For the first time in two years, The Beverly Hilton hotel in Los Angeles played host this week to one of the most gilded events in high finance.
More than 2,000 people gathered at the Milken Institute Global Conference, the elite get-together organised by the one-time “junk bond king” Michael Milken.
There were moments of tension during panel discussions in spacious ballrooms as well as at quieter gatherings at the on-site bar and more exclusive parties high in the hills.
Rising inflation and supply chain malfunctions were threatening a 40-year bull run in the bond market, the attendees worried. Nosebleed asset valuation left money managers with little to buy.
“It’s gotten harder to steal stuff,” lamented on stage Howard Marks, the Oaktree Capital founder who at Citigroup in the late 1970s had been one of the first buyers of Milken’s revolutionary debt.
But there was also much to celebrate. Since the pandemic interruption, hedge funds and private equity firms — many founded by Milken’s underlings at the defunct Drexel Burnham Lambert — have prospered as asset prices soared to all-time highs and political gridlock snuffed out the chance of systemic change.
Mixing in a safe space, in all senses, the Masters of the Universe attacked the big issues of the day with gusto. The usual celebration of economic Darwinism was paired with highbrow content on public health, philanthropy and diversity — plus a sprinkling of celebrity. Actor Uma Thurman hosted a talk on the benefits of psychedelics while former heavyweight boxing champion Wladimir Klitschko was spotted milling about.
The financiers disagreed about the trajectory for inflation and cryptocurrencies but there was a near unanimity that capitalism, financial achievement and wealth were bedrock principles that were under threat.
Two different prominent fund managers who had left New York and California explained their flight to lower tax states was not purely financial but also related to the “rhetoric” in Sacramento and Albany that made their professional success feel unappreciated.
The formal programme of panel discussions often felt like a sideshow to the wheeling and dealing. Money managers set up war rooms in suites and restaurants along the cluster of luxury hotels dotting the intersection of Wilshire and Santa Monica Boulevards, trying to snag their slice of the trillions accumulated by pension and sovereign wealth funds.
Attendees had to both be vaccinated and produce a negative Covid test result. The conference passed out its own jet black KN95 masks to be worn at all times inside. Dozens of hall monitors in hot pink vests milled about unafraid to admonish any rogue member of the global elite whose mask slipped.
The irony was plain. Michael Milken made his Wall Street legacy flouting the rules and, eventually, the law. At age 75, having received a presidential pardon last year from Donald Trump, Milken moderated several eclectic discussions — including ones on the global pandemic recovery and development in Africa — where he served up a few zingers. Before one session, Milken chatted warmly with Maxine Waters, the Democratic Congresswoman who has long represented the predominantly black neighbourhoods of south Los Angeles.
Reverence for Milken came from his former colleagues. Leon Black, the former Drexel merger banker turned private equity kingpin, showed up months after he resigned as head of Apollo Global Management following the exposure of his financial ties to paedophile Jeffrey Epstein. Black and his wife Debra attended a distressed debt discussion where their son Ben explained how his own investment fund was playing the Spac craze.
Amid the rich and famous were a group of once disadvantaged youngsters who had been selected as Milken Scholars, with their college tuition paid by the Milken family and a lifetime of mentorship.
“He does not have to do any of this,” said Ahmed Reza, a son of Bangladeshi immigrants whose Ivy League schooling two decades ago was paid by Milken’s foundation. “He still wakes up at 4am and goes to work. I wake up at 4am too. Why? Because Michael does.”
Worrying about the oppressed
Milken began organising gatherings in the 1980s to evangelise his junk bonds in an edgy convention that became known as The Predators’ Ball. Back then corporate raiders were widely condemned as avaricious asset-strippers, but Milken and his foot soldiers believed they were fighting corporate cronyism. Junk-bond fuelled takeovers, in their view, would bring egalitarianism and unprecedented innovation.
This week’s event had its own panel discussion called “Democratising Finance: Leveling the Playing Field for the Next Generation” whose star participant was Cathie Wood, the founder of Ark Investment, which earned massive returns during the pandemic by betting on disruptive, high-growth tech stocks. Wood praised the rise of retail traders, many of whom use the smartphone app, Robinhood, recounting a story of an elderly woman who began trading equities for the first time after watching Wood on YouTube.
Impact investor Jean Case, another panellist, wanted to lower the barriers that prevent inexperienced investors from making stock market bets, complaining that it was easier to place a bet at a casino in Las Vegas than in financial instruments.
Two other panellists, Orlando Bravo and Jonathan Sokoloff, were perhaps odd fits: private equity titans whose funds charge hefty fees and only permitted well-heeled backers. Sokoloff, a Drexel colleague of Milken and frequent conference speaker, even mused out loud, “I’m kinda on the wrong panel.”
Despite a roster of attendees which was unsurprisingly predominantly middle-aged, white, and male, the event debated the plights of marginalised groups. The discussion typically defaulted to market-based solutions, such as the panel “Investing in Growing Wealth for Women of colour.” Wealth taxes and reparations were not on the list.
But it was not all saccharine. Michael Piwowar, a resident at the Milken Institute and a former Republican commissioner of the Securities and Exchange Commission moderated a lively session entitled “Promoting Greater Wealth Equality”.
Michael Tubbs, who had trialled a universal basic income in his former role as mayor of Stockton, California, wondered why big banks were entrusted with “no strings attached” bailouts while welfare programmes came laden with requirements.
“Critiques of cash transfer and UBI are rooted in the ideology that some people we can trust with money and some we can’t,” Tubbs said, going on to describe wealth inequality in America as “obscene”.
The session, however interesting, was shunted off to a distant meeting room that was sparsely filled.
That was not the case for someone who turned out to be one of the conference’s biggest draws: Bari Weiss, the provocateur and self-styled free speech martyr.
Her appeal to older financiers was known but it became crystal clear when her session entitled “Talking Back to Cancel Culture” drew a capacity crowd that left some stuck outside in a queue. Weiss spent several minutes criticising her former employer The New York Times and decried what she called the “philosophy of woke”.
At one point Weiss compared her professional travails to the life of Galileo Galilei, the Italian scientist who was forced to renounce his views on heliocentrism to avoid being burnt at the stake. Her interviewer, the conservative political pollster, Frank Luntz, implored Weiss to throw her hat in the ring for the open US Senate seat in Weiss’ home state of Pennsylvania, an idea that was greeted with a burst of applause, marking the rare Milken conference talk where those in the audience were not fiddling with their phones.