Jeremy Warner: Merrill's Thain: from hero to zero in just four short months

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The Independent Online

Outlook Have they no shame? The one-time golden boy of Goldman Sachs, John Thain, may be a dab hand at personal enrichment, but in other respects he seems to be stupid beyond belief.

What planet does he live on? You might have thought a little restraint would have been called for with Wall Street's greed-fuelled antics accused of having brought the world economy to its knees. Public anger over the robber barons of banking is already at fever pitch. This was not the time to be flashing your money about.

But no. Instead, a tale of excess worthy of the last days of the Roman Empire emerges from the offices of the Thundering Herd, where Mr Thain has for the past year been running the show. Even as Merrill Lynch burned, and the US Government was forced to hose it down with tens of billions of dollars of taxpayers' money, the bankers continued to pay themselves as if in the final stages of the boom.

The moment he arrived, Mr Thain spent $1.2m refurbishing his office, including $1,400 on a wastepaper bin alone. This in a bank which was struggling to stay afloat. But the wastepaper bin was really just the tip of the iceberg. As the Merrill Lynch ship sunk beneath the waves, the remuneration committee ordered that the annual payment of bonuses be brought forward a month so that they could be banked before the new bosses at Bank of America, which was about to close the takeover of Merrill Lynch, could cancel them.

Even at the best of times this would have been grubby, but to do it weeks before the full horror of last year's losses became known was brazen. Less than two months ago, Mr Thain was still toying with whether to press claim on a $10m personal bonus for the sterling work he had done saving the bank from oblivion. In the end he was shamed into waiving it.

When the deal was first announced, Mr Thain was hailed as hero of the hour for persuading Bank of America to pay what by today's standards seems the fabulous price of $50bn for what now seems little more than a poisoned chalice. Ken Lewis, chairman of BofA, believes he was duped. The way things are going, Mr Thain will be lucky if he's not had up. In any case, his reputation as the pin-up boy of finance has been well and truly trashed, and in no small measure, he's managed to do it to himself.

You could tell Mr Thain was not much longer for this world when at last week's conference to announce record losses and another bailout, Mr Lewis welcomed Mr Thain on board as Bank of America's head of global banking and securities, expressed complete confidence in his new man, and said he was lucky to secure the services of such an outstanding banker. Days later, it emerged that as the losses and sense of crisis mounted Mr Thain had flown off for a skiing holiday in Vail, Colorado. There followed a string of leaks about Mr Thain's alleged arrogance and greed. Then last night he was unceremoniously ousted.

A year ago, Mr Lewis said he had had about as much fun as he could stand with investment bankers. He should have stuck with his instincts. Now he faces growing criticism from his shareholders for pushing ahead with the Merrill takeover despite the evidence of mounting losses. The investment bankers duped the public, and now they've duped Bank of America, too.

In another time, Mr Thain might have been congratulated for his cunning in saving the Thundering Herd and its bonus pool, yet somehow I doubt that will be the judgement of ordinary Americans today. Mr Thain should beware the lynch mob.

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