Thain: Unlikely poster boy in Wall Street blame game
The bloodletting in Wall Street’s top ranks claimed a big target on Thursday as Bank of America ousted former Merrill Lynch CEO John Thain, who last fall won accolades for the deal that saved the storied bank and its “thundering herd” of brokers.
Thain, a reserved MIT grad, who once was nicknamed “I-robot,” was regarded until 14 months ago as one of Wall Street’s steadiest hands. But mounting losses at Merrill have critics blasting his compensation and lavish spending on office decorations.
“What we are seeing is the end of the Masters of the Universe,” said Nancy Bush, analyst with NAB Research. She explained that the extravagant lifestyle long associated with major Wall Street dealmakers is no longer acceptable.
An unlikely poster boy for a blame game, Thain was blindsided as the mortgage crisis spiraled into a credit crunch and then a full-blown global recession that forced Merrill to sell itself to Bank of America at a fire-sale price.
Once Goldman Sachs Group’s () head of operations and technology, Thain received the “I-robot” nickname when he was CEO of NYSE Euronext, which he pulled into the electronic era, winning an image for leadership.
Thain, whose departure is effective immediately, was unavailable for comment. He hardly seemed like the kind of executive who would be remembered for over-the-top perks.
Yet Thain’s reputation unraveled as an unexpected $15.31 billion fourth-quarter loss at Merrill left Bank of America threatening to abandon its acquisition of the brokerage without government financing same day payday loans.
Suddenly critics took notice of reports that he had requested a bonus and spent $1,405 on a garbage pail during a $1.22 million renovation of his office.
“HIS SITUATION WAS NOT WORKING OUT”
On Thursday, Bank of America CEO Kenneth Lewis flew to New York to meet Thain and “it was mutually agreed that his situation was not working out, and he would resign,” Bank of America spokesman Robert Stickler said.
Lewis last week expressed dismay about the size of losses from mortgages and other toxic debt on the books of Merrill, which Bank of America decided to acquire the same weekend as Lehman Brothers failed in September.
It is an abrupt fall for Thain, whose years as chief operating officer at Goldman Sachs and running NYSE had won him the sobriquet “Mr Fix-It.”
That’s just what Merrill needed when he took over in December 2007, after predecessor Stanley O’Neal dove deeply into the toxic mortgage debt that would prove Merrill’s undoing.
Known as a temperate, methodical dealmaker, Thain had commanded respect and loyalty from his staff at the NYSE and Goldman, some of whom followed him to Merrill Lynch.
In September, Bank of America Chief Executive Kenneth Lewis lavished praise on Thain at a press conference announcing the Merrill purchase. Lewis said his counterpart worked selflessly to ensure the best deal for his shareholders and his staff.