This is from my favorite political website Talking Points Memo and head dude Josh Marshall is my favorite political writer. You want to know where your TARP money is going?
John Thain's Top Ten Greatest Moments
By Zachary Roth - January 23, 2009, 2:55PM
If there's one corporate honcho who's emerging as the poster boy for all the varied Wall Street sins that the financial crisis has exposed -- not just greed, but callousness, obliviousness and general incompetence -- its Merrill Lynch's former CEO John Thain.
Over the last few days, the revelations about Thain's mismanagement of Merrill have been coming thick and fast -- culminating with his ouster yesterday as an executive at Bank of America, which bought Merrill at the height of the financial crisis last September.
Thain, a top John McCain backer who was tipped as a candidate for a White House post had the Arizona senator won the presidency -- has amassed quite a record in his short time at Merrill. Lavish personal spending, absentee leadership, bonuses for billions in losses -- it's almost been too much to keep track of.
So we've created a handy rundown of Thain's top 10 greatest moments over the last turbulent year. (You might also want to check out our Merrill Lynch timeline to brush up on how Thain's missteps fit in with the larger story of his firm's collapse.)
In rough chronological order, here are John Thain's top 10 greatest moments:
1. The Great Redecoration
Thain pays $1.2 million last year -- well after Merrill's huge losses on mortgage assets are known -- to refurbish his office suite. That includes $800,000 to interior designer Michael S. Smith, who's also redecorating the White House for the Obama family. (More Smith clients: Steven Spielberg, Michelle Pfieffer, and Cindy Crawford.)
Other expenses from the big redecorating project, all signed off on by Thain personally:
Area Rug: $87,784
Mahogany Pedestal Table: $25,713
19th Century Credenza: $68,179
Pendant Light Furniture: $19,751
4 Pairs of Curtains: $28,091
Pair of Guest Chairs: $87,784
George IV Chair: $18,468
6 Wall Sconces: $2,741
Parchment Waste Can: $1,405
Roman Shade Fabric: $10,967
Roman Shades: $7,315
Coffee Table: $5,852
Commode on Legs: $35,115
At this time, reports CNBC's Charlie Gasparino on The Daily Beast, Thain is "preaching the virtues of cost control, telling employees to reduce expenses including car services, entertainment and travel".
2. The Unfortunate Chair Incident
During a summer 2008 meeting with his top financial officer, Thain, angry about Merrill's huge mortgage-asset-related losses, hurls a chair against the wall, shattering a nearby glass panel.
3. Just Can't Quit Those Mortgage Assets
Even after Thain has been forced to beg Bank of America to save his desperate firm, his traders, thinking the market has "bottomed out", keep trading risky mortgage securities. Those, of course, are the very assets that had helped bring on the massive losses, mostly incurred before Thain's tenure, that made the Bank of America deal necessary.
4. The Bonus Fiasco
In October, Thain suggests he should receive a $30-$40 million bonus. By December, he compromises: $10 million. After a blizzard of public criticism, including from New York Attorney General Andrew Cuomo and Senate Majority Leader Harry Reid, he drops his request for any bonus. Later, he denies having asked for one at all.
5. The In-Retrosepct-Ill-Advised Ski Trip
In mid December, Bank of America CEO Kenneth Lewis learns that Merrill's fourth quarter losses will be much larger than expected. Lewis gets the bad news not from Thain himself, but from the transition team handling the merger -- perhaps because, after the losses surface, Thain takes off for his ski house in Vail. (A "person familiar with the matter" tells the Journal, hilariously, that Thain was "working and available" while in Vail.)
6. The Failure To Impress The New Boss
Asked by Lewis about the new losses, which will officially come to $15.3 billion, Thain "didn't really have a good grasp of what was going on,", one source tells the Wall Street Journal. Ultimately, the federal government will in January give Bank of American $20 billion -- on top of the bailout funds it had already gotten -- to help it absorb the Merrill losses.
