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Editor's note: An earlier version of this article suggested that Mr. Thain acted without Bank of America's knowledge in paying bonuses and reporting Merrill's $15 billion quarterly loss. We regret the error. Read more about the corrections here.
Today's subject: Last month, John Thain, former head of Bank of America's (NYSE: BAC ) Merrill Lynch unit, sat down at The Wharton School of Business to speak with MBA students and a panel of experts. Mr. Thain discussed the future of the banking system, JPMorgan Chase's (NYSE: JPM ) purchase of Bear Stearns, problems with Freddie Mac (NYSE: FRE ) and Fannie Mae (NYSE: FNM ) , and the need for more competition among credit ratings agencies like Moody's (NYSE: MCO ) and Fitch.
It's quite possible that after watching the two-hour discussion, you may have walked away with a sense of respect for Mr. Thain, maybe even a feeling of empathy.
Why you should be indignant: Let's first look at some of his quotes from the discussion:
I have actually never believed in either executive contracts or golden parachutes. I don't think people should have golden parachutes ... They should get paid based upon the performance of the company ...
I think the most important thing was to protect my shareholders and to protect my employees, and I did the right thing for what my job was. The fact that this came at the expense of my job and then, even beyond that, to some extent my reputation was certainly damaged by the aftermath of that -- I still believe in being honest and telling the truth and doing the right thing.
I do a lot of charitable things. And, by the way, I did that before. These are not really new things.
Wow! From the way the transcript reads, it seems as though Mr. Thain is a stand-up, morally upright citizen -- the anti-Wall Street CEO who avoids golden parachutes and always does the "right thing."
Here's the problem:
Right before Merrill closed the deal with Bank of America, it doled out a few billion (yes -- billion) dollars to Merrill workers. I guess this is what Thain means by "protecting his employees." However, this seems awfully contradictory to his comments on golden parachutes, which isn't that far from what Merrill provided -- just a bit modified and wrapped in different jargon.
In early 2008, as a prelude to slashing thousands of jobs at Merrill -- his so-called "protected" employees -- he was spending more than $1.22 million on his own private office! An $87,000 rug here, a $68,000 credenza there -- you know, the usual fixings. Seems like a stand-up guy.
Finally, as estimates of Merrill's eventual $15 billion fourth-quarter loss were ballooning, he hopped a flight to his very own posh Colorado ski resort and hung out for a week. Doing the "right thing"? Dubious.
What now? It seems obvious to me that Mr. Thain is full of contradictions. He claims to do the right thing, but his words and actions aren't in sync.
But what disturbed me the most was seeing him on stage with esteemed and brilliant professor Jeremy Siegel, admired by a room full of MBAs, and consistently applauded for his honest and forthright answers. I mean, c'mon. Give me a freaking break.
Are we so impressed with this man just because he owned up to some of his mistakes? Yes, he would have handled some things differently. Yes, he did say he should have bought less expensive furniture at Ikea. But somehow I find it hard to believe that Ikea was ever in his thought process. Generally speaking, I find Wharton's interviews both interesting and inspiring, but this just left me feeling angry.
Anyone else think it's ridiculous to honor John Thain like he's some kind of post-war financial hero for answering a few tough questions at a business school?