Forced Savings as Loyalty Handcuffs

“Milken would in effect create his own firm within the firm of Drexel Burnham, one which its members would refer to simply as “the Department.” He laid the groundwork for that autonomy in 1973. From the very beginning, Milken made it mandatory that a certain portion of his people’s profits were reinvested in trading accounts which he ran. It was a system of forced savings, in which these salesmen and traders were able to watch—from a distance—their wealth accumulate. With the kind of return Milken got, no one really had much to complain about. On the other hand, if one decided to leave him on less than amicable terms, as one trader would, there might be difficulty in getting one’s money out. It was a powerful disincentive to taking any secrets from Milken’s operation to a rival firm.”

“Milken kept his group cloistered. He demanded that his people shun publicity, as he did. He was convinced there was no upside—“Mike would always say, ‘You can’t make a dime off publicity,’ ” Steve Wynn recalled—and there was considerable downside. If his people started seeing themselves in print, he once commented to this reporter, they would get their heads turned, they would think they were famous. “They won’t work as well. I want them there at four or four-thirty, ready to work, until eight o’clock at night. That’s what we do, that’s our responsibility. I don’t want them to think of what’s outside.””