MARIA BARTIROMO: Thanks very much. Well, while I’m in Davos, Switzerland, right now covering the World Economic Forum, John Thain is in New York City. And he joins us now with this exclusive interview to talk about the events of the day. John, thanks very much for sitting down with us. We appreciate your time.
JOHN THAIN: It’s no problem, Maria. It’s happy– I’m happy to talk to you.
MARIA BARTIROMO: Last week you were asked to step down from your job of running Merrill Lynch, just three months after agreeing a deal– to a deal with Bank of America. Can you tell us what happened?
JOHN THAIN: Well, Maria, I would first say I was surprised. We were only 20 days into the combination. I had agreed to stay because I thought there was a great opportunity– for the companies. I thought the strategy made sense. And I thought I could help a lot with the transition process. And it’s always difficult when you’re combining two organizations. And I thought– my ability to try to help– with that transition and– and help build the team going forward would be– a good opportunity. And, frankly, the first 20 days, the results were very good. So I– I was surprised.
MARIA BARTIROMO:What was the biggest surprise, from your standpoint?
JOHN THAIN: Well, that– after such a short period of time and after at least– very early but still very good results– that– that– there would be a change made– at my level.
MARIA BARTIROMO: John, let me turn to those results. And, of course– most stunningly is the fourth quarter loss for Merrill Lynch, more than $15 billion in premerger losses, $27 billion in losses for the year. How did that happen?
JOHN THAIN: Well, Maria, as you know, over the course of the year– we continued to have– positions– that really were there when I first started– primarily in mortgage and mortgage-related assets and– and later in the year in credit and credit-related assets– that– continued to deteriorate in value. And so over the course of the year that I was at Merrill– I was constantly shedding assets, selling assets. And then, of course, because– they continued to fall in value, constantly having to be able– be able to raise more capital. And that process really just continued– into the fourth quarter. The– the deterioration of the market– moved away a little bit from mortgage-related products into credit-related products. But– it was really just a continued declined in asset values and particularly towards the end of the year– really a complete breakdown in the functioning of the marketplace itself. So cash assets completely separated from their derivatives. There were huge spreads between the prices of cash assets and credit default swaps as an example. And any type of forced selling drove asset prices down. And we were in a position of owning very illiquid things that really could not be sold and– and had to be marked down.
MARIA BARTIROMO: There’s no doubt in I think most people’s minds, John, that you arrived at Merrill Lynch and inherited a very, very tough situation. You were able to raise capital, as you said. And then you made a tough call to actually sell the firm and hopefully– put the– combined company in a– in a better place over the long term. But there are real questions– about whether or not you allowed more risk to be taken on and if you came clean about that to Ken Lewis. How much of the loss of that $15 billion loss in the fourth quarter do you attribute to those legacy losses that were already there, tough decisions that you could not get rid of, and how much of it was new position? Did you allow Montag (PH) and the trading desk to take on more risk in this troubled environment?
JOHN THAIN: Maria, virtually all of the losses were from legacy positions that had already been there and the declined in the prices of those– positions. Did we– did we continue to trade? Yes. Did we put on– big risky positions that– were significant contributors to that $15 bill– billion loss? No.
MARIA BARTIROMO: So there is no truth to any speculation that there was further risk taken on and you weren’t upfront about it to Ken Lewis and that irritated him?
JOHN THAIN: Well, I– I can’t comment specifically on what irritated him. But– the vast majority of the losses in the fourth quarter were from positions that had been there since I started.
MARIA BARTIROMO: John, were– so you were aware of these losses then in September when you did the deal with Bank of America?
JOHN THAIN: Well, no, Maria, the– the– in September the– the positions were there. And– the results– we– we obviously don’t report– we don’t report results other than quarterly. But the market– the market deteriorated in both November and December.
MARIA BARTIROMO: Let me ask you about what Ken Lewis and the Bank of America team knew because there is also that– way of thinking that there was some kind of a surprise there. They moved into your building– a number of– of the Bank of America people moved into the Merrill Lynch building. They were seeing the same P– P&L every day?
JOHN THAIN: They were seeing exactly the same information that we saw. We gave them complete access to everything that we had.
MARIA BARTIROMO: So can you categorically say that Ken Lewis was aware of the road that was being taken at Merrill, that the losses had gotten worse because of the marks?
JOHN THAIN: Well, let me say it this way. The– the acting chief financial officer had come from Bank of America. He was their formal– former chief accounting officer. He and his team, which were– for all practical purposes, our day-to-day CFOs, they had direct access to our daily P&Ls, to our positions, to our marks.
