Part 1: Chapter 5, The Cloister at Wilshire and Rodeo Summary and Analysis

Drexel's junk bond business continues to grow through 1983 to $4.690 billion. In February, they underwrote $500 million in new issues in a ten day period. In April there was the $400 million for MGM/UA Entertainment Company and then $1 billion for MCI Communications in July. Milken was nervous over both of these deals because of the size. They had never done anything so large and Milken would never but back the amount of a deal once it was agreed upon. As a result of this, customers trusted him and felt indebted to him. Drexel would take the paper that it couldn't sell and this lead to the development of HITS, a high yield mutual fund that Drexel formed. HITS was the outlet for the paper that Drexel bought in various...