Panic on Wall Street

Ray Jenkins

November 24, 1990|By Ray Jenkins | Ray Jenkins,from the evening sun

THE GERMANS have a trenchant word called schadenfreude, which means taking pleasure in the misfortune of others. I did not experience this feeling toward Michael Milken upon hearing he had gotten a 10-year sentence,although I do believe it would have been a mockery of justice, not to speak of encouragement of future crime, to have let him off with a lighter sentence. But I have to confess that I felt a hint of schadenfreude toward the editor of the Wall Street Journal. The Milken sentence, coinciding as it did with Margaret Thatcher's resignation, just might be enough, I thought perversely, to make the fellow jump out of the window of his ivory tower on Wall Street.

You see, the editorial writers of the Wall Street Journal regard Michael Milken as a "national hero," much as Ronald Reagan did Oliver North. Reading the newspaper's editorials about Milken during the 1980s -- the decade in which the Journal became the tireless drum major for Ayn Rand's "virtue of selfishness" -- you'd have thought he was the greatest thing for capitalism since Adam Smith. They even suggested the prosecutors were as "guilty" as Milken. And predictably, the newspaper's editorial on the Milken sentence yesterday made it sound as if Mount Rushmore had been blown up. Never mind that Milken was investigated by a Reagan-appointed securities commission, prosecuted by a Reagan-appointed Justice Department and sentenced by a Reagan-appointed judge.

The Milken case has been especially fascinating to watch, because no other public controversy has so sharply focused on the schizophrenia that exists at the Wall Street Journal. Day after day the newspaper carried front-page news stories documenting irrefutable detail Milken's role in the arcane quagmire of junk bonds, leveraged buyouts and industry muggings. Indeed, the very day before Milken was sentenced, the lead news story in the Journal documented that the fundamental premise of junk bonds rested on fatally flawed economic theory.

But it was as if the reporters and the editorial writers lived on different planets. Even after Milken had pleaded guilty, the editorials refused to accept that their hero had done anything more serious than "shoplifting." That's right -- they likened Milken's crimes to shoplifting.

At the same time it was defending Milken, the editorial page was erupting like a volcano over the government's attempt to apply the RICO statute -- that's an acronym for Racketeer Influencedand Corrupt Organizations -- to businesses like Drexel Burnham Lambert, the corporate vehicle Milken used to take the country on a great joyride to ruin.

It is true that the RICO statute was designed to combat organized crime, especially that involved in big-time drug importation and sale. Essentially, the statute says when substantial evidence of organized criminality exists, the government can tie up the property of the suspects before trial. Granted, there is a legitimate constitutional issue involved here -- although I don't recall hearing a peep out of the Wall Street Journal so long as RICO threatened only the Mafia.

But when it threatened Wall Street institutions -- now, that's a different matter. The Journal seemed to take it as a given, a fact that no reasonable person could dispute, that it simply was not possible for a brokerage house like Drexel Burnham to become a "corrupt organization."

Well, as one unreasonable person, I suggest that is exactly what happened. Why should that be so shocking? After all, such conduct was rampant during the days of the "robber barons" whose unchecked avarice led inexorably to the stock market collapse of 1929 and the Great Depression of the 1930s.

I have a modest proposal: In addition to receiving 10 years in prison (that means three years with time off for good behavior, and we all know Michael Milken is a well-behaved person), Milken was ordered to perform three years of community service. I suggest that he spend those hours writing guest columns about his time in prison for the Wall Street Journal. That would be one helluva service to the Wall Street community.

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