wis 1990).
Lewis also explains how these unethical, greedy, egotistical traders were able to bilk clients out of millions of dollars in the junk bond market. Basically, they took advantage of legislation loopholes to sell junk bonds to people who did not know the value of the bonds and had to take their word for it. Lewis uses a line from Warren Buffet to describe the ethics underlying such greed at the expense of clients, “If you don’t know who the fool is in any game, it’s probably you” (1990). Donnie Green was a particularly intimidating trader at Salomon Brothers. Lewis recalls that one day he stopped a salesman on his way out the door and told him to take out flight insurance in Green’s name. When the salesman asked why, Green replied, “I’m feeling lucky today” (Lewis 1990). The book chronicles this mentality and excess that led to the collapse of Salomon Brothers.
From excessive egos to excessive greed, the same factors in the business climate at Salmon Brothers were not as evident in the corporate culture at Drexel Burnham, the investment banking firm where Michael Milken created the use of junk bonds. These bonds have a high risk of default because companies that issue them usually have enormous debt. However, Milken realized they could be used as a good source of financing if investors reduced the risk through diversification. Because of Milken’s discovery, this source of financing was used for almost every high profile takeover of the 1980s. Every year the company would hold its annual Predator’s Ball, where big name politicians and leaders of Wall Street schmoozed. Milken didn’t just control the junk bond market; he was the junk bond market. Despite his hard work, brilliance, and productivity
...