“BABY YOU CAN DRIVE MY CAR…”

1/22/09

In a long (about 53 years) overdue move, John Thain, 53 years old, has “resigned” from Bank of America. As most readers know, Mr. Thain ran Merrill Lynch before it was acquired by Bank of America. Before working his magic at Merrill, Mr. Thain ran the NYSE after being the president and COO at Goldman. Mr. Thain, the poster-boy for the “right place at the right time with the right connections, and very little else” formula that leads to big time success in modern day corporate America, and especially on modern day Wall Street, hid the gargantuan magnitude of the financial disaster that was Merrill Lynch from Ken Lewis at Bank of America, who purchased Merrill for a price that now seems, er, high. In Mr. Thain’s defense, Mr. Lewis, another card carrying member of the gormless goon squad that dominates America’s financial industry, was not inclined to look very hard at Merrill’s numbers. Though he may protest that he was “forced” into buying Merrill as part of the on the fly Bushite bailout of the financial industry, Mr. Lewis did not have to be dragged kicking and screaming into the Merrill deal; he thought he was getting a deal. No one, or at least no one sentient who did not have a vested interest in licking Mr. Lewis’s loafers, ever accused Mr. Lewis of being smart. But I digress.

Mr. Thain “resigned” ostensibly because of the obfuscation in which he engaged during and after the Bank of America deal. But other reasons are emerging that Mr. Thain was shown the door. One was that he decided to pay bonuses to employees at Merrill (and what a great job those boys did, eh?) in December, before the really bad news came out, rather than in January, the traditional month for Wall Street payouts. (In his defense (Never have I defended one of these Wall Street Wonderboys twice in one post; I must be getting soft.) Mr. Thain did not take a bonus himself—what a guy!) He also took a Vail ski trip just as the really bad numbers at Merrill, the numbers that jeopardized the B of A deal, were coming out. Then he decided that this week, when figurative defecation was swirling all about him and the deal he concocted with Mr. Lewis and the federal government, would be a good one to attend the annual Davos soiree at which the nabobs of the world economy who had so much to do with getting us into this economic dystopia get together to tell each other how smart they are.

But the really titillating details that have emerged concerning Mr. Thain in the wake of his defenestration at B of A (A multi-million dollar defenestration, I am sure.) have to do with the $1.2mm he spent on his office after becoming Merrill’s CEO in early 2008. Bear in mind that Merrill was teetering even then, before Mr. Thain had a chance to really bollix things up. Apparently, this $1.2 mm expenditure included:

$88 m for an area rug
$26 m for a table
$68 m for a credenza
$88 m for a pair of desk chairs, and…
My favorite:
$35 m for a commode on legs.

A commode on legs? I hope this wasn’t IN his office; I’m hoping it was in an adjoining bathroom. Either that or Mr. Thain, in addition to a paucity of brains, savvy, and judgment, also suffers from a serious LBJ complex. But I digress.

Mr. Thain also, by the way, paid his driver $230,000 for one year’s work. Hmm…Just this morning, I was telling a few friends that if I could find a way to make a living driving something other than a Greyhound Bus, I would leap at the opportunity. Perhaps if I had, like most of Wall Street, spent more time telling Mr. Thain what a genius (and a good looking one, complete with a Blagojevichesque head of hair, at that) he is, I could have achieved this dream. Oh, well…the story of my life. But I digress again.

Most commentators have used Mr. Thain’s extravagance as yet another example of the greed and outright silliness that pervades Wall Street. I, on the other hand, as I usually do, have another angle. At the time of his resignation, Mr. Thain was in charge of the new B of A’s wealth management division.

Let me repeat that…the firm’s WEALTH MANAGEMENT DIVISION!!! O tempora, O mores.

Would you want your wealth managed by a popinjay who spends $1.2 mm on his office, expunges $35 grand for a decorative toilet, and pays his driver $230 grand a year? I don’t know about you, but I would prefer a guy who, when he needs office furniture, goes to OfficeMax or calls his buddy in the office furniture business and asks if there are any old, dented, banged up file cabinets he is looking to unload. Instead of a pococurante who pays his driver more than $200 grand, I would entrust my funds to a guy who insists on driving himself, and only in a car with a real manual transmission. I would rather invest with a guy who clips coupons (and not coupons attached to bonds) than with a mountebank who spends $68 grand on something (a credenza) that I couldn’t even identify. I am far more comfortable investing with a wise man who considers attending to his bodily functions an opportunity to scrutinize the daily paper rather than an occasion to enjoy his $35 grand toilet. I would rather have my wealth managed by a paragon of insight who prefers the north woods of Wisconsin to Vail, CO and who would find a trip to Joseph A. Banks, let alone Davos, Switzerland, a shameless extravagance.

Oh, wait…my wealth is managed by such a person.