milken made a deal with ivan boesky to make millions of dollars illegally. california company wicks came to milken s firm and said it was planning a takeover. boesky bought the stock before it went up, shared the profits with milken s firm, but milken betrayed his client, charged a million-dollar fee and secretly earned $6.5 million more at the client s expense. authorities are worried that further disclosures resulting from the boesky affair may weaken public confidence in financial markets and weaken the markets themselves. i just came from inside. it looks like a mad house. i guess the bull market s over. it s a bloodbath down there. they re calling it the monday massacre, the worst drop in history. i call it the nearest thing to a meltdown i ever want to see. by the closing bell, the dow jones industrial average was down more than 500 points.
as one former s.e.c. official put it, this is like arresting the madame of a brothel and finding her private book of clients. this guy, boesky, takes a fall and all over wall street, they re practically jumping out windows. it comes out he s been taping his phone calls and maybe private talks for three months. and wall street big shots begin wetting their well, you get the idea. of course, boesky was guilty. there was going to be no defense. all he had was bargaining power. who could he deliver? levine was a fish, boesky was a shark. who is the whale they re going to catch? i don t know. drexel burnham? well, that s possible. in the middle of all this is drexel burnham lambert. until a few years ago, a little-known wall street firm. and then, it shot to the top by specializing in so-called junk bonds. high interest but also high risk. drexel and the head of its junk bond department michael
corporate takeovers. last year there were 4,000 involving $200 billion. this kind of deal is called a leveraged buyout. the company borrows the money, using its assets as collateral for the loan. in return the company issues ious. because it s so risky, those ious carry high interest rates, and they re called junk bonds. you may not have heard of michael milken, of the investment firm of drexel burnham lambert incorporated, but this 40-year-old wall street whiz is said to be the most powerful financier in america. he brought respectability to low rated junk bonds and then used the money to finance corporate raids and takeovers. without mike milken, t. boone pickens couldn t have raided gulf, 76 and phillips petrolium. he said if you really want to take over gulf, it s going to cost you $13 billion. i said, yeah, i get it. and he said, i can get the $13 billion.
he s the guy that t. boone pickens goes to and most people haven t heard of him. that s the way he likes it. he doesn t care about publicity and pride. he just cares about doing deals and having power. he was this shadowy howard hughes-like figure that you never saw, you just heard. it was milken s genius that created an entire market and fueled this takeover phenomena. we romanticize these characters. the fact of the matter, these are fat cats, first cousins to the financial manipulators, the robber barons of the late 19th century. they re trying to make a buck by doing nothing and putting people out of work. economists agree that some unemployment, some hardship is unavoidable in making the united states lean and mean again. but the takeover specialists call it corporate restructuring.
time served. the climate had gone from celebrating the excesses of wall street to condemning them pretty quickly. tonight s headline, milken pleads guilty in what may be the largest individual case of fraud ever to rock wall street. a case which ended in a plea bargain with the government. judge kemba wood said milken s crimes merited his removal from society. she sentenced the one-time king of wall street to ten years in prison. he didn t end up serving anywhere near that. he did go to jail for just under two years. i m confident when he left he was at a minimum a billionaire and quite possibly a multibillionaire. the game of monopoly could have been invented for donald trump. but monopoly is a tricky game. when you borrow $2 billion and the economy goes into a tailspin and you can t pay the interest on your loans, the bankers move in.