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interestrateripoff

Wall Street's Superthain Felled By Excess In Antiques And Bank Buying

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http://www.guardian.co.uk/business/2009/ja...globalrecession

Antique furniture, a $15bn (£11bn) loss and an unacceptably lavish trip to a Swiss ski resort. The 30-year Wall Street career of former Merrill Lynch boss John Thain came crashing to an end this week as his new employer, Bank of America, ran out of patience.

Nicknamed "superThain" for his bespectacled Clark Kent looks, Thain was once known as a turnaround expert with a deft hand for fixing troubled financial institutions. But he lost his job in a meeting which lasted barely 15 minutes on Thursday morning with Bank of America's chief executive, Kenneth Lewis.

"Ken went to see him, they had a short meeting and they mutually decided things weren't working out," a Bank of America spokesman said.

Ostensibly, the reason for Thain's departure was that Merrill Lynch has being losing money hand over fist since Bank of America agreed to buy the business in September. In the final quarter of the year, Merrill lost an eye-watering $15.3bn on exposure to toxic derivatives and bad mortgages.

Bank of America bosses privately complain that Thain left them in the dark about the scale of the outflow – as the situation deteriorated in December, he went on holiday to the mountain resort of Vail. The banking group might have pulled out of its purchase of Merrill had it not been urged to press on by the US treasury which, fearing another Wall Street bankruptcy, hurriedly stumped up $20bn of aid.

But Thain's personal style engendered particular irritation. In a carefully timed leak, it emerged this week that Thain spent $1.22m of Merrill's money renovating his office in New York a year ago. The 58-year-old signed off on purchases including an $87,784 rug, a $35,115 commode and a pair of curtains costing $28,091. Even the waste paper bin cost $1,405.

In any other year, such expenses would barely have prompted a raised eyebrow among Wall Street banks where wood panelling, tropical fish tanks and oil paintings are commonplace. But Thain misjudged the climate.

"Redecorating your office at this expense while letting go of employees is not a good thing," said Stuart Plesser, a banking analyst at Standard & Poor's equity research.

Office furnishings were not the only example of Thain's reluctance to tighten his belt. He was planning to lead a Merrill delegation to the World Economic Forum's annual summit in Davos at the end of this month – and his plans irritated Bank of America chiefs.

While Bank of America plans a single cocktail reception for opinion leaders in Davos, the Merrill team intended to show off in style. A banking industry source said: "Signals were sent to John that what he was planning was not appropriate. They were going to take over a hotel. They were going to do a lot of press with multiple parties and dining events."

With Wall Street banks struggling to stay afloat, Thain even had the audacity to lobby for a bonus. He let it be known to Merrill's board late last year that he felt he deserved $10m for successfully selling the business, thus protecting it from the fate of Lehman Brothers and Bear Stearns. When his peers at rivals such as Goldman Sachs and Citigroup declared that they were renouncing personal payouts, Thain backed down.

"The collective weight of things coming out – the office, the trips, the bonus – borders on indefensible," said Nancy Bush, an analyst at NAB Research.

It is a shattering end for a man who spent 24 years at Goldman Sachs before moving to run the New York stock exchange – where he won plaudits for trimming costs and smoothing the process towards electronic trading.

For many on Wall Street, the lingering question is what might happen to Bank of America next. While Merrill's brand and brokerage network are valuable assets, the firm's investment banking arm is proving a huge liability. Bank of America's own boss will face his board next week with doubts mounting over his handling of the takeover.

Critics suggest Lewis failed to negotiate sufficiently hard when he agreed to buy Merrill in an all-stock deal which was worth nearly $50bn before share prices sank. Others, such as JP Morgan's Jamie Dimon, have proved more ruthless in snapping up troubled firms.

It appears that arrogance and self delusion is rife, wanting a bonus for selling a failed business which needed massive bailouts from the taxpayer really says something about how arrogant and out of touch with reality these people are.

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A lot of artists have seen the price of their work, and egoes, soar during the credit boom as bw ankers and others have fought over having such and such work in their offices. I actually wonder now how much much of this artwork is truly worth in the credit crunch?

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A lot of artists have seen the price of their work, and egoes, soar during the credit boom as bw ankers and others have fought over having such and such work in their offices. I actually wonder now how much much of this artwork is truly worth in the credit crunch?

I think a lot less than it was paid for, I doubt Damien Hirst will replicate his last big sale any time soon.

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http://www.guardian.co.uk/business/2009/ja...globalrecession

It appears that arrogance and self delusion is rife, wanting a bonus for selling a failed business which needed massive bailouts from the taxpayer really says something about how arrogant and out of touch with reality these people are.

to be fair, he obviously managed to get a very good price for it, I think he does deserve a bonus for that. :ph34r:

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to be fair, he obviously managed to get a very good price for it, I think he does deserve a bonus for that. :ph34r:

The price he got for worthless bank full of toxic crap is amazing, you get the feeling the CEO of the Bank of America will be the next to face the axe for this.

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http://www.nytimes.com/2009/01/24/business...ml?ref=business

You could hardly blame Kenneth D. Lewis, the embattled leader of the Bank of America Corporation, for feeling a bit of buyer’s remorse.

His audacious acquisition of Merrill Lynch, the giant brokerage, looks so disastrous that many on Wall Street wonder if he can keep his job.

Four months ago, as turmoil swept Wall Street, Mr. Lewis’s bank bought the foundering brokerage for $50 billion in stock. Today, the two companies are worth $40 billion combined.

For Mr. Lewis, who built Bank of America into the nation’s largest bank through a series of bold acquisitions, Merrill has created one headache after another. The brokerage ran up steep losses after Bank of America agreed to buy the brokerage. A number of key Merrill executives left, including John A. Thain, whom Mr. Lewis pushed out on Thursday. The problems at Merrill were so acute that Bank of America was forced last week to seek a second federal financial rescue.

Some of Mr. Lewis’s shareholders are angry, and the lawsuits are flying.

Many initially questioned whether Mr. Lewis paid too much for Merrill. But now the conversation has turned to whether he adequately disclosed the risks of the acquisition to his shareholders. After Mr. Lewis clinched his deal, Merrill lost a staggering $15.3 billion during the fourth quarter. Bank of America went ahead with the purchase anyway.

Edited by interestrateripoff

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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