A Dozen Who Shaped the 80s

California’s image as a pacesetter held up fairly well in the 1980s in the world of business and economics. Californians were a force for dramatic change.

Some achieved change on a grand scale--inspiring a revolution in economic policy or transforming corporate finance. Some of the change may seem minor, but it altered our daily routines and our life styles. Some business people built firms that are monuments to America’s spirit of enterprise; others brought companies to ruin and became symbols of corporate recklessness.

Here is a sampling of California residents who gave American business a 1980s makeover--making it better, or worse, or just more fun.

MICHAEL MILKEN

Michael Milken arguably has had a greater impact on American business in the 1980s than anyone else. The 43-year-old trader radically transformed the world of American finance by pioneering the $210-billion market for high-risk, high-yield debt securities known as junk bonds--and then landed squarely at the center of the nation’s biggest securities fraud case.

In fostering the junk bond market, Milken helped touch off an unprecedented wave of merger and acquisition activity. Some entrepreneurs built vital businesses with the money that Milken raised for them, and corporate raiders were able to launch takeovers against industry giants by using almost no money of their own. In many instances, as companies sought to defend themselves or as raiders dismantled their prey, workers were laid off by the thousands. Investment bankers and shareholders often walked away rich and happy.

When Milken started work as a bond trader at Drexel Burnham Lambert in New York, a junk bond was debt issued by a “fallen angel,” a once highly regarded company that had fallen on hard times. Small and mid-size companies were rarely able to borrow from anyone but a bank, and even that wasn’t easy. But Milken helped hundreds of smaller firms issue bonds in the public markets in the way that big companies did.

For a long while, the business was good for both Drexel, which became a financial powerhouse, and Milken, who earned $500 million in one year and ranks among the wealthiest men in America. But Drexel and Milken were charged with massive securities fraud. Drexel has pleaded guilty and paid a huge fine; its business is suffering. As for Milken, he is fighting a 98-count indictment on similar matters and hopes to stay out of jail. He maintains his innocence and has started a new financial advisory firm.