Executive Misconduct – John Thain
By now, most people have probably heard that John Thain, former CEO of Merrill Lynch, has left what I’m calling a “cushy” job at Bank of America for doing some things that are, quite frankly, astoundingly arrogant. Nothing illegal, but it smacks everyone right in the face with why so many people have complained about the bailouts of banks.
This guy, who was heading a wealth management division of the two firms’ merged businesses, decided that, before the banks went to ask for help, that he’d dole out big bonuses to Merrill executives were also paid out as the company prepared to report a $15.45 billion fourth-quarter loss. These bonuses weren’t supposed to be paid until January, but he decided to move them up a month, before the two companies became one, as Bank Of America has taken over Merrill Lynch. He himself didn’t accept a bonus, and neither did four other top executives, but that doesn’t matter; they have enough money already.
But that’s not all of the story. It seems that, as a certain point, Bank of America CEO Kenneth Lewis had started to lose confidence in Thain, and went to visit him in his offices in NYC. That’s when he discovered that, in the midst of a lot of bad financial news, Thain’s office had undergone a transformation. Thain spent $1.2 million early last year to redecorate the office, including $87,784 on area rugs and $18,468 on a George IV chair; wow! No wonder the stock price of Bank of America went down after this news came out.
Word was Thain had no clue that his bank, Merrill Lynch, was in trouble, and has told many people that he would have done the same thing he’d been doing all along had he known. This, once again, is why many people don’t trust CEOs, and why I wrote my article on CEOs a couple of days ago. Seems that, indeed, the top financial minds just may not be all that intelligent after all.
So, Thain is gone, and the word is that Lewis might be next, not only for purchasing Merrill Lynch at a price much higher than it turns out it was worth, but for not catching on to what Thain was doing earlier, which included the exodus of, supposedly, a lot of good people that Lewis actually liked, that he didn’t know about until too late. No wonder the banking industry is in trouble.