Payback by Daniel R. Fischel
The Conspiracy to Destroy Michael Milken and His Financial Revolution

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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 the 2008 financial crisis. Instead of correcting systemic issues, government leaps to indulge special interests with patchwork handouts. Prosecutorial witch-hunts are then cynically used to deflect blame.

"This book is a must read for those of us who have been misled by the hyped-up journalistic accounts of the so-called "decade of greed." In a thorough examination of the major cases of the eighties alleging criminal financial manipulation, Daniel Fischel demonstrates that the real culprit is the government, which in its zeal to find scapegoats for its own mistakes grossly misused the justice system."—Milton Friedman

"Fischel's provocative book offers a critical analysis of how overzealous regulators and self-interested journalists often abuse and distort the truth in pursuit of headlines. This can produce irreparable harm to an individual's life and reputation. This book is almust read for executives, financial managers, and concerned citizens everywhere, because it could happen to you." —Bert C. Roberts Jr., chairman and CEO, MCI

"This is the eye opening story of how a high-profile case can spin out of control, at the expense of justice, and how a man can become a symbol and a scapegoat. No one is better qualified to tell this story than Dan Fischel, one of the nation's most distinguished legal scholars." —Susan Estrich, professor, USC

"In this no-holds-barred prosecution of the prosecutors, Dan Fischel comes to the defense of almost every major figure accused of financial fraud in the late 1980s and early 1990s. While I disagree with central elements of his analysis, Fischel's observations deserve serious consideration by everyone interested in the future of America's financial markets and in the workings of our legal system." —Joseph Grundfest, commissioner, 1985-1990, SEC

About Daniel R. Fischel

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Published March 7, 2013 by ChuHartley Publishers. 352 pages
Genres: Biographies & Memoirs, Business & Economics, Professional & Technical, Law & Philosophy. Non-fiction

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Fischel goes on to deconstruct the charges against Michael Milken, who bestrode the era's financial world like a colossus, and details how prosecutors purposefully criminalized regulatory violations or gained indictments for misdeeds, such as insider trading and stock parking, that are not define...

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