Drexel Burnham Lambert

Drexel Burnham Lambert's 1990 bankruptcy ended the junk bond pioneer that had financed the 1980s leveraged buyout boom. Michael Milken's criminal conviction and $650 million in fines devastated the firm. When commercial paper investors refused to roll over funding, Drexel collapsed. The mechanism failure was key-person risk—the firm depended on Milken, and when Milken fell, the firm fell.