[dvt]

I live in Santa Monica and often walk past the Lowell Milken Family Foundation (which is close to the posh downtown). I always kind of smile and think about the story of how the Milken Family completely reinvented itself. Michael Milken, for context, was paid the highest yearly salary in the history of the world (~250M in one of his highest years if I remember correctly). He served 2 years in prison, his fine was 600M and the guy is still a billionaire (he also got pardoned by Trump in 2020). He's a self-admitted crook and liar[1].

How many lives were destroyed (or at least harmed) by hustling junk bonds? Is that okay now that he is donating money to cancer research? Forbes and CNN certainly think so[2] (even in 2004, for that matter). William K. Black put it well: "the best way to rob a bank is to own one."

[1] https://web.archive.org/web/20220428215122/https://www.nytim...

[2] https://money.cnn.com/magazines/fortune/fortune_archive/2004...

[derefr]

> Is that okay now that he is donating money to cancer research?

If someone was an asshole, but has decided to stop being an asshole and try out "being a nice person" instead — then your choice, as an onlooker, is between either encouraging them in their new take on life; or pushing back due to their past actions. Through your actions, you can choose to live in a society where "turning over a new leaf" like that is either incentivized, such that more assholes become not-assholes... or disincentivized, such that the assholes' takeaway will be "damned if you do, damned if you don't", and they'll likely not bother, and keep being assholes.

Clearly, one of those options is better for the public good than the other.

[Banana699]

As a sibling comment points out, there is always a tradeoff between forgiveness and commitment, forgive too much and you incentivize people to take advantage of you (why not? You always forgive in the end), but forgive too little and you incentivize people to go all-in once they make one initial mistake.

Abrahamic religions solve this by imagining an entity capable of deciphering all of your intentions perfectly and delegating the task of granting forgiveness to it, but this perfect oracle is obviously not realizable in practice. Even the communities that worshipped this entity fervently had to contend with the Prisoner's Dilemma nature of the problem of forgiveness frequently, and they solved it no better than others. It's a really difficult problem.

[justinclift]

> Abrahamic religions solve this

Perhaps better worded as "attempt to solve this", as clearly it's not working for them in practise. ;)

[pessimizer]

No, because one of those options incentivizes people to do whatever it takes to get to the top, ethics and harm be damned, then once they get there to turn over a new leaf and be canonized as a saint while reclining on a pile of ill-gotten gains.

Most sociopaths won't get to the top, though. They'll just do the first half where they hurt people, then lose it all. You can watch them on twitter now, hawking crypto and MLM.

[DiggyJohnson]

What is your alternative? Lock em up? Better to get all of them and a few more than let a single one go free…?

[InefficientRed]

Yes, there's no middle ground between locking everyone up and letting people keep billions in ill-gotten gains /s.

[DiggyJohnson]

I'm literally asking - genuinely asking - what a solution in the middleground would look like.

The purpose of the sentence that has bothered you is just to stake out the other side of the spectrum from where we are now. That's all. Please argue against the best possible interpretation of comments on this site.

[InefficientRed]

>> Better to get all of them and a few more than let a single one go free…?

> I'm genuinely asking...

Your questions are not serious. You are not genuinely asking. If you want interlocutors to engage with your questions with anything other than dismissiveness, try asking questions that are not prime facie dismissive.

> Please argue against the best possible interpretation of comments on this site.

I am.

[vba616]

>How many lives were destroyed (or at least harmed) by hustling junk bonds?

I'm not familiar with the context of what Michael Milken did (although he's famous enough I know the name), but your (rhetorical?) question sounds very strange to me.

An omniscient and omnipotent being that knew the right amount of junk bonds to issue could probably answer how many lives were destroyed or harmed by creating the wrong amount.

But when a question like that is asked, you're asking human beings, not God, and it sounds rhetorical, which means that the answer is supposed to be obvious, I think.

If you were asking about milk with melamine in it, then I would understand what you meant. But junk bonds aren't inherently useless or defective.

[dvt]

> and it sounds rhetorical

It's rhetorical: the answer is, given how much money he made, a lot.

> But junk bonds aren't inherently useless or defective

This seems a bit disingenuous, as they have, by definition, a very high risk of defaulting. He also manipulated stocks[1], which, again, is technically a victimless crime (but is it really?).

[1] https://www.sec.gov/comments/s7-08-09/s70809-4614.pdf

[vba616]

>This seems a bit disingenuous, as they have, by definition, a very high risk of defaulting

I'm aware junk bonds have a relatively high expected risk of default and I'm not being disingenuous.

Please assume that I'm sincere, as it's required by the HN guidelines, and also, I am.

