investment practices.
• 😮 The Orange County Treasurer's leverage-heavy investment strategy backfired when interest rates started to rise.
• 🙈 Moorlach's warnings were ignored by credit rating agencies and reporters until it was too late.
• 🪩 The Orange County bankruptcy and its impact on Wall Street mirrored the events depicted in "The Big Short."
• 😚 Despite losing the state treasurer election, Moorlach has had a successful career in public service, representing the state of California for over 25 years.
• 😫 Moorlach's transparency, demonstrated through his blog and podcast, sets him apart from other politicians.
• 🐕‍🦺 His experience in finance and his dedication to public service make Moorlach a unique and valuable asset in California politics.

Questions & Answers

Q: What prompted John Moorlach to run for state treasurer?

Moorlach was recruited to run for state treasurer after his neighbors in Costa Mesa suggested that he could make a difference and improve the financial management of Orange County.

Q: What alerted Moorlach to the risky investment practices of the Orange County Treasurer?

After examining the portfolio being managed by the treasurer, Moorlach realized that a significant amount of leverage was being utilized, putting taxpayers at risk.

Q: What was the investment strategy employed by the Orange County Treasurer?

The treasurer made an arbitrage play, borrowing at the short end of the yield curve and buying at the 4-year level to profit from the spread between interest rates.

Q: How did Moorlach's warnings go unheeded?

Despite sounding the alarm about the potential risks, Moorlach was widely dismissed by both reporters and credit rating agencies who failed to recognize the magnitude of the situation.

Summary & Key Takeaways

• John Moorlach started his career as a certified financial planner and CPA before being recruited to run for the position of state treasurer.

• He discovered the risky investment practices of the Orange County Treasurer and warned of the potential consequences.

• Despite being dismissed by many, Moorlach's predictions ultimately came true, leading to the bankruptcy of Orange County.