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

Fischel, a University of Chicago law professor who worked as an expert witness for Milken and Drexel, wrote a defence of both and an attack on the prosecutions.

The economic argument is that high-yield debt and the takeover wave it financed increased economic efficiency. Fischel argues that hostile takeovers discipline entrenched management, that the target shareholders captured large premiums, that leverage reduces the free cash flow available for managerial empire building, and that the empirical literature on takeover returns supports these claims. He treats Milken as having removed a capital market restriction, namely that only investment-grade companies could issue public debt, which had protected established firms from competition by new entrants.

The legal argument is that the prosecutions were driven by politics and by the interests of entrenched corporate management rather than by the conduct. He attacks the use of the racketeering statute, which permitted asset freezes before conviction and which he argues was used to force settlements from parties who could not risk trial. He argues that the specific offences charged were technical, that similar conduct was widespread and unprosecuted, that Rudolph Giuliani used publicity to build a political career, and that the savings and loan crisis was wrongly blamed on high-yield bonds when its causes were interest rate mismatch, deposit insurance and real estate lending.

Fischel was a paid participant on Milken's side, which he discloses. The book is an advocate's brief and reads as one. His claim that high-yield bonds did not cause the thrift losses is broadly supported by subsequent research, since thrifts' junk bond holdings were small relative to their real estate losses. His treatment of Milken's personal conduct, particularly the warrants and side partnerships, is the weakest part, and readers should compare Stein's account and Kornbluth's, both in this reference.