Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution Hardcover – July 1, 1995

I found this book to be very informative on the rise and fall of Michael Milken as well as on the general regulatory responses to the various financial "crises" of the 1980's.

First of all, the author is a professor of law and business at the University of Chicago who is very sympathetic to laissez-faire economics. Although the writing can be a little repetitive and overly detailed at times, I, as a graduate student of engineering, still found the style of writing very enjoyable. If you know a little bit about free market economics and a little bit about investing then you should find this book very accessible.

Second of all, this book offers a compelling defense of Michael Milken. If only Daniel Fischel was his defense attorney! Fischel persuasively argue that the charges against Michael Milken were incredibly vague and the laws used were highly subjective. Furthermore, the author also argues how there was a lot of national sentiment to vilify a Wall Street tycoon, such as Michael Milken, in response to the recent market downturn. Unfortunately, instead of viewing sudden declines in market prices as a consequence of overvalued securities, many individuals find it much more emotionally satisfying to blame a successful stock speculator for their losses, regardless of if the stock trader actually did anything wrong.

Further still, Fischel reveals how truly productive Michael Milken was. Milken greatly expanded the use of high-yield (viciously called "junk") bonds in corporate finance and mergers and acquisitions, which in turn revolutionized corporate restructuring.

Book is of great relevance today. From reading this book, you will learn of the emotionally-driven demands for the Federal government to respond to dips in the financial market. In response to the Savings and Loans crisis, Congress passed the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), which essentially created a government-backed oligopoly of bond credit agencies (i.e., S&P, Moody's and Fitch.) Note that these are the very same ratings agencies who are currently being blamed for the subprime housing crisis today.

This book is also of great relevance for the 2008 presidential primaries. First, Senator Barack Obama is calling for "21st century regulations" of stock speculators. Reading the regulatory responses in this book offers a very recent parallel to today's debate. Second, you will read about Senator John McCain's membership in the "Keating Five", a group of five legislators accused of improperly aiding Charles Keating, the colorful chairman of a failed Savings and Loan.

The most chilling chapter is the one that focuses on Rudy Giuliani as the relentless prosecutor of Michael Milken. Rudy Giuliani is portrayed as a ruthless attorney who will stop at nothing to incriminate speculators accused of insider trading. Specifically, you will learn about how Giuliani was the first to use the RICO Act, a federal law originally used to prosecute organized crime, for Wall Street traders. If the portrayal of Giuliani in this book is accurate, it is a stark contrast to the Rudy Giuliani of 2008, who campaigned for the Republican nomination while touting the virtues of the free market, especially in health care.

If you are interested in financial economics, the recent history of investing, free market economics or just what really happened with Michael Milken, then I cannot recommend this book more highly.

This book, written some years ago, tells the accurate story of the pursuit of financier Michael Milken. It peels back the curtain that protects the reputation of federal prosecutors who deserve no curtain to hide what they really did. (Disclosure: I had a role in providing post-conviction legal advice to Milken.) HARVEY SILVERGLATE, Cambridge, MA

Great book. Very readable. Fischel does an excellent job of explaining how Milken threatened the iron triangle of Big Business, Big Unions, and Big Government.

Watch out when an economist begins talking about law (or, like Posner, a lawyer talking about economics).
Another good book in this general line is Fenton Bailey's "Junk Bond Revolution". Very well written, probably by a ghostwriter.
A useful counterweight to conventional received wisdom, but, keep in mind, that experts are hired mouthpieces, and Alan Greenspan once testified on behalf of Charles Keating.

Payback: Conspiracy to Destroy Michael Milken and His Financial Revolution, The

If you are a contrarian like myself and don't want to fall for the standard (what your Gov't would like you to believe) populist rhetoric, you HAVE TO READ THIS BOOK. It really cuts through the BS and takes an honest look at the world of high finance. In the beginning it dissects insider trading and applicable laws in great detail so we have a good basis for what the prosecution was about. It's been said that statistics don't lie, but liars use statistics. In a similar vein, when the economy gets tough, our Gov't (and their minions) get dirty. Daniel Fischel documents this fact in spellbinding detail in this book.

I bought my copy in 2005 in order to prepare and educate myself for the coming subprime mortgage meltdown. Wow! There's nothing like a good honest look at history to see what the future has in store. And now I am here in 2012, and the parade of Gov't idiots and populist nonsense is only just beginning. At this moment I am looking at page 212 where Fischel is bearing down on "government's scapegoating" (S&L crisis), and presciently predicted, "Elected officials who see an opportunity to extract political contributions and other favors often are eager to help. Elected officials and regulators know that there is a good chance the problem will get worse, but they don't care. By the time the industry's problems become too visible to be ignored, they will be long gone and a new generation of elected officials and regulators in place. And for this new generation, the 'crisis' presents additional opportunities to search for scapegoats and 'rescue' the industry. These efforts are then used to convince taxpayers, who are left to foot the bill, that the government is on their side and something is being done to bring the guilty to justice."

Holy cats! How true with this current crisis again today? Remember Rohmbo's infamous phrase, "Let no good crisis go to waste"? They propped up the ailing banks with bailouts (again), and once these banks are making profits they extort cash settlements 'cause somebody used a rubber stamp to sign foreclosure documents. Never mind the fact that the people who borrowed the money hadn't paid the mortgage payments in about 3 or 4 years. To politicians on the hunt, the intent of the law isn't important! It's the failure to dot the i's and cross the t's that counts. The important thing for politicians is to wack someone with high profile, extort cash, and to create the illusion for the public that heavy handed political bullies are necessary to keep those naughty bankers and hot shot financiers from getting out of line. Notice that the plaintiffs seldom go to jail. That'd be like killing the golden goose from a gov't official's point of view, and oh how they love those deep pockets. Meanwhile the root causes are never really addressed - Fannie and Freddie are allowed to exist as zombies on a steady intravenous drip of taxpayers dollars, banks are logjammed with technicalities while foreclosures are allowed to rot on the vine, upside down mortgagees are encouraged to quit making payments, and the only one really getting wacked in the long run is the taxpayer.

But back to the book: There was a reviewer who complained about the later part of the book going into detail with the savings and load fiasco. I couldn't disagree more. To me this was the main impetus for buying this book and an integral key to the main subject of this story.

I could go on and on, but I thank God for Fischel's insightful review of this fascinating epoch in the history of finance and the economy. This book is a lodestone for those few who are not satisfied with the placebo dope (smoke and mirrors) our Gov't is so anxious to shovel down our throats. I thank God too for the spirit of freedom of the press and people like Daniel Fischel who are bold enough to tell it!