Bleak Bankruptcy-Related Predictions Fail to Come True

More than two years have passed since the national media descended on Orange County to report that the home of Disneyland was mired in the largest municipal bankruptcy in U.S. history.

The coverage wasn’t flattering. “In Orange County, nothing is in order,” reported the German newspaper Der Spiegel. Newsweek described “a land of beaches and bankruptcy,” while the New York Times talked about a “deadbeat” county.

Even David Letterman weighed in with the Top 10 signs that you hired a bad accountant. No. 5: “He used to be some kind of financial big shot in Orange County.”

Despite the barrage of bad press, however, media experts and others say that the county’s national image was not significantly tarnished by the 18-month bankruptcy.

Some had feared that the financial crisis would give the county a permanent black eye and prompt businesses to leave the area, but those and other dire predictions never came true.

“I think everyone realized that this was a county government bankruptcy, not an Orange County bankruptcy,” said Joan Gladstone, president of the Gladstone International public relations firm in Irvine. “People moved on.”

Gladstone and others attribute that to a number of factors, most notably that the county eventually paid its debt without raising taxes, slashing school budgets or touching the lives of most residents.

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Though the county’s government is still struggling to recover from the bankruptcy, the area’s economy in general is rebounding from the recession of the early 1990s, and future growth is projected.

“The experience around the country has been that, when localities deal with their problems effectively and have substantial underlying strengths, they are able to recover and rebound,” said Harrison J. Goldin, who served as New York City’s chief financial officer during its financial problems in the 1970s.

“Look at New York,” Goldin said. “The city had a brush with near-bankruptcy in the ‘70s and by the early 1980s was flourishing.”

Public attitudes appear to be shifting too. The latest Orange County Annual Survey found a surge of public confidence among county residents. More than 80% of poll respondents felt positive about life in Orange County. Only 7% listed the bankruptcy as a top concern.

Mark Baldassare, the UC Irvine professor who conducted the survey, said the national media’s early coverage was colored by a simplistic view.

“A lot of people came to Orange County with the wrong assumption that this was a wealthy suburban enclave,” said Baldassare, who is writing a book on the bankruptcy.

“Certainly, there are portions of wealth, but this is a very middle-class county,” he said. “The idea that this was a wealthy county refusing to pay its bills came out of that misconception.”

While interest by the national press has waned, the county will likely be associated with the bankruptcy for years to come. As a New York financial advisor recently told the Board of Supervisors, Wall Street insiders nearly always mention Orange County when discussing more recent financial problems in Washington and Miami.

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A New York Times review last year of T. Jefferson Parker’s mystery “The Triggerman’s Dance” began this way: “Orange County, Calif., wealthy and bankrupt, is a kind of spiritually distilled America, a place of mythic, reckless excess.”

Parker said the financial crisis confirmed his most critical impressions of the county government as being “flagrantly out of touch. . . . Only Orange County could let $2 billion slip away,” he said.

Nonetheless, the Laguna Beach author said he has fielded relatively few questions about the bankruptcy during a national tour for the book, which is about white supremacists in Orange County.

“It was talked about a little, but as I was going around the country people seemed more interested in Orange County as a hotbed of conservatism and right-wing activities,” Parker said. “The farther I got away from the county, the less people cared about the bankruptcy.”

Parker is now finishing up a new Orange County thriller in which the characters will mention the bankruptcy, but only in passing. “It’s put in the context of how eager the county is to put the events behind it and get on with things,” he said.

Getting beyond the bankruptcy has been Gladstone’s mission since the early days of the crisis, when she and other business leaders launched a campaign to counter the negative media images.

The group contacted reporters about “positive” Orange County stories, such as companies adding jobs or new concerns moving into the area. Gladstone also published her own newsletter to put a favorable spin on the daily developments of the bankruptcy.

Gladstone sees a silver lining in all the bad press. “Before, people didn’t know who we were. They saw us as an appendage to L.A.,” she said. “Now, people say that Orange County has a distinct identity.”