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

Stein, a lawyer and writer who had covered the junk bond market for Barron's, wrote a hostile account of Michael Milken's operation at Drexel Burnham Lambert. He argues that the high-yield bond market Milken built was not a legitimate financing innovation but a mechanism for extracting value from savings institutions, insurance companies and shareholders.

The specific claims concern the network. Stein argues that Milken assembled a group of buyers, including savings and loan institutions such as Columbia Savings and Loan and insurers such as First Executive, who bought the bonds Drexel underwrote, and that these buyers were dependent on Milken for their own financing and for the trading marks on their portfolios. He argues that this let Milken place issues that no independent buyer would have taken, that the reported liquidity of the market depended on Drexel making the price, and that the collapse of many of these institutions at public expense was the predictable result. He also covers the parking arrangements with Ivan Boesky, the stock manipulation charges, and the use of warrants and equity participations that transferred value from issuers to Milken's own partnerships.

The book is a polemic and does not conceal it. Stein wrote much of it during the prosecution, and his account of Milken's motives is unsympathetic throughout.

Daniel Fischel's Payback and Jesse Kornbluth's Highly Confident, both also in this reference, take positions ranging from defence to ambivalence, and readers should compare them. The empirical question of whether high-yield bonds performed adequately as investments has been studied since, with results that partly support the defence: default-adjusted returns on the asset class were reasonable, though the returns to specific portfolios concentrated in Drexel underwritings were not. Stein's account of the interlocking buyer network is the part that has held up best.