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Downbound Thain
The John Thain rehabilitation campaign continues.
He hasn't been on The View yet, but the chair-throwing ex-Merrill CEO did the next best thing this afternoon, talking to Maria Bartiromo of CNBC about his departure last week from Bank of America, why he's not to blame for Merrill's multiple billion dollar losses, and the whether it was a good idea to spend $1.2 million of Merill's money redecorating his office suite. (Short answer: No, but it was a "different economic environment.")
Thain said he was "surprised" by his ouster at the hands of B of A CEO Ken Lewis, saying that results from the first 20 days of the merger, which went into effect January 1, were "very good."
He blamed Merrill's losses on positions the company held before he took over in 2007, and the larger market meltdown. "Over the course of the year I was at Merrill, I was constantly sheding assets," he said, referring to toxic mortgage assets. "We were in a position of owning very illiquid things that could not be sold and had to be marked down."
And he denied that Merrill's continued buying of mortgage assets into the fall were at the heart of the massive fourth quarter losses. "Did we continue to trade? Yes. Did we put on big risk positions ...? No... The vast majority of loses in the fourth quarter were from positions that had been there since I started."
As for the claim that Thain wasn't open with B of A about Merrill's losses, Thain said:
"They were seeing exactly the same info that we saw. We gave them complete access to everything we had."
Those billion dollar bonuses Thain signed off on? "If you dont pay your best people, you will destroy your franchise. Those best people can get jobs other places, they will leave."
And about that redecoration, Thain said it was a "very different economic environment." He added: "It is clear to me in today's world that it was a mistake. I apologize for spending that money on those things."
Asked by Bartiromo why he couldn't have left the office as it was when his predecessor as CEO, Stanley O'Neal, took off, Thain replied:
"His office was very different than the general decor of Merrill's offices. It would have been very difficult for me to use it in the form that it was in.
Watch the video of that exchange:
Josh
Zachary
""If you dont pay your best people, you will destroy your franchise. Those best people can get jobs other places, they will leave."
That's true, and in this economy there are still a few vacancies at fast food restaurants and the grape fields... part time, of course...
January 26, 2009 9:27 PM | Reply | Permalink
Yes.
And I would add that even if the outlook in the field isn't that bleak, bonuses can be deferred pending profitability or other criteria. Six months, a year, or longer. It might make sense to pay out say 10% of a bonus upfront as a gesture and to help cover any outlays made in expectation of a bonus, but make the rest of the bonus be contingent on excellent individual future performance and the employee sticking around long enough to collect it.
What a creep!
January 27, 2009 3:04 AM | Reply | Permalink
Honestly, there has always been this vague wonder as to why it was I didn't live in interesting times. That was in the 1990s.
I look at the front page of TPM and I no longer have that wonder.
January 26, 2009 9:28 PM | Reply | Permalink
Great headline: "Downbound Thain". Kinda gets me in the mood for Springsteen's new album tomorrow...
January 26, 2009 9:30 PM | Reply | Permalink
What the fuck does that mean? It's simply not possible every other Merril office had "parchment waste baskets" and hundreds of thousands of dollars worth of silly crap Thain bought for his office. Nor is there any way the lack of such pretentious knick-knacks would cause Thain's job performance to suffer.
I spent decades in the music business so I know about big stupid wastes of money. But how anyone would expect they'd keep their job very long after paying their personal office's interior decorator $800,000 is beyond me.
-AF
Andrew Sullivan Is A Fraud
January 27, 2009 1:17 AM | Reply | Permalink
Nit - picky but...
Why is it that the head of a major company "earning" millions of dollars does not know that you say "different from" in this situation.
January 27, 2009 7:44 AM | Reply | Permalink
Let me dice this down (Maria wasted her time here): "We 'best people' are accustomed to the best of lives at the top of the bubble we helped create, and that mindset wasn't abated by undeniable forecasts of imminent market meltdown. Although we are the primary agents in depreciating the economy, we are thoroughly detached from the chickenfeed concerns of those at the bottom of its system; we simply couldn't care less. We'll burn through the bailout money just like we torched that of investors and depositors. If you don't like it, suck my parchment. Jackass."
January 27, 2009 10:53 AM | Reply | Permalink
You've pretty well nailed them. (Not to excuse Thain etal but the few mega-rich I've known don't ask prices. They like it, they buy it.)
That said, it seems to me that there is a strange, singular phenomenon afoot in the world of high finance, namely that world is rife with rampant fraud and other crimes yet nobody's committed them? Hell, that phenomenon could call into question - how about flush it down the drain - our entire justice system.
January 27, 2009 12:58 PM | Reply | Permalink
Yes, sometimes it's weird how the very rich have a kind of freedom, it's a freedom from the economy. They are free to be uneconomical in their conduct. And then trickle down gives limited tastes of freedom to the not so rich...
The Shock Doctrine talks a bit about how Chicago Economics helped the South American dictators in the 70s achieve this thoroughly insane notion of freedom for Chile and Argentina.
January 27, 2009 2:15 PM | Reply | Permalink
The sense of entitlement and privilege is simply breathtaking. The biggest issue here, is that John Thane's behavior is TYPICAL of executives of public corporations: it's not unusual at all, really.
So much for that oft claimed responsibility of corporate leaders to focus primarily on 'shareholder value.'
Anyone remember the 'clown prince' of Tyco, L Dennis Kozlowski? The twenty million dollar apartment, lavish wedding celebration and $ 6000.00 shower curtain, all paid for by the corporation?
January 27, 2009 11:51 AM | Reply | Permalink
In the corporate world Thain is one of those "safe"and servile persons who typically rise to the top. Look at him. He's never had an original idea that was not stolen. He got to the top by staying out of trouble, being a goody two shoes, and a mediocrity. He made no waves and always pleased his bosses. His bosses were and are from the same mold, sensing with their antennas that he was a safe and mediocre. That's why Thain was promoted. That's how the corporate old boy network operates. Thain was almost certainly a mandarin--ever serving upward, but creataing hell on earth for those below him, silencing them, isolating himself, firing or shelving those with good ideas, then dutifully dropping those good ideas at his bosses' feet. His office was redecorated to impress those who were above him and serve as a barrier to those under him. It was a symbol and a show of his own power. Too bad M-L was sold and Thain got new set of bosses. He found himself on the outside of B of A's old boy network and was exposed now as a turtle without a shell. Thain was conveniently fired by people at B of A for his bad business decisions and his extravagance, people just like him.
January 27, 2009 3:47 PM | Reply | Permalink
.... "His office was very different than the general decor of Merrill's offices. It would have been very difficult for me to use it in the form that it was in." ......
Which certainly begs the question: What exactly did the office look like before the remodel?
A bordello? A jazz club? A gym with work-out equipment? A day-care for toddlers?
How bad could it have been to spend $1.2 million on it?
January 27, 2009 4:03 PM | Reply | Permalink
This guy lives in Cloud Cuckoo Land!
Firstly, WHERE would all these wonderful bankers go if they decided to up sticks and move?
Secondly, if his argument about the franchise had ANY validity, why not let the bonuses be decided by the people who had bought that franchise, i.e. Bank of America? Surely it should be for them to decide what it is worth?
Bringing the bonuses forward like that just smells really bad. The only explanation can be that he thought BoA maybe didn't put such a high valuation on the expertise of its acquisition, and Thain was determined to reward his buddies with other people's money while he still could.
January 28, 2009 6:31 AM | Reply | Permalink