Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution

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About Payback: The Conspiracy To Destroy Michael Milken

To this day in the popular mind, Michael Milken is the poster boy of the "Decade of Greed"—the inspiration for movie character Gordon Gekko's chilling assertion that "Greed is good." Conventional wisdom driven by media hype deplored the corporate raiders and takeover arbitrageurs of the 1980s. But as Daniel Fischel, CEO of Compass Lexecon and a professor at the University of Chicago Law School, shows in this classic, engagingly written work of law and economics, it was Milken, at upstart investment bank Drexel, who, by underwriting corporate takeovers with high-yield debt—unjustly demonized in the press as "junk bonds"—forced corporate America to become more competitive, better disciplined, and better-run. Who resented this? The Establishment. Fat and happy in oversized and dysfunctional fiefs built for their own ease and self-protection, the Business Roundtable old boys fought back, using their connections in the press and the Government. Worse, grandstanding prosecutors like Rudy Giuliani, and judges more attentive to mob opinion than due process, proceeded to railroad an innocent man, whose deals profitably underwrote the tech and telecom revolution. The prosecutors' case crumbled on appeal, leaving only a story, untold by the media, of horrendous prosecutorial overreach along with the persistent smear that "junk bonds" enabled the "greed" of a certain class.PAYBACK shows the unhealthy influence of corporate special interests on Washington, who entrench personal power by manipulating politicians, laws, and regulations. The press rarely whistleblows—regulatory tweaks don't bleed, so they don't lead. For instance, the 1968 Williams Act's Rule 13(d) seems to promote shareholder transparency, but is really just a head's up to incumbent management of an impending takeover. Fischel's lucid portrait of how bad laws like FIRREA built the S&L crisis and made it much worse, with the bill handed to the taxpayer, foreshadows the even bigger debacle of