A License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation

This is an amazing book. It really points out the genius of milken to create a pool of investors that he virtually controlled by their dependence on him continuing to fund them. He then according to Stein had them investing depositors money that was guaranteed by the government and having them invest in a circle fashion to continue the the basically false increasing valuation of investments which allowed him to issue more of those same "junk" investments to wall street. The whole scheme lasted exactly as long as he could have those pooled, controlled S & L's keep flipping those bonds to each other. Additionally Stein says Milken cause dthe Fitch rating firm to rate his junk bonds so highly that it became legal for S & L's to invest in them which opened the floodgates to him basically creating a false non arm's length market for the investments he wanted wall street to buy. Unfortunately the bonds became so "valuable" and the whole scheme so huge that even the publicly guaranteed funds of the S & L's he virtually controlled were no longer big enough to keep flipping those bonds at every increasing (false) valuations to each other. Once they had to start flipping the bonds to the arms' length market place where they were closely examined- the value of the bonds was quickly shot down and the whole thing collapsed. Stein blames Milken for the junk bond crisis not the S & L crisis. He says he precipitated and exacerbates it though in the S & L's where he colluded to have them invest in bonds that shouldn't have been rated for S & L investment. Those S & L's were some of the largest that collapsed and the ones where criminal convictions for the officers were prevalent. This is Stein's last true book as a reporter before he became a right wing mouthpiece for the monopolists he candidly criticizes in this book.A License to Steal It is absolutely an amazing insightful book into both how to rig the capitalistic system on a huge scale and the early truthful analysis of a formerly excellent financial reporter, Ben Stein, who has lately realized like Milken that there is more money to be made assisting the monopolists. So now we more often see Stein defending monopolists under the guise of "capitalism"(which it isn't) on Fox News. I find it telling that apparently this is on of the few of Ben Stein's books that is not being reprinted. Stein probably wishes he had never written it! The irony is Stein said in this very book that only monopolists could really make money in a free enterprise system (it's a brillant quote in there somewhere) and he lambasts it when Milken does it becuase apparently some of Stein's own relatives lost money to Milken's markets. Anyone seeking to be a financial investigator, thoughtful economic voter, or grand criminal should read this book. The only other book with such true insight into the REAL workings of a monopoly that equals this one is called "Hard Drive: Bill Gates and the Making of the Microsoft Empire" by James

Benjamin Stein's License to Steal is the finest book available on the emergence of the original issue high yield market and the consequences of Michael Milken's abuse of newly emergent and naïve capital markets through a combination of the promotion of bogus research on the probability of default, burying fraud within the issue documentation, and providing groundless "independent' ratings for new issues. Not since John Law has there been another evil genius on the scale of Milken, whose re-writing of his own history also presages our modern world of constant spin by decades. Milken's debasement of capital markets begins with his misrepresentation of the seminal W. Braddock Hickman study of corporate bond returns, follows his testimony before Congress and his telling silence during his prosecution, and ends in a prison term he so richly deserved. Stein documents each detail carefully and well in a delightful and compelling style that is readable, funny, and horrifying. Unlike "Predators Ball" and other titles that focus on the glitz posing as glamour, and the fraud posing as capitalism, Stein's study is a character portrait that follows Milken's rise and fall while focusing on both the hubris and hamartia that makes up Milken's twisted worldview and sense of himself. Stein also correctly calls attention to Edward Altman's early sponsored research that further polluted the high yield market and extended Milken's criminal activity, and highlights the underappreciated study by Paul Asquith on cumulative default rates of high yield bonds to support the fact that yields did not pay for default risk with Milken's desk of Drexel Burnham Lambert in the market. If Stein has any flaw, it is that he is too hard on the concept of high yield (and therefore, high risk) bonds. Like John Law before him, Milken did do some good, but it was an accident of his actions, not his intention. For John Law, it was the tangible proof that an economy could survive and grow on paper script instead of coin. In the case of Milken, capital markets were sclerotic and entrepreneurs' access to financing was circumscribed to highly regulated and overly cautious banks. Milken forced banks to reexamine their own lending priorities to include a wider mix of risk profiles in their loan portfolios, and simultaneously encouraged the industry to lobby regulators for eased restrictions. Mercifully they were led in this effort by current Federal Reserve Chairman Alan Greenspan. In hindsight, it now is obvious that banks and Savings and Loans were too constrained. It is equally obvious that the original issue high yield bond has a place in capital markets as part of a portfolio. But for a brief time in history there was a vacuum between banks, capital markets, entrepreneurs, regulators, and ratings agencies: filled by the evil ego that was and is Michael Milken. This book tells that story like no other.

The back of the book highlights are the tip of the iceberg to a great book... and is right on:"The world of Michael Milken--a world in which he could:*Orchestrate the creation of a whole network of federally insured saving & loans to which he could sell vastly overvalued Drexel junk bonds--at a cost of billions of dollars to depositors and taxpayers;*Pump up from nothing an insurance company network, induce it to buy his junk bonds, and then watch it fail, throwing hundreds of thousands of policyholders into panic;*Own a powerful stake in a prestigious bond-rating house that actually rated his own bonds;*Take a well-regarded national chain of daycare centers and make it a captive of the Drexel machine, force-feeding it junk until it collapsed;*Command a national network of journalists who would write that Milken was doing good works even after he was in prison.This is the world of Michael Milken, a financial manipulator so powerful that he was, in the words of the author, Benjamin J. Stein, "...almost a force of nature." " This is a great book! Get it.Other suberb, outstanding must reads on the Milken subject: "Den of Thieves" by James B. Stewart; and "The Predators's Ball" by Connie Bruck. Three great reads on Michael Milken. Any other recommended good books on the subject?