Drexel Burnham Lambert
|Founded||1935, went bankrupt in 1990|
Drexel Burnham Lambert was a global investment bank that specialized in high-yield, high-risk fixed income, aka, junk bonds. The firm rose to prominence in the 1980s under the guidance of Michael Milken, who essentially created the junk bond market. After agreeing to a $650 million dollar settlement with the U.S. government stemming from securities fraud allegations against Milken, which also resulted in Milken being dismissed from the firm, Drexel could not regain its financial footing. In 1990, the firm collapsed. 
The company began in 1935 as a retail stock brokerage firm, headed by I.W. ("Tubby") Burnham. After 35 years as a brokerage, Burnham desired to move into investment banking, which would allow the firm to underwrite stock and bond issuance. In 1971, Burnham merged with Drexel Firestone, a Philadelphia-based investment bank, and renamed the firm Drexel Burnham. In 1976, the firm added a research arm by merging with the American subsidiary of Belgium's Lambert Group. The firm became known as Drexel Burnham Lambert. Burnham retired in 1980.
With its status as the leading trader of high-yield corporate bonds, Drexel experienced substantial growth during the 1980s, as the popularity of highly leveraged mergers and acquisitions fueled the junk bond market. After the Milken settlement, the firm announced the sale of its retail brokerage unit. This touched off a wave of selling of Drexel stock, much of it by company insiders. At the same time, the junk bond market experienced several large defaults. This led to the drying up of the company's ability to borrow money in the commercial paper market, the vehicle by which it relied on short-term funding. On February 13, 1990, Drexel defaulted on $100 million in short-term loand and, by that evening, had filed for bankruptcy.
- The Fall of Drexel's House of Risk. New York Times.
- Stars of the junkyard. The Economist.
- I.W. Burnham II, a Baron of Wall Street, Is Dead at 93. New York Times.