Published at: 17/12/2025 09:00 PM

(Time, February 26, 1990)

• In 1990, the financial operator, Michael Milken, was sentenced to 10 years in prison for violating 98 articles of the Securities and Exchange Fraud Act, confessing guilty to 6 of the 98 crimes committed, mainly for the misappropriation of $1.8 trillion derived from fraud.
• While in prison, he received the Nobel Prize in Economics as the inventor of the toxic Trash Bonds or Junk Bonds, the same degraded stock instruments with which he fostered the fraud of millions of dollars and bankrupted thousands of American families.
• The “King of Junk Bonds”, as he is colloquially known, was the creator, in the 1980s, of the “high-yield bond market”, as an executive of the investment bank Drexel Burnham Lambert.
• Milken fraudulently obtained $1.8 billion, was fined $600 million and sentenced to 10 years in prison. That sentence was commuted to two years for his collaboration with government investigators to dismantle the scam he installed on Wall Street.
• 18 years later, this same high-risk stock instrument, the junk bond, played a crucial role in the issuance of mortgage securities that produced the Great Crack of the 2008 Global Financial Crisis.
• This time Lehmkan Brothers was the investment bank that orchestrated the issuance, at very low rates, of Subprime Mortgages, linked to junk bonds, with the fictitious endorsement of risk evaluators that granted high AAA credit ratings.
• With this triple A range and waiting for a rise in the value of mortgaged homes to very low-income people, the opposite happened, real estate prices suddenly fell and the great financial bubble burst.
• The holding of these “toxic stock instruments”, purchased on a large scale by other banking consortiums, produced a domino effect, causing the Great Recession of 2008.
• The bursting of this housing bubble, called the “Subprime Mortgage Crisis”, increased the unemployment rate, and the evictions (evictions) of hundreds of thousands of families from their homes who now live inside their cars parked in large parking lots across the United States.
• Ironically, Michael Milken now has a fortune of more than $4 billion and is listed by Forbes magazine as one of the 500 richest men in the world.
• Thus, as a result of these stock market scams and the fact of leaving more than 8 million mortgage debtors homeless, Michael Milken was awarded the Nobel Prize in Economics, which he could not withdraw personally because he was behind bars.

Mazo News Team