Until his ill-fated stint at the helm of Merrill Lynch at the height of the global financial crisis, John Thain led a fairly charmed career. After serving as chief executive of the New York Stock Exchange, and as president and chief operating officer of Goldman Sachs, Thain was brought in by Merrill in 2007 to help right the ship as losses from bad bets on subprime mortgages threatened to sink the venerable firm.
To Thain's credit, he managed to get some bad investments off the staggering firm's books, and ultimately pushed Merrill into a $50.3 billion merger with Bank of America. The deal may have brought company's days as an independent entity to an end, but it was still a better alternative for the firm's employees and shareholders than the fates of Lehman Brothers or Bear Stearns.
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Since then, Thain's reputation has taken one hit after another and he's now one of the poster boys for why Wall Street is so unpopular with Main Street. Soon after the merger with Bank of America was completed with the help of taxpayer money, it was revealed that Thain spent $1.2 million on a makeover of his office. Those expenditures included $35,000 for a toilet and $87,000 for a rug.
On top of that it was reported that he rushed out billions in bonuses to Merrill employees shortly before the merger was finalized.
Thain's once again in the headlines for all the wrong reasons this week after former FDIC head Sheila Bair's new book revealed that as the government was racing to stabilize the nation's financial system through taxpayer-funded bailouts, his primary concern wasn't whether the plan would work and ultimately save jobs. Instead, his main priority was his own paycheck.
Here's a brief excerpt from the book, courtesy of Fortune:
The room became quiet as Paulson entered, with Bernanke and Geithner in tow. We all took our seats. He got right to the point. We were in a crisis and decisive action was needed, he said. Treasury was going to use the Troubled Asset Relief Program (TARP) to make capital investments in banks, and he wanted all of them to participate.
Paulson asked Geithner to tell each bank how much capital it would accept from Treasury. He eagerly ticked down the list: $25 billion apiece for Citigroup, Wells Fargo, and J.P. Morgan Chase; $15 billion for Bank of America; $10 billion each for Merrill Lynch, Goldman Sachs, and Morgan Stanley; $3 billion for Bank of New York; $2 billion for State Street.
Treasury Secretary Hank Paulson in a October 2008 press conference in Washington explaining the bank bailout. Behind him, from left: Fed chairman Ben Bernanke; FDIC chairman Sheila Bair; New York Fed chief Tim Geithner; Comptroller of the Currency John C. Dugan; SEC head Christopher Cox; and Office of Thrift Supervision chairman John M. Reich.
Then the questions began.
Thain, whose bank was desperate for capital, was worried about restrictions on executive compensation. I couldn't believe it. Where were the guy's priorities?
On top of that, Thain's now embroiled in a bit of a controversy with Fox Business Network's Charlie Gasparino. Earlier this week, Gasparino learned that Thain was quietly shopping CIT to larger players throughout the industry with the ultimate goal of emerging as a contender to run the larger, combined entity. Fox Business notes that Thain began putting put feelers after CIT's failed bid to buy ING Direct earlier this year.
The news channel says Gasparino reached out to CIT for a comment and that a spokesperson there didn't deny the matter. But after the Fox Business piece ran, Thain took to CNBC to claim the piece was untrue and that Gasparino's team didn't fact check the story. In turn, Gasparino went back the airwaves, said Thain has a history of denying his reports and basically calls him a liar.
Thain, no doubt, has his reasons for being bitter with Gasparino since he was the one who broke the devastating story about Thain's lavish office makeover. He also found out from a Gasparino report that he was getting forced out of his role at Merrill following the merger.
From Fox Business: