Kicking a man who's down - by $47m

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EVERY now and then Michael Milken's name pops up in the news and a wave of nostalgia washes over the bond market cognoscenti.

Most recently, Milken hosted a high-profile conference that drew prominent businessmen and a gaggle of Nobel Prize-winning economists. Of all the important people who spoke at the conference - the topic was the world economy, no less - the man who received the most attention was Milken himself.

His pronouncements about the need for Asia to democratise capital found their way into newspapers across the US. And no wonder. If you had a choice of hearing the views of a Nobel Prize-winning economist or Michael Milken, which would you choose?

A lot of people who have their pick of financial advisers feel the same way. Ted Turner paid Milken $50m to coach him through the sale of Turner Broadcasting System to Time Warner. Rupert Murdoch paid Milken $42m to sit in on his meetings with MCI Communications, which was looking to invest in Murdoch's global media empire.

People who did business with Milken before he went to jail still want to do business with Milken now that he is out of jail. Of all the financiers in America, Milken is still the most highly valued by the people who know.

But of all the prominent financiers in America, Milken is the only one who is forbidden from practising finance. His settlement with the Securities and Exchange Commission at the end of his junk bond career barred him for life from the securities business. The mere suggestion that by helping Murdoch he had violated this agreement led Milken last month to pay the US government $47m in reparations - or go directly back to jail.

He's the man who knows more about money than anyone on the planet, yet anytime he's caught talking about money it costs him a fortune. I've never really understood the public attitude towards Michael Milken, or what exactly is to be gained by keeping him out of finance for the rest of his life.

In retrospect, the draconian punishment seems to be a case of spectacularly bad timing on Milken's part. In 1990, the stock market went into the tank, the economy flew south, and society decided that the 1980s were to blame. The Eighties, everyone agreed, were a Bad Time.

Just as people were figuring out that one, they learned that America's most prominent financier had broken the securities laws. Few actually knew what these laws were; fewer cared. The point was that the man had made $550m in a single year; he must have done something very wrong. Books such as Den of Thieves persuaded many otherwise intelligent people that pretty much everything Milken had done was illegal.

Milken was pronounced rotten to the core. And that was that.

Only it wasn't, not really.

A man more or less restructures American capital markets so that capital moves more freely from those who have it to those who need it. As a result, a lot of worthy - and some unworthy - people get money to start businesses. These businesses, in turn, fuel the greatest legal creation of wealth in the history of the planet, and a stock market boom to go with it. Tens of millions of people leap out of bed each morning to tote up their mutual funds, a bit more happily than they did the day before. And the man who helped to make it all happen is sentenced to 10 years in jail and considered evil for the rest of his life.

Is that fair?

There are at least two things worth saying about the Milken story that don't get said often enough. The first is that everything important that Milken did was either perfectly legal, or might as well have been. No one has ever persuasively shown that Drexel Burnham Lambert's junk bond business depended for its success on crime. The people who were upset by Milken were upset by the way he unsettled corporate life. But Milken's most unsettling acts - the big leveraged buyouts financed by Drexel - were perfectly legal.

Rather, it was more a case of a man acquiring so much power that he felt he could do pretty much anything, and so he did. Some of those things were against the law.

The second salient fact about Milken's career is that the worst deals - the LBOs that destroyed large companies - were done not by him but by his cheap imitators. Others on Wall Street, eager to get a piece of Milken- style success - Salomon Brothers and Goldman Sachs come to mind - bankrupted large prosperous companies through their sheer ineptitude. Their legal ham-handedness was far more socially damaging than Milken's illegal activity. No one went to jail for Revco or Southland or Macy's, but those deals were far more destructive than anything Milken ever did.

I suppose that if you have already written a cheque to your government for $1.1bn, another $47m hardly matters. Still, the continued harassment of Michael Milken seems more than a little unfair.

q Michael Lewis is the author of "Liar's Poker", the best-selling account of life on Wall Street in the 1980s.