The Rise of a Wall Street Maverick
In the busy streets of New York City, a young man named Michael Milken walked into a big glass building. It was 1969, and he had big dreams.
"I want to help companies grow," Michael told his new boss at Drexel Burnham Lambert. His boss smiled and gave him a chance to prove himself.
Michael was different from other people on Wall Street. While everyone liked to buy and sell safe bonds from big companies, Michael saw something special in smaller companies that needed help.
“Sometimes the best treasures are the ones others don’t see,” Michael would often say.
He had a special idea about bonds. Most people thought bonds that weren't rated "very safe" were bad. They called them "junk bonds." But Michael saw them differently. He gave them a new name: "high-yield bonds."
Think of bonds like IOUs. When a company needs money, they ask people to lend them some. In return, they promise to pay it back with extra money later.
Michael worked very hard. He would wake up at 4:30 in the morning to read about companies. By lunchtime, he had read more than most people read in a week!
His office at Drexel became a special place. People started calling it the "X-shaped desk." It was where Michael sat with his team, making phone calls and helping companies get money to grow.
Some of his early wins included:
• Helping a small cable TV company become bigger
• Getting money for food companies to buy new machines
• Making it possible for small companies to compete with big ones
Other banks didn't understand what Michael was doing. They thought it was too risky. But the companies Michael helped were happy. Many of them grew from small businesses into big ones.
A New Way of Thinking
Michael's ideas were changing Wall Street. He showed that smaller companies deserved a chance too. His team at Drexel worked hard to understand these companies better than anyone else.
"Everyone deserves a chance to grow," Michael would tell his team. "We just need to be smart about how we help them."
By the end of the 1970s, Drexel was becoming famous. Michael's office in Beverly Hills, California, was like a magnet. Company owners from all over America would come to see him. They all wanted his help to make their dreams come true.
Some people called him a genius. Others said he was taking too many risks. But everyone agreed on one thing: Michael Milken was changing how Wall Street worked, one bond at a time.
His team grew bigger. The X-shaped desk got more crowded. More phones were ringing. More deals were happening. Drexel was becoming one of the most important banks in America.
The quiet young man who wanted to help companies grow was now leading a revolution in finance. But this was just the beginning of his story. The biggest deals – and the biggest challenges – were still ahead.
Little did anyone know that the financial world was about to change forever, and Michael Milken would be right at the center of it all.
The Junk Bond Revolution
The year was 1980, and Michael’s special bonds were becoming very popular! More and more people wanted to learn about these “high-yield bonds.” Even big companies started paying attention.
Michael’s bonds helped companies grow faster than anyone thought possible. It was like giving small plants the water they needed to become big trees!
“We’re changing how money works,” Michael told his team one morning. His X-shaped desk was now the busiest spot in all of Beverly Hills. The phones never stopped ringing!
Making Dreams Come True
Something exciting was happening. People called “corporate raiders” started using Michael’s bonds in a new way. They could now buy big companies they couldn’t buy before!
“It’s like having a magic key that opens any door,” one businessman said. “Michael gave us that key.”
Here’s what made these bonds so special:
• They gave more people a chance to own big companies
• Small companies could grow bigger faster
• New jobs were created all over America
• Old companies got fresh new starts
Big Deals and Bigger Dreams
Some of the deals were huge! One day, a small company used Michael’s bonds to buy a giant food company. Another day, someone bought a big movie studio! These deals made news all over the world.
Michael’s team worked harder than ever. They started early each morning and stayed late at night. They believed they were helping make America stronger.
But not everyone was happy. Some old banks didn’t like these new ideas. They said Michael’s bonds were too risky.
“Sometimes new ideas seem scary,” Michael would say. “But look at all the good things happening! Companies are growing. People have jobs. America is getting stronger.”
A New Way of Doing Business
By 1985, Michael’s bonds were everywhere! Companies all over America were using them. Even some companies in other countries wanted to learn about them.
