Wall Street’s Wild Ride: Nov. 19, 1984
The fast-money era of the 1980s quickly came to resemble, well, a carousel. Seated on it were corporate raiders such as Victor Posner, Carl Lindner Jr. and the Belzberg brothers (Samuel and William). At its controls: Drexel Burnham Lambert’s 38-year-old superstar, Michael Milken.
Milken’s marvelous money machine ran on junk bonds—a $41.7 billion market ($96.7 billion in 2016 dollars) that had grown 340% in five years. He helped executives put together deals, and often those clients became investors in future Milkenled offerings. “Incestuous? That is one way of putting it,” concluded the story’s authors, Allan Sloan and Howard Rudnitsky. “There is nothing illegal about this. It is simply a case of one hand washing the other—to [everyone’s] mutual profit.”
The government disagreed. When a politically ambitious prosecutor named Rudy Giuliani needed a poster boy for the decade’s excesses, he set his sights on Milken, who would plead guilty to fraud in 1990 and serve 22 months in prison. Since then he has devoted himself to philanthropy.