Kornbluth said the public assumed anyone with Milken’s level of compensation “had to be guilty. Milken never socialized with Mr. Drexel’s strong franchise in low-rated debt didn’t materialize overnight. Before Milken, the greatest financier had been J. This created millions of jobs.

Other defendants in cases similar to Milken’s fought charges for as long as a decade, and eventually prevailed. Milken built many industry-leading companies through his financing. On the contrary, the fictional Gekko character is based on Ivan Boesky, who in a famous speech at the University of California, Berkeley, said, “I think greed is healthy. Both also had powerful allies in government and the media. As others began to exploit this insight, Milken turned increasingly to such issues as public health, education, wage disparity, expanding human capital, and medical research. So perhaps it’s not surprising that widespread misunderstanding persists about the facts of Mike Milken’s life.

In the s, Milken supported the pioneering work of Dr.

What Went Wrong: An Examination of Drexel Burnham Lambert’s Descent into Bankruptcy

The period from the lates to the mids generally favored debt financing. Kornbluth said the public assumed anyone with Milken’s level of compensation “had to be guilty. This was 20 years before his cancer diagnosis and a decade before any legal issues arose. It has been a corporate governance issue ever since A. The pursuit of Milken was an affront to the rule of law.

Between andMilken employed approximately 50 distinct securities types in a dozen major asset classes only one of which was high-yield debt to help finance the growth of more than 3, companies. Their share of the market declined as Milken financed thousands of below-investment-grade companies.

By the mid ‘s Milken had become the most storied financier on Wall Street, his high-yield bonds had ignited an American business revolution, and the firm, now known as Drexel Burnham Lambert, was launched to the apex of American finance. Milken, financially able to afford the settlements and concerned about the stress on his family, felt his time would be better spent on efforts such as helping address America’s serious education, medical research and public health issues – instead of spending a decade in court.


This structure – taken for granted today and widely taught in business schools – powered job growth in America for a quarter-century and is now moving around the world through the efforts of the Milken Institute. It advanced shareholder value from which everybody gained. M ilken’s impact on the economy.

michael milken wharton thesis

He formalized his individual efforts in early when he was relatively unknown to the general public with the formation of the Milken Family Foundation, which was endowed with several hundred million dollars. Steven Rosenberg, who reported a major breakthrough in the development of successful gene therapy that for the first time in history harnesses the body’s own immune system to shrink tumors; Dr.

Milken’s medical and public health philanthropy began in the s and paralleled his business career. Milken’s impact on the economy. Once Drexel’s knowledge of buyers and sellers took hold, the firm’s investment bankers, headed by Frederick Joseph, began underwriting new debt issues in for younger and smaller companies. The cable television industry would not be in anywhere close to four-fifths of American homes if Milken hadn’t financed several major provider companies.

Gordon suggests that Milken may have been “the victim of jealousy, self-serving crooks like Boesky, and ambitious prosecutors who lusted after so high-profile a case. Glib references to the “junk bond king” perpetuate a one-dimensional caricature of a multi-dimensional financial innovator.

Many of the prosecution theories we used were novel. There were other payments, primarily to dispose of civil litigation, but there was no adjudication of wrongdoing in those suits.


They grounded corporate jets and sold off company wine cellars in order to theiss profits.

michael milken wharton thesis

He’s the one who’s sold them on junk bonds. Why Milken supports medical research. Safeway is a company withemployees in almost 1, stores across the U. Milken’s problem was his success. Uses of high-yield “junk” bonds.

Michael Milken – Myths

This not only created millions of jobs; it also made bank loans almost superfluous, agitating a large segment of the financial community. In the early days, Milken worked long and hard out of Philadelphia and, later, New York, as a bond analyst, researching more than 2, issues — many of them the downgraded bonds of ailing conglomerates. In those days, there was very little innovation.

Alvin Toffler, the futurist and author of Whafton Shocksummarized the entire Milken phenomenon of mjchael and retribution in his book PowerShift: Insurance companies also saw Milken’s innovations as a threat because they were generally required by regulators to carry only investment-grade securities.

Some of Drexel’s largest clients reaffirmed ,ichael loyalty to the firm after the settlements, and the response of whartoh markets to both the investigations and their outcomes was muted. Journalists who don’t know the history sometimes conclude that he really did engage in insider trading but got the charge dropped as part of a plea deal.

In various Wall Street Journal op-ed articles, Milken has noted:.

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