Drexel became very powerful. They were doing bigger deals than the oldest banks in New York. Michael’s office in Beverly Hills became more important than Wall Street!
In just a few years, Michael helped companies raise more money than anyone else in history!
The revolution was growing bigger every day. More companies wanted help. More deals were happening. The phones at the X-shaped desk rang more than ever.
But with all this success came new challenges. Some people started asking questions about how these deals worked. Others worried that things were moving too fast.
Michael kept working hard. He believed in his ideas. He knew his bonds were helping companies grow. But storm clouds were starting to gather. The biggest tests for Michael and Drexel were just around the corner…
The Peak of Power
In 1986, Michael Milken was on top of the world! His office in Beverly Hills was like a busy beehive. Money was flowing, deals were happening, and everyone wanted to be part of the action.
Michael made more money in one year than most people make in their whole life! He earned $550 million – that’s like filling a swimming pool with dollar bills!
Every morning, Michael sat at his special X-shaped desk before the sun came up. He liked to start work at 4:30 AM! His famous “morning meetings” were something everyone talked about.
King of Wall Street
“Michael is like a money wizard!” people would say. Even the biggest banks in New York had to admit that Drexel was now the most powerful firm on Wall Street.
“If you want to make a big deal happen, you have to talk to Michael,” became a common saying in the business world.
Some amazing things happened during this time:
• Drexel’s yearly parties became super famous
• Big company bosses flew from all over just to meet Michael
• The firm made more money than any other bank
• Everyone wanted to learn Michael’s special ways of doing business
Living Large in the 1980s
The 1980s were all about being big and fancy! Drexel’s parties were like something from a movie. They had famous singers perform and served the fanciest food you could imagine.
But Michael wasn’t like other rich people. He still lived in the same house and drove a regular car. He gave lots of money to help schools and sick people.
Money Magic
“We’re helping dreams come true,” Michael would tell his team. And it was true! Small companies were growing big. New jobs were being created. America’s business world was changing.
Signs of Trouble
But not everything was perfect. Some people started saying mean things about Michael and Drexel. They said the firm was too powerful.
Some people worried that Michael’s bonds might be too risky. Others didn’t like how much power Drexel had.
Michael kept working hard. He believed he was helping make America better. His team trusted him and followed his lead. The phones at the X-shaped desk never stopped ringing.
Everything seemed perfect on the outside. Drexel was making more money than ever. Michael was the most powerful person in the money world. But dark clouds were gathering…
Some people in the government started asking questions. They wanted to know more about how Drexel did business. The happy days of the 1980s were about to face their biggest test.
The mighty castle Michael had built was strong, but storms were coming. Nobody knew it yet, but everything was about to change…
Shadows of Misconduct
Dark clouds began to gather over Drexel’s sunny world in 1986. ️ The government started looking very closely at how Michael and his friends did business. Something didn’t seem right to them.
The SEC (that’s like the police for money stuff) thought some people were cheating to make more money.
The First Cracks
One day, a man named Ivan Boesky got in big trouble. He was Michael’s friend and did lots of business with Drexel. The police found out Ivan was doing bad things with money.
“I have something important to tell you,” Ivan told the police. “I know about other people who broke the rules too.”
This made everyone at Drexel very nervous. People started whispering in the halls. The phones at Michael’s X-shaped desk weren’t ringing as much anymore.
Questions, Questions, Questions
The government had many questions:
• How did Drexel make so much money?
• Why did some people get special deals?
• Were they telling the truth about everything?
• Did they follow all the rules?
Friends Turn Into Problems
Some of Michael’s old friends started telling secrets to the police. They hoped this would keep them out of trouble. Michael felt sad and worried.
“We didn’t do anything wrong,” Michael told his team. But more and more people were saying different things.
The Big Investigation
A special team of lawyers started looking at everything Drexel did. They checked every paper, every phone call, and every deal.
The government found more and more things they didn’t like. They thought Drexel broke lots of rules.
