PAYBACK by Daniel R. Fischel


The Conspiracy to Destroy Michael Milken and the '80s Financial Revolution
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 A contrarian view of the much-maligned 1980s, from a University of Chicago economist who remains convinced that the US government was guilty of economic offenses far worse than any committed by the handful of putatively errant Wall Streeters it put in the dock. Drawing largely on the public record, Fischel first makes a persuasive case for the unpopular proposition that the merger mania that convulsed corporate America during the '80s was a constructive development. Among other benefits, takeovers (or the threat thereof) helped restore the world-class competitiveness of US industry (in part by making its stewards appreciably more accountable) and created vast liquid wealth for individual as well as institutional shareholders. Not too surprisingly, de facto restructuring outraged the domestic business establishment, which with winks and nods sicced federal prosecutors on upstart challengers. In particular, the Business Roundtable (a Washington- based lobbying group supported by major American corporations) was vocal in its criticism of the putatively coercive tactics employed by raiders. In the author's informed opinion, much harm and precious little good came of unleashing the Justice Department's pit bulls: Virtually all convictions obtained in court against arbitrageurs, brokers, and investment bankers were reversed on appeal. 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 defined in securities law. Also covered in credibly revisionist fashion are the factors that undermined thrift institutions, the real sins of S&L scapegoats, and Washington's culpability in the interim collapse in demand for junk bonds (which have since provided handsome returns). A convincingly documented and thought-provoking audit of the high costs of government intervention in the free markets that have built America's enviably high standard of living. ($40,000 ad/promo; author tour)

Pub Date: Aug. 3rd, 1995
ISBN: 0-88730-757-4
Page count: 384pp
Review Posted Online:
Kirkus Reviews Issue: June 15th, 1995