'Predators' Ball' redux: Drexel honors corporate sharks Icahn and Milken
Robert Zaller
Issue date: 9/26/08 Section: Ed-Op
Talk about bad timing: Just as the financial universe was about to collapse, Drexel decided to offer its graduating classes the wit and wisdom of Carl Icahn and Michael Milken, the two notoriously aggressive Wall Street businessmen immortalized in Connie Bruck's muckraking classic, "The Predators' Ball."
From the administration that fawned a few years ago over Jiang Zemin, the despot who gave us the bloodbath of Tiananmen Square, you certainly don't expect Socrates as a commencement speaker. But really, Icahn and Milken?
For those who need a refresher course on the 1980s, when these two masters of the universe made their bones, Carl Icahn was the original corporate raider who specialized in forcing proxy battles against target companies with assets to be stripped. Icahn was usually costly to get rid of, and the payoffs came to be known - more politely than they deserved - as greenmail. Icahn made no pretense creating economic or social value of any kind; he was simply a predator, a shark.
Icahn's "insight" was that money might simply be used to make money, without any other mediating activity. When you put money in a bank or a money market fund, you are guaranteed - or you used to be, until a few days ago - a premium on your investment. You are using money to make money, but the premium is based on an underlying economic activity; somewhere, something is being made, sold and consumed, or a service is being rendered to someone who wants it. Icahn simply dispensed with this underlying economic equation. Money, used as a weapon, could be used to extort more money.
This is not a terribly novel idea; it is what the Mafia does. The difference was that Icahn used cash for his tire iron. Sometimes the money wasn't his, but as long as he could control it, even temporarily, it served his purposes. As for his corporate victims, their assets were, as he sneered, "undervalued," and thus ripe for the taking. One such victim, Marshall Field & Company, sought a Racketeer Influenced and Corrupt Organizations Act indictment against him. This law had been framed with organized crime in mind, though Icahn fit its specifications. He signed consent decrees with the New York Stock Exchange and the Securities and Exchange Commission, and paid fines to the Chicago Board Options Exchange. Undeterred, he moved from greenmail to acquisition.
From the administration that fawned a few years ago over Jiang Zemin, the despot who gave us the bloodbath of Tiananmen Square, you certainly don't expect Socrates as a commencement speaker. But really, Icahn and Milken?
For those who need a refresher course on the 1980s, when these two masters of the universe made their bones, Carl Icahn was the original corporate raider who specialized in forcing proxy battles against target companies with assets to be stripped. Icahn was usually costly to get rid of, and the payoffs came to be known - more politely than they deserved - as greenmail. Icahn made no pretense creating economic or social value of any kind; he was simply a predator, a shark.
Icahn's "insight" was that money might simply be used to make money, without any other mediating activity. When you put money in a bank or a money market fund, you are guaranteed - or you used to be, until a few days ago - a premium on your investment. You are using money to make money, but the premium is based on an underlying economic activity; somewhere, something is being made, sold and consumed, or a service is being rendered to someone who wants it. Icahn simply dispensed with this underlying economic equation. Money, used as a weapon, could be used to extort more money.
This is not a terribly novel idea; it is what the Mafia does. The difference was that Icahn used cash for his tire iron. Sometimes the money wasn't his, but as long as he could control it, even temporarily, it served his purposes. As for his corporate victims, their assets were, as he sneered, "undervalued," and thus ripe for the taking. One such victim, Marshall Field & Company, sought a Racketeer Influenced and Corrupt Organizations Act indictment against him. This law had been framed with organized crime in mind, though Icahn fit its specifications. He signed consent decrees with the New York Stock Exchange and the Securities and Exchange Commission, and paid fines to the Chicago Board Options Exchange. Undeterred, he moved from greenmail to acquisition.
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