What do you do when your firm is on the verge of being absorbed, you are about to announce massive quarterly losses and the government might impose salary restrictions? Why, announce bonuses early! That was easy.
Merrill Lynch took the unusual step of accelerating bonus payments by a month last year, doling out billions of dollars to employees just three days before the closing of its sale to Bank of America.
The timing is notable because the money was paid as Merrill’s losses were mounting and Ken Lewis, BofA’s chief executive, was seeking additional funds from the government’s troubled asset recovery programme to help close the deal.
Merrill and BofA shareholders voted to approve the takeover on December 5. Three days later, Merrill’s compensation committee approved the bonuses, which were paid on December 29. In past years, Merrill had paid bonuses later – usually late January or early February, according to company officials.
Within days of the compensation committee meeting, BofA officials said they became aware that Merrill’s fourth-quarter losses would be greater than expected and began talks with the US Treasury on securing additional Tarp money.
It will come as no surprise that we love bankers. Yes, we mean you. Without your antics, where on earth would we be here at Dealbreaker? Still, there must be some limits to the shifty imaginations lurking under those big, blue eyes. No? At some point someone has to say “enough is enough” and buckle down to admit that maybe the institutional decision to hold 30:1 leverage, and the structural changes you’ve made over the past ten to fifteen years to become a securitization clearing house, routinely torturing Basel to within inches of its life, might not actually have been the way to eternal glory and a spot in the great hall at Valhalla (where the time will be spent underwriting Bowie bonds on hunting ventures, no doubt). Someone had to say that. Someone had to, ever so gently, put a toe on the brakes.
Unfortunately, in this case, that someone was John Thain.
Congratulations, John Thain. You got your few hundred – 1,000 workers bonuses.
now, tens, if not hundreds of thousands of workers will be screwed in the ensuing backlash.
This was brilliant. Underhanded but brilliant. I have to give it to ML. They made a last ditch effort to take care of their people.
At the expense of the rest of us!
Thain stole Bernie’s move ! Did’nt Madoff try to bring forward bonuses ?
Thain is going to need all the $ he can get his hands on to pay for leagal counsel and endless congressional investigations. Go long law.
Thain is going to need all the $ he can get his hands on to pay for leagal counsel and endless congressional investigations. Go long law.
Thain is going to need all the $ he can get his hands on to pay for leagal counsel and endless congressional investigations. Go long law.
Shoot yourself (and everyone else) in the foot much, Mr. Thain?
@3 – You seem surprised.
John Thain smells his own farts.
BAC Bank of America: Ken Lewis to hold emergency meeting with John Thain today; meeting will center on Thain’s future with the firm, according to CNBC (5.80 -0.88)
my head almost exploded reading that treatise by EP
GOOD WORK ML!
Sounds like a company that actually gives a fuck about their bankers
Is anyone besides me starting to get pssed off at this whole thing? Not only should Wall St give back their bonsues but from here on out they should be capped at fkcing $50k. All you Wall St a$$holes who say “well bonus is part of my total comp, otherwise I make MCdonalds wages” can go F yourself. I hope you all lose your jobs. ALL OF YOU. Oh and John Thain is a complete dirtbag. My image of ex GS employees (and by extension Goldman itself) is shattered. Paulson, Kashkari, Thain, all of you SUCK. TRULY F’ING SUCK.
@12: Then don’t go to Clusterstock, they’ve got tons of long, anti-Ken-Lewis screeds over there.
Supposably meeting is at 11am to decide Thain’s fate. Don’t let the door hit you on the way out
I blame Bessy.
@14
I have a VERY long list of ex-goldman people I’d like to bag. Biggest mistake of my career was working for the slime bags.
W2′s get mailed out by the end of next week. When you get them, open the little gift up. The tiny box that say “federal withholding” with the big number in it? That big number just went to pay the bonuses of a failed business.
They execute people in China for less than what these fucks get up to. Maybe we need some of that over here to keep everyone ‘honest’
@14
why don’t you go protest at 85 broad you stupid hippie? make some pictures of yourself and send them in, so i can have a laugh. if you are lucky, i may just make the effort to drag my ass to the window and shit all over you..
This is what it feels like to be a victim of organized crime.
Sollozzo: Bene. Don Corleone. I need a man who has powerful friends. I need a million dollars in cash. I need Don Corleone and all of those politicians that you carry around in your pocket like so many nickels and dimes.
