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-Retrospect-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.