Michael still came to work early every morning. But now he spent more time talking to lawyers than making deals. His special touch with money wasn’t helping anymore.
Fighting Back
Drexel tried to show everyone they were good. They said, “We help companies grow! We make jobs! We make America better!”
But the bad news kept coming. More friends told secrets. More papers showed problems. The government found more things they didn’t like.
People who used to love Drexel’s bonds started getting scared. They wanted their money back. This made everything even harder.
The Pressure Builds
By 1988, things were really bad. The government was ready to do something big. They had boxes and boxes of papers showing problems.
Michael’s lawyers worked day and night. The happy buzz in the Beverly Hills office turned into worried whispers. Everyone wondered what would happen next.
Michael stood at his X-shaped desk, looking out at the morning sky. He knew bigger troubles were coming. The game was changing, and not in a good way. The question wasn’t if something bad would happen, but when…
The Fight Ends
In 1989, everything changed for Michael and Drexel. The storm that had been building finally hit with full force. ️
The government said Michael and Drexel had to pay the biggest fine ever – $650 million!
A Sad Day
Michael had to leave his special X-shaped desk. His fancy office in Beverly Hills became very quiet. No more early morning meetings. No more magic with money.
“I need to make this right,” Michael told his family. He agreed to pay lots of money and go to jail.
The news made everyone at Drexel very scared. Who would help them make money now? Who would lead them?
Everything Falls Apart
Without Michael’s special touch, Drexel started having big problems. Their magic with money stopped working. People didn’t trust them anymore.
The people who used to be their friends didn’t want to work with them anymore. Banks stopped giving them money. Customers took their business somewhere else.
The Last Days
One cold morning in February 1990, Drexel had to tell everyone the sad news. They couldn’t fix their problems. They had to close forever.
Workers packed up their desks. They took down pictures from walls. The halls that once buzzed with excitement became silent.
Michael Goes to Jail
Michael had to leave his family and go to jail. He wasn’t allowed to work with money anymore. His days of being the “King of Junk Bonds” were over.
• Michael went to jail for 2 years
• He had to pay $600 million in fines
• He couldn’t work in money business anymore
Learning Hard Lessons
The story of Drexel taught everyone important things. Making lots of money is good, but following the rules is more important.
Many people lost money when Drexel closed. Banks, companies, and regular people all got hurt. It showed how one company’s problems could hurt lots of people.
A Changed World
After Drexel fell, Wall Street changed. People made new rules to stop the same bad things from happening again. They watched companies more carefully.
The fancy parties stopped. The big deals ended. The time of wild money-making on Wall Street was over. A new chapter was about to begin, but it would be very different from the old days…
Starting Over
The story of Michael and Drexel didn’t end when the company closed. Something new and surprising happened!
A Different Path
After jail, Michael decided to use his smarts to help people instead of just making money. He started giving lots of money to good causes.
“I want to make the world better,” Michael said. “There are more important things than being rich.”
• Help find cures for sick people
• Give money to schools
• Help people start new businesses
• Make education better for kids
Changing Lives
Michael started a special group called the Milken Institute. It brings smart people together to solve big problems. They help make medicine better and schools stronger.
Wall Street Changes Too
The way people do business on Wall Street changed a lot after Drexel closed. They made new rules to keep everyone safe.
Companies had to be more careful with money. They couldn’t take big risks like before. Everyone had to play fair and follow the rules.
Good Things from Bad Times
Even though Drexel’s end was sad, some good things came from it. People learned to be more careful with money. They understood that following rules is important.
Looking Forward
Michael’s story shows that people can change and do better things. Even when you make mistakes, you can start over and help others.
“Life gives us second chances,” Michael often says. “What matters is what you do with them.”
The Big Lesson
The story of Drexel and Michael teaches us that money isn’t everything. Being kind and helping others is more important than being rich.
Michael found a new way to be successful – by making the world better for everyone. His story shows that even after big mistakes, you can change and do good things.