Feb 20, 2020 - Economy

Trump indulges Wall Street with Milken pardon

An illustration of Trump with the charging bull on his chest.

Photo Illustration: Sarah Grillo/Axios. Photo: Chris Graythen/Getty Images

Donald Trump loves Wall Street shenanigans. Companies owned by him have declared bankruptcy six different times, and he was once sued alongside Mike Milken for participating in a scheme to artificially inflate junk-bond prices.

Driving the news: Trump pardoned Milken this week, with an official statement positively gushing over Milken's role in developing the wilder side of fixed-income capital markets.

  • The statement strongly implies that Milken — who was originally charged with 98 counts of racketeering, securities fraud, and other crimes — in fact committed no crimes at all.

Context: The pardon comes against a backdrop of aggressive Wall Street deregulation. Trump has defanged the Consumer Financial Protection Bureau, loosened regulations on banks, and given free rein to non-bank entities like insurers, ratings agencies, and hedge funds.

  • Under Trump's regulatory and legal regime, it is very unlikely that Milken would have been charged with any crimes. Trump, after all, describes him as "one of America’s greatest financiers."
  • Many individuals close to Trump are credited in the statement with helping to obtain the pardon — including Rudy Giuliani, who led Milken's prosecution in the 1980s, and Rupert Murdoch, who used Milken's services to turbocharge the growth of News Corp.

Milken has been determined to engineer this pardon for decades, and he's finally found a president whose fondness for ultra-rich financiers makes that possible. Bloomberg's Max Abelson lists many of them, including Apollo Global Management co-founder Josh Harris, Carlyle’s David Rubenstein, and hedge fund manager John Paulson.

  • Think of the pardon as Milken calling in favors.
  • “When he walked out of prison, he was bent double under the weight of a Rolodex," said author and former banker Michael Thomas in a 2017 Bill Cohan profile of Milken. "He had a lot of due bills he could call on. He made people rich. He made them powerful."

The bottom line: Milken, convicted felon and junk-bond billionaire, is the perfect avatar for Wall Street in the age of Trump. His pardon sends a clear message: If you want to get rich through financial legerdemain, now's the time to do it.

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