Disgusting Abuse by Merrill Lynch exec John Thain

Memo to the banking/ Brokerage industry you are in a prepackaged bankruptcy. Collectively you are broke. The only reason that you are still in existence is because the US Government will not allow you to go under. The US Financial system can not be allowed to go bankrupt, is the edict from the US Government. Respected analyst Meredith Whitney’s view in the FT on Tuesday summed it up eloquently and succinctly when she said the only reason that US bank stocks are not at ZERO is because the US government will bail them out all the way. 

She wrote “I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year.”

This makes the actions of this past week at Merrill Lynch even more distasteful. The Merrill lynch bonus’s  paid out, CEO Thain’s ridiculous $ 1.2m decorating binge, and then his drivers $230,000 expense just shows the lunacy & misplaced sense of self that revolves around wall Street. As CEO he is responsible for managing revenues and Expenses. Surely even as big an idiot as this should realize that means counting paperclips, managing the Telephone expenses, T&E, and more importantly absolutely spurious expenses like office décor.

Any fool should know that these actions are just plain wrong. Where is this guy’s sense of the simplest idea of right and wrong? You don’t need to learn this in business school, its something that’s ingrained in every well adjusted adult. Isn’t it? What exactly does a Wall St CEO do at the moment? Surely “strategic direction” is surviving? Does he and his team look every day at cost containment? Doesn’t a bunch of smart people figure out every day how to cut expenses? Doesn’t he sit there and figure out how to make his company profitable every day by getting rid of the “fat” and making the organization “leaner”? Or is it just too difficult? Isn’t a “simple matter” of going thru every piece of crappie paper asset you have and figuring out what exactly its worth? I mean every piece? Every underlying toxic mortgage has some value, every CDS has some risk or reward? Every obligation on the books have some associated monetary value? 

Where do is accurate and timely accounting? If the latest information is true it would appear BofA was defrauded into the purchase of Merrill by parties that overstated the position of the company. Are accountants unable to un-fathom the complexity of the banks accounting systems. Off balance sheet companies, enron-esque entities all over the place. What is wrong? Lack of transparency? How can this be? (Well I was an auditor for a big 8 ( when there was 8) and I didn’t know anything. When you’ve got some big experienced CPA CFO telling you this is how we do it, don’t you think a greenhorn just minted CPA is going to cave?) 

The justification for this daupinesque lifestyles and the supposed immunity from the realities are insane. All Thain needs for an office is a friggn sheet of plywood for his Bloomberg, a high speed internet connection and a Herman Miller chair. Total a couple of grand. Anything other than that does not justify what should be a period of total austerity and complete cost control. 

The bonus, surely comes out of the bonus pool. Pool means we share. Total availability for pool is LESS than ZERO. It is unconscionable to pay bonus’ at all. If the company can’t afford to pay them & employees feel unappreciated let the guys walk. That’s free enterprise. The fact that Merrill paid bonus prior to the completion of the merger is surely malfeasance. Merrill should be bigger than anyone individual, or several. Shareholders and stake holders, that means the taxpayers and the Government as stewards of “OUR” stake should revolt. 

It is absolutely unconscionable for Thain to spend this money. It is unconscionable for him to approve these bonus’. The compensation committee should be hauled in front of congress and the court of public opinion. Who is on the compensation committee. And how was this decision made? I want to know. 

These bonus should be pulled back, the compensation committee fired, and if possible charges of conspiracy, larceny, RICO statutes whatever can be bought should be. And no manner of slap on the wrists should be acceptable.