How Do These Fat Cats Get Away With It?

The other day I watched a snippet of an interview between Maria Bartiromo of CNBC and John Thaine , CEO of  Merril Lynch, which I have not been able to get out of my head.  Thain is newsworthy because he  had just been given his walking papers.   John Thain, you will remember,  had been brought in about a year ago to take over at Merrill which continued to leak money under his leadership.  Then, about mid-year  he accepted  a buyout from Bank of America. The alternative, I guess, was to follow in the footsteps of Lehman Brothers.

So, good going John Thain–you get brought into Merrill Lynch at God-knows-what astronomical salary and proceed to lose $40 billion in one year.  Even after the buyout from B of A in this last quarter, he presided over a loss of $15 billion. That’s B for billion.  Maria was sort of incredulous about this and kept pushing for some kind of reason for this complete hemorrhage. Well, he opined, he had inherited a tough situation.

Again, Maria is back at him: how much of this loss is legacy loss and how much because of new endeavors you undertook…Well, mumble, mumble…

And, how about those, $4 billion in bonuses??? Again, Maria kept after him. The unflappable and almost expressionless Thain went on about paying “the best people” to “protect the franchise”. Apparently, all these people could go elsewhere. Really? In December of 2008? Where are they going to go?  Who wants a bunch of the “best people” who just lost $40 billion in one year and tanked their company into quasi- oblivion?  Eventually, he admitted that “compensation levels are being reset”.  What does that mean? In January 2009 as opposed to December 2008? You,  Stone Face John and these people just lost $40 billion…


Thain perhaps deserves some credit, Maria brought out, because neither he nor the B of A CEO, Ken Lewis, had taken a bonus this year. Wow! But what were their salaries to begin with? And, it turns out, Mr Thain had spent $1 million to “redecorate his office.” How do you spend $1 million redecorating an office? Sheepishly, he admitted it was a “mistake” and promised to reimburse the company.

Folks, this is what we are up against. These people running our financial institutions are living in an alternate universe. People I run into every day are losing their homes, their jobs, their pitiful pension money, and these people have to be dragged onto TV to be made to see that $4 billion is a lot of bonus, $15 billion is one quarter is complete failure and $1 million to redecorate an office even in the good times is an extravagant waste of stockholders’  money.

What is it with these people? Citigroup cries they’re going down the drain, so they get  a giant bailout from you-know-who, and the next thing you know they’re purchasing a $400 million private jet made in a foreign country.  It took an outcry and a big storm in the House  for that little purchase to be scotched. Remember AIG? Too big to fail, the whole world would swoon if they went under, governments would topple, economies crumble—so, gigantic bailout paid by you-guessed-it. Then, almost immediately, came the news of a $250,000 company trip/conference to I think it was a 5-star Newport Beach hotel. After the screaming on that one died down, they were grouse-hunting in Scotland…

What does it take to make these financial geniuses to take some responsibility? They are the “best people” so I am sure they felt entitled to their big bonuses when things were going well. After all, they are the Masters of Wall Street. Why is it when now things are so bad, they don’t seem to feel any sense of involvement at all? “Legacy” losses?  Puhlez…

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