Sunday, January 25, 2009

What happened to the money I already gave you?

Extracts from
Former Merrill Lynch CEO John Thain resigns from Bank of America amid bonus scandal
by Helen Kennedy for the Daily News, Thursday, January 22nd 2009, 8:56 PM

The CEO of Merrill Lynch was abruptly ousted Thursday after it emerged that he had spent $1 million to decorate his office - including buying a $1,405 trash can - and rushed out billions in executive payouts just days before his firm went under.

Sources said the main reason was Bank of America's growing horror at the true extent of Merrill's financial weakness, which forced the bank to beg for another $20 billion in taxpayer-funded bailout money last week.

Thain's firing also came hours after a news report detailed how he went on a lavish decorating spree last year, including an $87,000 area rug and a $35,000 "commode on legs" - even as Merrill was slashing thousands of jobs.

And those extravagances pale next to the estimated $4 billion in bonuses for executives of the failing firm that Thain pushed out in December just before Merrill's fire sale to Bank of America.

Merrill's fourth-quarter $15 billion loss was much worse than anticipated. Bank of America, which already got $25 billion of the TARP Wall Street bailout, had to go ask for more.

Last year's mounting losses didn't stop Thain from ensuring a hefty payday for his execs.

The Financial Times revealed that in December, just days before the Bank of America takeover, Merrill rushed through $4 billion in bonuses, which are typically given in late January.

Thain had tried to get $10 million for himself, too, arguing that he saved the company from a total dissolution like Lehman Brothers. But he gave up the idea as public fury grew over the excesses of Wall Street executives.

Thain also paid his chauffeur $230,000 a year from the company till, CNBC reported.


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