Merrill Lynch CEO John Thain was fired yesterday by his new bosses at Bank of America. You, like I, may have missed this, because you were probably thinking that John Thain was fired months ago, right about the time his company lost $40 billion and was forced to be sold to BofA. Apparently, the geniuses..
Merrill Lynch CEO John Thain was fired yesterday by his new bosses at Bank of America. You, like I, may have missed this, because you were probably thinking that John Thain was fired months ago, right about the time his company lost $40 billion and was forced to be sold to BofA. Apparently, the geniuses over at BofA decided that they might as well keep Thain on (because he had been doing such a bang-up job, I guess). But the erstwhile CEO wasn't really doing a great job managing the parts of his new bank that were under his purview; BofA has taken a tremendous stock hit in recent days based on reports of how bad Merrill's finances really were, forcing it to accept more government money, making the U.S. government its largest share holder; and it has recently come to light that Thain pushed through bonuses for his employees at Merrill (employees who had just overseen the loss of tens of billions of dollars) right before BofA was to purchase the bank, thus ensuring them millions of dollars they might not have gotten from a more reasonable employer.This is all to say that something is clearly wrong in corporate America, if that wasn't clear already. In his inaugural address, Obama talked about the need, lacking in recent years, to make hard choices. He was referring, I can only imagine, to the Bush White House, but it applies most directly to corporate America. If a small or middle sized business lost the equivalent of this much money, it would just go out of business. A large corporation: the CEO gets a bonus. If they are doing a really bad job, they usually get a chance to resign rather than be fired, and with a generous package. And once you reach the upper echelon, you are seemingly set for life. Thain will surely soon be consulting, or the CEO of another company. This isn't news to anyone, but I truly hope that at some point, people snap and do something about it. I've heard it argued that there is a uniquely American tendency to put up with this absurdity because-due to the American dream and whatnot-everyone harbors a tiny hope that one day they might be John Thain, and be able to be paid millions to do an awful job.If that's true, I would suggest people need a wake-up call. This stuff is just as bad as what the French peasants were dealing with during the Revolution. In fact, I am pretty sure that when Lehman CEO Dick Fuld was testifying before Congress on how he has had to sell most of his art collection, I heard him whisper: "Let them eat cake." We are in desperate need of our own Revolution here, because the fat cats have simply gotten too fat, and someone needs to bring them down to the place where most of the rest of us are-dealing with a horrible recession that is, in large part, these fat cats' making. Since no one is going to be marching to Wall Street with pitchforks, torches, and Molotov cocktails, the people need to revolt with their wallets and, most importantly, with their government. Our representatives, it would seem, are the only people who can really bring the hammer down on corporate America (since corporate America has clearly shown they aren't interested in being good people and doing it themselves) and create-with regulations and laws-a new corporate culture that values and rewards competence and disdains and punishes the incompetent. Sadly, we know who pays for the government, and their re-election, so we may have to resort to the pitchforks.UPDATE: Since I wrote this, two articles from today's news have come to my attention. First, this piece describing how John Thain spent $1.2 million last year renovating his office. Now, that much money is a drop in the bucket when compared to the $40 billion he lost, but, seriously. Second, a piece in the Times today sort of buries the lede, but middle of the way through you'll find this choice quote:"But after Merrill appeared to be safely in Bank of America's arms, Merrill's traders began buying risky mortgage assets, thinking that the market had bottomed out, according to two people familiar with the firm's trading. Merrill also began to run up losses on equity derivatives and other instruments, they said."By the end of 2008, Merrill had lost an additional $5 billion in the markets..."Someone needs to go to jail, seriously. Lots of people, most likely. Where is the outrage? Where are the mobs? Have we grown that complacent? I guess we have, because I certainly am not going to start an angry mob outside Merrill HQ. But, heck, if someone else did, I would certainly go and chant and maybe throw some rotten fruit at people.Photo via the Wall Street Journal