7. The Troubling Lack Of Candor
Under Thain, Merrill appears not have been as forthcoming as it might have been with its new owner about the state of its books. A Bank of America spokesman tells the Journal today: "Their fourth quarter was way beyond anything they said would happen." Even worse, Thain may also have been less than straight with Merrill itself. He doesn't fully inform his own board that, thanks to Merrill's losses, the federal government might need to step in to ensure the B of A deal goes through, according to complaints from board members.
8. The Other Bonus Fiasco
Merrill, with Thain still in charge, accelerates its yearly bonus payments, doling out an estimated $3-4 billion in bonuses before January 1, 2009, when Bank of America will take control. Some at B of A believe the expedited schedule is designed to avoid giving B of A a chance to cut those payments. New York AG Cuomo is now reportedly investigating.
9. The In-Retrospect-Ill-Advised Planned Trip to Davos
Thain plans a trip to Davos to attend the World Economic Forum next week -- even though Bank of America has discouraged the idea.
10. The Final Act
Thain pays $483,320 for 84,600 shares of Bank of America. The following day, he's fired.
Well, at least now he can make it to Davos.
Fro heavens sake, the damn Parchment waste can is...not kidding...MADE IN FRANCE! An American made one not good enough?
French fries were bad enough, now the taxpayer is funding fancy French waste baskets for filthy rich financiers who are robbing the US Treasury!
Posted by NobleCommentDecider in reply to a comment from Mark Regan
January 23, 2009 5:10 PM | Reply | Permalink
But... we must generously compensate such remarkable individuals or they won't take the critical positions of power in our free market economy and the USA will turn into a socialist country like Germany, Japan, or G-d forbid Canada!
I am sure with a mind like his Thain will be scooped up by a great institution like the American Enterprise Institute or the CATO foundation.
Posted by NobleCommentDecider
January 23, 2009 4:58 PM | Reply | Permalink
Or, NobleCD, join that honorable (not)news source, Faux Mews.
A serious question: why are these characters not having to repay what they've stolen. I think of myself as an honorable person but I don't know how honorable I'd stay if I was sent into a bank and told to take anything I could over a pretty much unlimited time period.
Posted by soupson52
January 23, 2009 5:12 PM | Reply | Permalink
Listen the thing that is revolting is that he is not alone with his attitude and viewpoint how the world is designed for their benefit---to an extravagance end. It is no different than the attitude that royal families had in 18th and 19th Centuries where some literally lost their heads and others were revolted against.
I know I was an senior executive search professional in the private equity and investment bank market until it began to seek safe harbor in late 2006.
This is a generation that never "earned" it like the famous EF Hutton slogan, they merely mined their incomes on the backs of other people's money.
I am glad Cuomo did not get picked in the Senate so he can get an urgency of now going after the WS Banks.
Posted by RWN
January 23, 2009 5:23 PM | Reply | Permalink
Too bad about his bonus, man. That's $10 million that isn't going to get to trickle down to the rest of us.
You take a wad like that and go on a spree at Walmart and they'll have to hire a few more baggers, who then get to buy groceries. Before you know it this economy is moving again.
Posted by arbalest
January 23, 2009 5:54 PM | Reply | Permalink
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I used to wonder whether the guillotine was really justified, and I tended to think the French went overboard during their revolution.
But now I see things differently. There are mortals whose souls are so debased that a beheading is the only justice.
Mr. Thain and others like him have cost us some fourteen trillion dollars ripped from our retirement accounts, including mine. Unless I can find employment, I face a grim old age.
The Chinese are on the right track, executing malefactors.
Who are these guys and where do they come from? Did they have parents who taught them things? Or did they grow like mushrooms, in the damp, dark places. It's a sad comment on our "system" that people like these are allowed to grow up and become important.
So, Thain bought a lot of stock right before he was fired? Bet he had option rights to pay less than full value for them, and can sell them at a tidy profit anytime he chooses? Isn't it nice how losers become winners despite their losing?
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