John Thain Resigns Amid BofA Losses, Lavish Decorating and Bonus Scandal
At the very moment Merrill Lynch’s CEO John Thain was pleading for an emergency bailout from the U.S. federal government to the tune of billions of dollars in taxpayer money, the brokerage giant already had begun to dole out $4 million in bonus checks to executives. A few days later, with the help of government funds, Merrill Lynch was acquired by Bank of America (BofA).
On Jan. 22, Thain abruptly resigned from his post at BofA. Now, both Thain and Bank of America, which has received $45 billion in bailout funds, face harsh criticism for what many are calling an outlandish misuse of taxpayer money.
Adding to Thain’s PR troubles is news of a lavish spending spree totaling $1.2 million to decorate his corporate office during a time when Merrill Lynch was drowning in financial losses and slashing jobs. Among his purchases:
- $800,0000 for the services of interior designer Michael Smith
- $35,115 for a commode
- $1,400 for a trash can
- $37,000 for six dining room chairs
- $131,000 on two area rugs
- $68,000 on a credenza
In addition to Thain’s over-the-top decorating, he reportedly paid his driver a salary, including bonuses and overtime, of $230,000 for one year’s worth of work. Drivers for executives of Thain’s stature are usually paid about half that amount.
Thain also at one time had tried to secure a big bonus for himself before the sale of Merrill Lynch to Bank of America. In October, the 53-year-old suggested a sum of between $30 million and $40 million. Later, it was reduced to $10 million. In the end, he received no bonus at all.
Thain’s departure from Bank of America comes less than a month after being named head of the firm’s global banking, securities and wealth management division. Apparently, BofA CEO Ken Lewis flew to New York on the morning of Jan. 22 to meet with Thain and call for his resignation.
Lewis’ disappointment with Thain no doubt has something to do with Merrill’s unexpected $15.4 billion fourth-quarter loss, which forced BofA to seek an additional $20 billion of funding from the government last week.
As for Thain’s ill-timed gamble of paying $4 million in bonuses to Merrill Lynch executives, that matter is now under investigation by New York State Attorney General Andrew Cuomo.
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