MARIA BARTIROMO: John, at this moment in time, is the Merrill trading book clean? I mean, how many more quarters would you expect– toxic asset losses?
JOHN THAIN: Well, Maria, that would require me to predict what was gonna happen in the market itself– which I obviously can’t do. The– as I said before, the market in November, but particularly in December, the credit markets were basically broken. Any forced selling simply drove asset prices down. The– the correlations that should exist between derivatives and cash also broke down. And I would expect that those conditions that existed then will actually get better. They actually have improved somewhat in the first 20 odd days of the month. But I can’t make any predictions for what will go forward in the future.
MARIA BARTIROMO: But, I mean, would the book be clean if, in fact, we were not to see further market movements– and– and a further collapse?
JOHN THAIN: Well, I– again, I– I– I think the– the way to answer that is we– we, or– now Bank of America/Merrill, you know, continue to have– positions, legacy asset positions, that can create risk. I think that the dislocations that we saw at the end of December are– are not likely to– to– resume but they could. So there still is risk there.
MARIA BARTIROMO: John, let me move on to something that has certainly angered people and that is when it comes to bonuses. Merrill paid out $4 billion to bon– in bonuses to Merrill top players. How can you justify losing $15 billion in a three-month period and still be paying out bonuses at a time when you were forced to– to sell to a larger player, you’re going to the government for backstops as well as needed capital? How do you justify paying out all of that money?
JOHN THAIN: You know, Maria, it’s a very fair question. And the answer is you have to believe that there’s value in the franchise. So, yes, we lost an incredible amount of money. But that loss was concentrated in primarily mortgage- and credit-related assets. We have a much broader business space. We have an entire investment banking organization. We have an equity trading team. We have other business that did relatively well. If you don’t pay your best people, you will destroy your franchise. Those best people can get jobs other places, they will leave. So the necessity to maintain the franchise is why you really have to pay– some amount of bonuses because, as you know, in Wall Street– people’s salaries tend to be relatively small. And their bonuses are the vast majority of their compensation for the year.
MARIA BARTIROMO: You also have to resize the business when you’re faced with new realities of the economy, right? I mean, do you look back and regret some of the high price tags you paid to lure in new talent when you first– went to Merrill?
JOHN THAIN: Well, you have to– pay market prices at the time. And the world is resetting. Compensation levels are being reset. We are not gonna see the type of compensation on Wall Street– that we’ve seen in the past. And– that’s a– that’s a fundamental change. So compensation levels going forward to definitely gonna be much, much lower.
MARIA BARTIROMO: What about your bonus, John? You had a hypothetical or philosophical conversation with one or more board members before the actual board meeting when you wanted a bonus, correct?
JOHN THAIN: Well, no, that’s not exactly correct. I did have discussions with my board, as you would expect a CEO to have, on compensation, philosophy, and– and levels of bonus. But I also had an agreement with Bank of America that– any bonus that I would get, if any– would be less than– anything that– Ken Lewis would get. And that understanding really fits in with what we did with the overall levels of bonuses because we knew that we had to bring into line the Merrill– compensation and the Bank of America compensation. So there was an agreement that if Ken Lewis didn’t get a bonus, that I would not get a bonus. Whatever Ken Lewis’s bonus, if he got one, mine would be less. So, of course, in the end– Ken did not get one. And my only recommendation, the only thing I ever asked my board, was that I receive no bonus.
MARIA BARTIROMO: You know, the way that you’re– the way that you’re explaining it, John, obviously seems natural to be having these discussions with the board. Do you think you were treated fairly? And do you believe that Ken was aware of everything you did? Or is there something else going on?
JOHN THAIN: Well, I– Maria, I really don’t know how to answer that. You know, I think that– I think that the transaction makes sense. I believe in the strategic value of the transaction. I believe that– the combined organizations– will, in fact, be successful. And– I was certainly willing to be a part of that. And, you know, we– we are where we are.
MARIA BARTIROMO: Having said all that, John, after having seen the environment that you entered and the clear deterioration– for the– the– the system, the industry, do you regret selling Merrill to Bank of America?
JOHN THAIN: No, not at all. I think there is– no question that– the decisions that we made on that weekend in September were the best interests of Merrill shareholders, were in the best interests of Merrill’s employees. And I do not regret for one moment– initiating that first phone call with Ken and ultimately getting this deal done over that weekend.