I didn't say anything is a victimless crime or say victimless crimes are ok (or acts that have victims are always wrong). So let's not go on that tangent for now. Or talk about details about Milken, which are beyond the scope of my previous comment.

So: I infer you think high risk loans are bad, like poisoned milk. I don't have a problem with that concept, really. But there must be a threshold, right? And I have never heard of anyone seriously putting that threshold precisely at the word "junk". As far as I know, "junk" is a term of art, that is opposed to "investment grade".

[dvt]

Okay, maybe we're just speaking past each other. My point is pretty simple, and you're right that I should not have brought up victimless crimes, etc.

I'm just trying to say: here's some rich guy that did bad stuff, went to jail, and received the equivalent of a slap on the wrist, essentially rebranded his image, and is now back at the adults' table as a philanthropist, even though his wealth is funded by his past illegal/unethical endeavors. And to make things more bizarre, everyone is totally playing along. Isn't that kind of funny?

[thedailymail]

I came here to say pretty much the same thing. Thanks for putting it so well. Not all strategic use of ill-gotten wealth is "philanthropic" (= motivated by the love of humanity).

[RobRivera]

manipulation of stock is far from a victimless crime

[skippyboxedhero]

> How many lives were destroyed (or at least harmed) by hustling junk bonds?

I think most people would struggle to name anyone. Milken is probably the most important person in modern finance, he was the JP Morgan of our era, no-one really comes close. And the impact for both companies and lenders was hugely positive, he organised financing for companies that would have gone bankrupt otherwise, he swept away the monopolistic finance that was emerging from the 70s (ofc, in the early 80s there was a very active attempt to stop Milken by the big banks, anti-semitism being a component of this). Private equity exists because of Milken, direct lending, offshoots of infra/real estate, he changed securities law, he increased management accountability (which was crippling economic growth), he increased the efficiency of corporate capital structures (also crippling growth), on and on. There are definitely innovations that were as important (securitization being one) but in terms of individual impact...no-one comes close (and he stopped working three decades ago...he is still that important, three decades later).

Milken certainly broke securities laws...improper disclosure of 13D/Gs, inaccurate commission disclosure, trades made for non-economic reasons, and (what he wasn't convicted for) improper separation between his personal deals and customer deals. A lot of the other stuff though was a combination of wrong and what almost everyone else was doing (and it took changes in regulation, a lot of these problems continued into the 90s because rules didn't change, Milken going to jail changed nothing).

Btw, all of the things he was actually charged for were supposedly harms against customers...but how many customers were unhappy with the business they did?

It is also worth saying that I don't think anyone who is actually familiar with Milken can think he did it for the money either. The guy basically didn't leave his desk, didn't take holidays, and lived in the same house that he lived in when he wasn't a billionaire.

[mherdeg]

Gosh this makes me want to re-listen to some Capitol Steps parodies, like their 1992 classic "Mike Milken".

Growing up in the late 90s there were a few ways that I absorbed the pop-culture view of what had come recently. Old books collecting Erma Bombeck and Art Buchwald columns, plus old Doonesbury comics, plus a few Capitol Steps CDs, helped fill in some of the gaps for me in ways that I don't think newspapers or other sources really provided.

[phonon]

> How many lives were destroyed (or at least harmed) by hustling junk bonds?

Zero? What evidence do you have otherwise? None of his crimes were related to the issuance of high yield bonds. It's not like penny stocks being pushed from a boiler room...he helped create a market for higher risk, higher yield bonds. Historically, they have done pretty well in a portfolio.

[vorpalhex]

At some point punishment has to end and you move forward in life. The justice system would be a lot more fair if this was applied equally.

[tasty_freeze]

> At some point punishment has to end and you move forward in life. The justice system would be a lot more fair if this was applied equally.

I completely agree, but if I am reading your statement right, our conclusions are 180 degrees apart. It seems you are saying it is unfair that some people are forgiven and others aren't and that Milken is getting unjustly punished.

My take is there are hundreds of thousands (if not millions) of people who served more than 2 years for petty offenses, things like selling dime bags of weed. Their convictions follow them for life and make future gainful employment extremely difficult. Yet a highly educated, white collar guy can steal hundreds of millions and serve two years in a luxury prison, and then coast the rest of his life on his ill-gotten gains. That is no justice at all, and I don't feel the least bit sorry for hoping that Milken's reputation never recovers.

[marcosdumay]

That point has to be further away than the gain a person got from the crime.

[rocqua]

Since this is a matter of ill-gotten gains, reparations instead of punishment should be in order.

The process of: do crime - get rich - do minor prison time and pay a minor fine - spend 10% of your remaining riches to rehabilitate your image - be a rich and respected person

That process should not be possible. As long as you are sitting on money gotten through crime, you shouldn't get respectability back. If you do want to turn over a new leaf, start giving back.