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John Thain's $87,000 Rug
"I don't want to convey to you that Ken was delighted in mid-December when he found out about the losses, in fact he was pissed at Thain," one person at BofA who is close to Lewis told The Daily Beast earlier in the week. "He's not doing anything about Thain now because it isn't clear whether Thain should have told him sooner. So at least for now, Ken is sticking with Thain." (A spokeswoman for Thain denied a rumor inside Merrill that Thain is poised to step down from the firm.)
It's unclear how the disclosure of the personal expenses will effect now Thain's position. Thain signed off on the purchases in January, people close to Merrill say, when Merrill was still an independent firm and when some analysts believed the company was poised for a rebound with Thain as the new CEO. Thain came to Merrill after a largely successful stint as CEO of the New York Stock Exchange, where he converted the not-profit entity to a public company. Before that, he was a long-time executive at Goldman Sachs, where he served as former CEO Hank Paulson's No. 2.
Still others say spending so much company money on personal items shows incredibly bad judgment on the part of Thain since Merrill was in the middle of a financial crisis that ultimately led to its demise as an independent company. At the time, Thain was preaching the virtues of cost control, telling employees to reduce expenses including car services, entertainment and travel. In addition to the personal expenses on his office, documents show Thain paid his driver $230,000 for one year’s work, which included the driver's $85,000 salary and bonus of $18,000, and another $128,000 in over-time pay. Drivers of top executives are often paid about half that amount.
"If this is accurate it has shades of Dennis Kozlowski's $6,000 shower curtain," said investor Doug Kass of Seabreeze Capital Management, in a reference to former Tyco CEO Dennis Kozlowski who was convicted of fraud and is serving prison time for improperly spending millions of dollars on personal items. While there is no evidence that what Thain did is either illegal or of the magnitude of the spending by Kozlowski, Kass said "Merrill was on the fence and Thain came into save the company. It's still a lot of money and there is no rationalization for something like this."
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Charles Gasparino appears as a daily member of CNBC's ensemble. Gasparino, in his role as on-air Editor, provides reports based on his reporting throughout the day and has broken some of the biggest stories affecting the financial markets in recent months. He is also a columnist for Trader Monthly Magazine, and a freelance writer for the New York Post, Forbes and other publications.
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Charles Gasparino is CNBC's on-air editor and appears as a daily member of CNBC's ensemble. He is a columnist for The Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His new book about the financial crisis, The Sellout, was published by HarperBusiness.
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Charles Gasparino is CNBC's on-air editor and appears as a daily member of CNBC's ensemble. He is a columnist for The Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His new book about the financial crisis, The Sellout, was published by HarperBusiness.
citivas
Even as we speak B of A is spending $4 million in completely discretionary "upgrades" to their private suite at the new Yankee Stadium, before the paint is even dry on the multi-million dollar suite they just acquired. In essense, we the taxpayers are paying for all this. I wonder if that means we all get to take turns using it? $4M, on top of the existing lavish finish, for a room that gets used a few hours at a time a couple dozen times a year and has no legitimate (client smoozing, yeah, right) business purpose... Sure, that's great stewardship of our tax dollars, Ken...
marmitelover
Speechless. They really don't live on the same planet as the rest of us.
KateTheGreat
It always amuses (and annoys) me mightily when I see someone spend just a hair more than my entire years' take-home pay (after taxes) on 4 curtains...The words disgusting, bloated, and vulgar come to mind.
sharonsj
I'd like to add that the one Roman curtain equals my Social Security for a single year. I have nothing against people who earn more than I do--it's how they spend it that makes me wonder about their awareness of other people's reality. I doubt Thain has any clue. He's the CEO equivalent of Marie Antoinette.
isaac1
Perhaps Mr. Lewis should sign for any future expenditures Mr. Thain thinks important. Or call in Sotheby's.
queensplate
go figure it...$128 k overtime pay for his driver......whew.....what were they up to ?
mikehattan
Does the phrase.."Let them eat cake" come to mind?
And we all know what happened next....I yearn for the sound of tumbrils rumbling down Wall Street.
bored2tears
The best thing about this piece is being able to read it here, and not have to tune into the on-air cesspool of uselessness that is CNBC. Otherwise, where is the real news interest? Thain is slime. That much we have known for ages.
wrywriter
Isn't it time that a teeny, tiny bit of the bailout/recovery fund be set aside for the construction of a gallows? Purely symbolic, of course, but a reminder to the masters of the universe that paying more for your office rug than an average family makes in a year at a time that the economy is in the tank should be a crime.
If the banking meltdown had happened in China, people would have been shot. In Japan, they would have resigned in disgrace. But here the bankers whine about no bonuses and redecorate. It's a disgrace.
missbike
Not to nitpick, but I think you mean guillotine? Gallowsis for common criminals so it would work, but the guillotine was invented for "Let them Eat Cake"...
Just a style point.
Slicyman
Charlie---I don't know how you deal with the screeching clucking talking-hens at CNBC. Tell 'em to STFU.
citivas
My personal favorite BTW is the $1,400 trash can with the $34,000 toilet ("commode on legs" which technically can be a peice of furniture too but I choose to interpret it as a fancy john...) as a close second...
andrew585
Pigs at the trough... when will this madness end?
mikehattan
Maybe tumbrils and gallows are a little too extreme how which to punish these people but I would call for the return of the pillory and stocks. Being under "Penthouse arrest' for stealing millions and just the arrogance of these people feeling they are above the law justifies their spending a couple of days subject to the public humilation that they so well deserve.
sippewissett
DISGUSTING. While it's true that a lot of projects, like interior design where custom pieces have been ordered, probably originated before the Crash, it is also true that there were PLENTY of warning signs of a weakening economy and a weakening financial industry so Thain should be hanged by his thumbs. How come he's still around? ML/BofA should drum him out of there.
BLUEBIRDFARM
Hotel Gitmo will have occupancies soon. Put him and the rest of them in there. No maid service available.
Upperleftcoast
Great minds think alike: Guantanamo needs to be put to some use. You might get a chuckle (or high blood pressure) out of a song I wrote about just this topic:
http://www.youtube.com/rantcaster#p/a/u/0/juywAoQvMm8
onedirector
Lock the SOB up. Sell the stuff and distribute it amomg the poor slobs he laid off.
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