As Wall Streeters go, John Thain had done a pretty impressive job of maintaining his reputation amid the financial carnage of the past couple years. But I’m starting to wonder if any of the Wall Street establishment is going to come out of this mess looking even remotely respectable.
Thain had risen through the ranks at Goldman Sachs. When it became clear that he wasn’t going to rise to the very top of those ranks, he took over as CEO of the New York Stock Exchange and orchestrated a surprisingly peaceful transition into the modern electronic era. Then he went to Merrill Lynch to clean up the mess that Stan O’Neal had made, sold out just in time to Bank of America, and seemed to win the confidence of B of A CEO Ken Lewis.
Scratch that last part. Today—with the play-by-play reported by Charlie Gasparino on CNBC—Lewis hauled Thain into his office and fired him. The biggest issue was clearly Merrill’s $15 billion in fourth quarter losses and, according to the WSJ, Lewis’s aggravation that he didn’t hear about them from straight from Thain. But there was some other stuff too:
The Bank of America CEO also concluded Mr. Thain has exercised “poor judgment” on a number of fronts. He left for a vacation in Vail, Colo., after the losses came to light, bonus payments at Merrill were accelerated so they could be collected before the end of the year and Mr. Thain had planned to fly this week to Davos, Switzerland, even though Bank of America had signaled that such a trip was not a good idea …
Plus this from Gasparino:
Thain spent $1.22 million of company money to refurbish his office at Merrill Lynch headquarters in lower Manhattan. The biggest piece of the spending spree: $800,000 to hire famed celebrity designer Michael Smith, who is currently redesigning the White House for the Obama family for just $100,000.
My impression is that this is all basically stuff that top Wall Street executives do. Or at least have done. I really think most of them—even the pretty smart ones like Thain—still don’t get how much smaller and poorer and less popular their industry is likely to be in the coming years.