I was surprised by John Thain's sudden resignation from Bank of America where he was the head of global banking, securities and wealth management. Thain is leaving only a week after BofA’s acquisition of Merrill Lynch closed on Jan. 1st. This morning, we know this was not a resignation. Thain was reportedly forced out in a showdown with the bank's CEO Kenneth Lewis who was furious about the way Thain handled the surprise $15.31 billion fourth quarter loss that the Wall Street firm suddenly uncovered and heaped on its new parent.

I’m sure a lot of analysts wanted Thain to stick around as he was presiding over the merger of the retail and institutional brokerage house with America’s largest bank. Thain, who previously reengineered the New York Stock Exchange, was being counted on to integrate the two organizations.

However, CNBC story is reporting that Thain spent $1.22 million redecorating his Merrill Lynch offices at a time when the firm was reeling from billions in losses from the credit crisis, and laying off thousands of employees. If it’s true, then I am extremely disappointed by his excessive spending decisions.

According to documents cited in the CNBC story, Thain spent $87,784 on an area rug, $25,713 on a mahogany pedestal table and $68,179 on a 19th century credenza, to name just a few of the items on the list. Also, Thain personally signed off on the items, according to CNBC. And he used an interior decorator, Michael S. Smith Design, that Michele Obama used and that the White House paid $100,000 for his services. (Even his driver earned $230,000, though that included $128,000 in over-time pay probably from all those midnight meetings at Treasury with Secretary Paulson and crew).

Given the state of the economy and the miserable state of affairs in banking and brokerage firms that are waiting for new infusions from the TARP funds or nationalization, I would have suggested going to an Estate sale or perhaps shopping at Staples or Office Depot. Then again, what’s wrong with Kmart or Target?

Of course spending $1.22 million on revamping a senior executive’s office is a drop in the bucket compared to the $15.31 billion in losses that Merrill unexpectedly incurred in the fourth quarter of 2008 from mortgages and toxic debt still on its books. As a result, BofA’s CEO Ken Lewis had to go to the government to tap another $20 billion to help it close the Merrill acquisition.

When Thain left the NYSE where he shook up the place and ushered in a new era of electronic trading, he came into Merrill Lynch after the ouster of Stan O’Neal. It was Thain’s credentials as an M.I.T. graduate and technocrat, who was previously in charge of risk management at Goldman Sachs, that earned him high praise. Undoubtedly, Thain worked hard at Merrill Lynch to clean up the crisis that he walked into and I’m sure he did many good things. So it is again surprising that he would waste money on redecorating his office in this climate.

On the other hand, in December, word leaked out that Thain was lobbying Merrill’s Board for a $10 million bonus payment. A letter from New York Attorney General Andrew Cuomo indicated he was against Wall Street executives receiving bonuses when their firms were failing and seeking government funds, reportedly led Thain to tell the Board he would forgo a bonus. Thain also accelerated the payment of bonuses to Merrill employees ahead of the Dec. 5 meeting when the BofA Board of Direcros would vote on approving the merger.

Perhaps it is time for CEOs in financial services with oversized compensation packages to get back to reality and reign in their expensive tastes. And when it comes to redecorating, they should consult pragmatic thinkers like Martha Stewart, for instance, who could whip up a more frugal budget.