Don Corleone: What is the interest for my family?
Sollozzo: Thirty percent. In the first year your end should be 3, 4 million dollars and then it would go up.
kenny boy shouldn’t be fired…he should be arrested
@20
Dude the entire world despises Wall St right now. I wouldnt be surprised to see a protest at 85 Broad at all.
John Thain is history. But Ken Lewis should be gone too. Right now.
@20
The entire world should hate themselves, “Wall Street” was just one piece in the puzzle that, due to the $ and the “culture” gets the lion’s share of the blame for our current predicament.
Nice try though.
What people seem to forget in assigning blame is that the events that resulted eventually in a “crisis” were the same ones that contributed greatly to recent economic gains. You cant cry about what was taken away from you without also facing up to the fact that maybe it should not have been given to you in the first place.
@20 and 26= idiots
The question is whether ML had reserved for those bonuses and if BofA knew about them when they were granted. If KL knew that ML had $4bn reserved to pay out to employees – then there is no fault on ML’s behalf. If it was not known/communicated to BofA’s team – then you got a problem. Most street firms reserve bonus money as the year rolls by (Leh had Bn’s reserved when they went kaplooey) – so the devil is in the details.
What is so wrong with the analysis that banks levered 30 to 1 somehow brought about their own demise? The whole point of margin limits on retail investors was to prevent this idiocy, and the gist of the argument in favor of bank deregulation was that bankers aren’t idiots, they are too smart to fuck things up, basically what Greenspan said he believed until the bankers went and fucked things up.
What is rich is that the run on the banks wasn’t a bunch of rube investors, it was the bankers themselves who lost faith in the system.
Yes, bankers who don’t get their bonuses this year should feel like someone failed them, just like us retail investors who just got bombed back into 1995. Where are those balls you were telling us about?
YOU’RE JOHN THAIN
(You’re so Vain, Carley Simon)
WilliamBanzai7
You waltzed into the Bail Out party
Like you were sailing on an unsinkable yacht
Your hat strategically dipped below one eye
Your scarf it was really hiding a mega Merrill subprime surprise
You had one eye on the Level III mirror
As you watched yourself gavotte
And all those second rate Charlotte Bankers dreamed that they’d be your partner
They’d be your partner, and
You’re John Thain
And yes this song is about you
Don’t complain
I’ll bet you thought B of A could’nt live without you
Without you? Without you?
You had Ken Lewis several months ago
When he was so naive its hard to believe
Well, you said that the Thundering Herd would make an awesome notch on his sleeve
And that you John Thain would never leave
But you gave away the things you loved
And one of them was a 10 Million Dollar bonus snub
And good ol Ken’s grandiose dreams turned out to be clouds in his bailout coffee
Clouds in his bailout coffee, and
You’re John Thain
And yes this song is about you
You’re John Thain
I’ll bet you thought B of A couldn’t live without you
Don’t you? Don’t you?
Jesus told his disciples: “There was a rich man whose manager was accused of wasting his possessions. So he called him in and asked him, ‘What is this I hear about you? Give an account of your management, because you cannot be manager any longer.’ The manager said to himself, ‘What shall I do now? My master is taking away my job. I’m not strong enough to dig, and I’m ashamed to beg— I know what I’ll do so that, when I lose my job here, people will welcome me into their houses.’ “So he called in each one of his master’s debtors. He asked the first, ‘How much do you owe my master?’ “‘Eight hundred gallons of olive oil,’ he replied. The manager told him, ‘Take your bill, sit down quickly, and make it four hundred.’ “Then he asked the second, ‘And how much do you owe?’ ‘A thousand bushels of wheat,’ he replied. He told him, ‘Take your bill and make it eight hundred.’ “The master commended the dishonest manager because he had acted shrewdly. For the people of this world are more shrewd in dealing with their own kind than are the people of the light. I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings.
Luke 16:1-9
Thain is, as always, shrewd.
Thain is a genius. Now he’ll always be able to find a job when he leaves this steaming cesspool of effluvia.
Applause.
The top guys should be put in jail. While the people’s money paid in bonuses to bunch of incompetent employees should be taken back.
Where is congress? where is Cuomo NY AG?
The top guys should be put in jail. While the people’s money paid in bonuses to bunch of incompetent employees should be taken back.
Where is congress? where is Cuomo NY AG?