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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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UPDATE: This article originally incorrectly reported BofA's fourth quarter loss. The number has since been revised.
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 forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
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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 forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
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...
Speechless. They really don't live on the same planet as the rest of us.
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.
Perhaps Mr. Lewis should sign for any future expenditures Mr. Thain thinks important. Or call in Sotheby's.
go figure it...$128 k overtime pay for his driver......whew.....what were they up to ?
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.
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.
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.
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.
Charlie---I don't know how you deal with the screeching clucking talking-hens at CNBC. Tell 'em to STFU.
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...
Pigs at the trough... when will this madness end?
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.
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.
Hotel Gitmo will have occupancies soon. Put him and the rest of them in there. No maid service available.
Lock the SOB up. Sell the stuff and distribute it amomg the poor slobs he laid off.
Let's ask how much John Thain has on deposit in off-shore and foreign accounts. How many employees were fired to free up money to furnish his office and fund his vacations? It appears that the 20 billion dollar bailout simply kept a lot of fat cats from personal bankruptcy.
I think I heard that the Laura Bush designed rug in the Oval Office cost something like $70,000. What's the difference between an $87,000 rug and a $70,000 rug? Is a presidential seal cheaper to make than a dollar sign?
Oh how I wish this was Revolutionary France and we peasants could storm his offices and wreak havoc on his designer accoutrement. Are these people children? Sociopaths with no conscience? Where did they get their sense of entitlement that says (as another commenter said), let them eat cake?
Thain should run for Congress. He knows how to spend money on things that are not necessary and neither political party would have to teach him.
It is not only obscene b/c economy is tank - it all obscene b/c Thain and his ilk led the world off the cliff. PERIOD. Anyone who thinks sub prime was the problem is listening to too much propaganda! The FED and the banksters knew exactly what they were doing b/c they in effect have taken over the country. Congress may think its in charge but is clear they are all just handing the boyz from harvard b-school aka - The Nuveau Mafia - anything they want b/c as we all know Congress is so corrupt every one of them is under black mail such as Rangel got a 0% interest load in DR, Dodd secured a less than market mortgage for his loans on two homes he owns - a beach house and a regular -wow govt work is good if you can get it!
Koslowski was sent to jail, Fastow was sent to jail, Skilling was sent to jail!
I think it's time to get any bonus money BACK from Thain, and install him in the Greedy Executive Hall of Shame!
Thain has quite a large head (in more ways than 1) - what say we taxpayers see if it fits in a $35,000 commode on legs?
Tell me why nothing can be done to this guy Thain for spending this kind of money on the office and himself?
I recall that thains were said to be a sort of malign creature in some Nordic myth/epic. Could the name really be cursed? That sounds as fantastic as myths & epics. No one puts any stock in such things.
I do hope that it warms so that we can dance nude among the pines to honor the Lord Odin today.
Thank you.
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