John Thain Apologises For Lavish Expenditure, But Not For Appalling Lapses Of Taste

John Thain, the former CEO of Merrill Lynch who looks like Clark Kent with a missing chromosome, said sorry yesterday for redecorating his office with company funds. But he didn’t repent for divvying up a pot of bonuses worth $4bn just before the bank merged with Bank of America, of whom the state is the largest shareholder, and before losses of $15.3bn for the fourth quarter were announced.

The $1.2m decorating bill is therefore a relatively piddling sum, but as so often during this crisis, it’s nice to have something to shake your head and make incredulous, objection-filled noises towards. Judging from the itemised list here, Thain sounds like he was going for a Scarfacian blend of French Regency and coked-out bling – “Mink guest chairs” for $87k, that sort of thing. I don’t even know what some of the stuff is – “Wall sconces”? “19th century Credenza”? What is certain is that the decorator went straight to the shop called “We Saw You Coming” and set up a tab.

Thain has promised to pay the money back to Merrill-BoA, and called the redecoration “a mistake”. Aesthetically as well as financially, John! But he did rather huffily point out that it wasn’t just for an office, but for “my office, two conference rooms and a reception area,” which has placed things in a whole new light. Presumably the $230,000 he paid his driver last year was for “driving, tuning the radio and working the windscreen wipers”.

But he hasn’t backed down from the big numbers, saying that the bonuses were “determined together with Bank of America”, and that BoA knew about the losses they were taking on. Resignation usually comes with an acknowledgement of having dropped the ball, but Thain was clearly pushed by BoA CEO Ken Lewis, and now he’s not apologising to nobody.

As well as the bonuses, Thain also defended the losses with that naughty child’s failsafe: “It was like that when I got here”. Thain said that the “vast majority” of losses were due to mistakes or bad assets made before he arrived. But of the $15.3bn, $5bn isn’t accounted for in BoA’s reported earnings – the FT says that someone close to Merrill’s trading arm told them it was from “failed trading strategies combined with hedges that did not work”.

So it doesn’t look like saying sorry for your over-plush office (sorry, office, two conference rooms and a reception area) will get you off the hook that easily. The lawsuits from wronged BoA shareholders, angry at not being told of Merrill’s position pre-takeover, are flooding in. Meanwhile we can expect Thain to head off to Vail again, just as he did when there was music to be faced back in December. Ah, luxury American ski resorts – where reckless buffoons go to die.

Posted by Ben Beaumont-Thomas in Hot Money | January 27, 2009 10:49AM |