When all about you lose their heads

John Thain spent $1.2 million of other people’s money redecorating his Merrill Lynch offices two months ago, while his underlings drowned. The man is clearly a genius for selling Ken Lewis a 50 lb sack of crap for $50 (?) billion but I don’t think I’ve read of a more despicable individual in American business, ever. There’s still time for that title to be contested and these days, I’m sure other candidates will emerge. But for now, Thain makes Dickie Fuld look like a warm, genuine human being.

13 Comments

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13 responses to “When all about you lose their heads

  1. Mad Monkey

    Ken Lewis is an idiot. Lehman filed for bankruptcy on Monday, Sept 15th. That entire weekend it was well understood that Lehman would not make it. Merrill’s stock was trading below $12 on Friday, Sept 12th with short sellers leaning all over the stock for more than two weeks. Why the heck did BofA agree to buy Merrill on Sunday, Sept 14th for $27 per share or $50 billion the day before Lehman was scheduled to file for Chapter 11? With Lehman going under on Monday, BofA could have paid $3 per share or $5.5 billion for ML on Tues, Sept 16th. Merrill was about to go bankrupt! You don’t pay a 50% premium for distressed companies on the brink of bankruptcy. Since the deal’s announcement Merrill has reported $15 billion in additional losses and BofA stock is down 85%! Ken Lewis should be shot dead. Even Greenwich bottom fishing, tire kicking, pseudo wealthy buyers know a thing or two about the low ball bid!

  2. Kidding Really??

    Thain in his defense… He didn’t lever up the balance sheet under his tenure with toxic assets. Stan O’Neil did. He took over after the Titanic hit the Iceberg. Ken Lewis overpaid for Countrywide too. I believe the Fed had more to do with it…

  3. Cos Cobber

    Interesting comment Mad Monkey. So, shouldn’t those shopping for real estate, regardless of price range, do the same and NOT pay a premium when its clear others (maybe not you) will sell a similar product for less.

    And isn’t profit in real estate made on the proper buy price…not sell price. Thats all these low-ballers are looking to do, catch a falling knife and lock in a good deal.

  4. Mad Monkey

    Cos Cobber,

    Merrill was on life support without any chance of survival. Conversely, Greenwich real estate is alive and well. Granted the town has experienced a slight real estate price dislocation but it’s nothing to panic about. The market is going to return and return big in a few years. If I thought the sky was falling I might agree with you but it’s not.

  5. anonymous

    When losing many billions, a couple million in decorating, etc are rounding error…emotional headlines, but still trivial…

    Actually, bonuses at most inv banks in ’08 weren’t all that bad (vs ’07 record lvls) for the rank-and-file…sr execs took no bonus for optics, and many weak employees were laid-off, but Darwinian cleansing is periodic and healthy in any industry…the business cycle or something…

    Thain’s net worth is prob far higher than that of 99% of IB execs today….advantages of selling his GS stock yrs ago…

    No one has ever worked for a commercial bank by choice….and in past 10yrs, same can be said for IBs….talent migrates to wherever is the big money…

  6. Cos Cobber

    But the prove is in the pudding, right? As in, you haven’t been able to sell your place at the price you want. You want to characterize the current market as a slight downturn, but today’s spot market, granted on low volume, says overwhelmingly otherwise. But alas, your point is a strong rebound is ahead…we shall see, but I for one highly doubt it. Too much wealth has been lost.

    And I do own real estate in town and yes, its a birdhouse to your castle.

  7. Debtvulture

    Mad Monkey, why have you said the following:

    “The market is going to return and return big in a few years”

    How can you really believe this? The IB model is debt, the U.S. is on life support and heaven forbid China stops buying our Treasuries, the job market has just started stinking, municipalities are about to go busto left and right, at least $13T is household wealth has been destroyed, the world is still deleveraging, but everything will be honky dory real soon? Seriously, what are you looking at and can I have some of what you are smoking.

    At BEST prices will be flat for years to come (5 – 10), IMHO.

  8. A taxpayer

    Merrill Lynch brokers earning commissions of $500k and up will be paid retention bonuses (apparently from TARP money) to stay on with Bank of America. According to Investment News, the total bonuses will be about $3 billion out of the latest $20 billion sent off to B of A.

  9. Retired IB'er

    Just another weighing in on how it is a sea change out there. Nah, this downturn won’t affect high priced real estate. Move along, nothing to see here, all is safe in the world…

    Floyd Norris at NY Times… “Wall Street Paychecks May Wither”

    Link to story: http://www.nytimes.com/2009/01/23/business/23norris.html?_r=1

  10. Mad Monkey

    Though bonuses were down most of my friends on the Street still got paid very well this year. Yes, senior executives went without bonuses but the rank and file got paid very well (mostly from TARP since these firms had negative earnings). If someone is making $3mm-$5mm per year, a 15-20% decline in total comp doesn’t make a huge difference.

  11. pulled up in OG

    ” . . . a 15-20% decline in total comp doesn’t make a huge difference.”

    How ’bout a 15-20% drop in real estate prices?

    $20M > $16M . . . no biggie, right?

  12. Mad Monkey

    Don’t sell.

  13. DebtVulture

    Maybe Mad Monkey….but I know plenty that got more than a 15% cut and on top of that, none of it came in cash……gotta love that restricted stock that will probably be worth $0 in another year when the banks get nationalized.

    Can one buy a house with restricted stock these days? Hmmmm….doubt it.