Word: junking
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Dates: during 1990-1999
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...Morgan dodge the slump? While the firm handled a sizable share of leveraged buyouts and issued $14 billion in junk bonds during the late 1980s, the company chose its deals with care. (Morgan did come up short in one notable fight, however, when it assisted Paramount Communications in its failed $12.2 billion hostile bid for Time Inc. last year on the eve of the company's planned merger with Warner Communications.) Under Chairman S. Parker Gilbert, 56, the stepson of co-founder Harold Stanley, and President Richard Fisher, 53, Morgan hedged its bets by diversifying into many different fields rather...
...Wall Street the debt-propelled takeover binge gave rise to the era's get- rich-quick mentality. Michael Milken, the deposed Drexel guru who pioneered junk bonds and nurtured them into a $200 billion market, was paid $550 million in 1987 for his unrivaled expertise. In a perverse version of the trickle-down theory, lower-echelon bankers raked in multimillion-dollar salaries, and new recruits with two years' experience earned six-figure sums. The fantastic payoff created a brain drain as the best and the brightest from top colleges and business schools across the U.S. flocked to Wall Street...
...echo carried that far and beyond. Drexel's notorious junk bonds -- debt instruments that pay high rates of interest because of the relative shakiness of the ventures they fund -- turned the financial world topsy-turvy and helped set the tone for the money lust that gripped America in the '80s. Armed with the bonds, corporate raiders swiftly raised the money they needed to attack even the largest companies. At the same time, investment bankers raked in billions of dollars by advising the raiders and selling junk bonds to eager borrowers. In what corporate America saw as a glorified protection racket...
Drexel's demise was greeted with little sympathy, even on Wall Street. Many experts regard the firm's fall, caused largely by the collapse of its $1 billion junk-bond portfolio, as a just comeuppance and a sign that Wall Street is entering a period of welcome sobriety. Drexel, after all, was more than just a tough competitor; it was viewed as a bad influence. Last year the company agreed to pay a $650 million fine and pleaded guilty to six counts of mail and securities fraud. As part of the settlement, federal prosecutors required Drexel to dump Milken...
...legacy, Drexel leaves behind a battered junk-bond market and hundreds of corporations staggering under debt. Last week the prices of junk bonds, some of which had lost as much as half their face value in recent months, rebounded as investment firms bought them up to reassure the marketplace about their stability. But in the long run, the overleveraging of America could spell trouble if the country plunges into a recession and profits tumble, leaving companies unable to meet their interest payments...