MARIA BARTIROMO: Would Merrill have been better off– or I would– I– I assume you’re gonna say clearly– had Lehman not gone done? Was it a mistake that there wasn’t a savior there for Lehman Brothers?
JOHN THAIN: Well, I think there’s no question that the bankruptcy of Lehman Brothers is what forced us to search for an alternative– to simply staying independent. The consequences of the Lehman bankruptcy– were– tremendously negative in the marketplace.
MARIA BARTIROMO: I know that those talks from some of the members in that room were– were heady and– and– and there was that moment when everybody realized they were all in this together– that the implications of a Lehman bankruptcy would be severe. How much pressure did you get from Paulson and Geitner to do a deal? We all know that they basically orchestrated a number of deals in this.
JOHN THAIN: Yeah, Maria, I think it– I depends a little bit on the timeline. And there’s been some– I– I think– inaccuracies in– that have been reported about this. It became clear on Saturday that it was unlikely that– Lehman was gonna be rescued or that a deal could be put together– that was going to work, although the– the conversations had been– were still continuing. And the first– set of discussions that I had– with Ken– were really not pressured by anyone. As a matter of fact, I was a little bit concerned because at least at the time there was some hope that Bank of America would still pursue Lehman. I didn’t want, in any way, to– to– make that transaction less likely. But when I first talked to Ken it’s obvious that he was not gonna pursue Lehman without– government assistance, which at least did not seem to be forthcoming. And so we began our discussions on Saturday. When– when Secretary Paulson and– and– and Tim Geitner became aware– that we were having those discussions– they were very encouraging of those. And they definitely wanted to make sure that I found a solution– that weekend– because they were concerned what the consequences might have been to Merrill– following the Lehman bankruptcy.
MARIA BARTIROMO: John, I wanna ask you more about the– the– environment that we’re in. But I’ve gotta ask you– first about the office. You spent more than $1 million renovating your office; is this true?
JOHN THAIN: Well, first of all, it– it is true. This was a year ago or actually a little bit more than a year ago in a very differ– different– ec– economic environment and a very different outlook for Merrill and the financial services industry. It was my office. It was two conference rooms and it was a reception area. But it is clear to me in today’s world that it was a mistake. I apologize for spending that money on those– on those things. And I will make it right. I will reimburse– the company for all of those costs.
MARIA BARTIROMO: Why did you need to renovate the office? What was wrong with Stan O’Neil’s (PH) office?
JOHN THAIN: Well– his office was very different– than– the– the general décor of– Merrill’s offices. It really would have been– very difficult– for– me to use it in the form that it was in. And– you know, I– it needed to be renovated no matter what. It would have been better for me to simply– I should have– simply paid for it myself (UNINTEL).
MARIA BARTIROMO: So it is an environment where jobs are being cut and clearly salaries are being cut. And the firm is reporting all of these losses. At– at– did I occur to you at some point over the process to say this is probably not the best judgment, I better put this off? Or, I mean, clearly not but when did you start feeling like perhaps it would have been a– a sore thumb? Or were you totally blindsided by it?
JOHN THAIN: Well, Maria, remember, this was back in– it really started in December of ’07. So the financial industry hadn’t melted down yet. I– I had every expectation– that– Merrill Lynch would be a large successful company– that– these office renovations– would be used by me for many years in the future. And we were also doing lots of other things– to– to bring down costs. So in– in– with 20/20 hindsight, it was a mistake. And– and as I said, I– I’m sorry that we– that I did that. And I’m willing and I– and I intend to fully– reimburse the company.
MARIA BARTIROMO: So, John, it– it sounds like as far as the loss, the $15 billion in the fourth quarter, Ken Lewis and his team knew about it. As far as the bonuses, did the board approve those bonuses?
JOHN THAIN: Well, let’s– let’s go back a second to the– to the whole– discussion of bonuses. It was always contemplated, even in our merger agreement, that we would pay bonuses at the end of the year. And just like the discussions of my own– potential bonus– we were very transparent and coordinated with Bank of America about the aggregate levels of bonuses that we would pay. So they were completely plugged into what the total amount of discretionary bonuses would be. We actually changed the cash/stock mix– that that– we would normally have used. We normally would have used 60 percent cash, 40 percent stock. They asked us to move it to 70/30, 70 percent cash, which we did. And the– the timing of the payments– including the portion that was cashed and the portion which– which– which was stock. And remember the stock part was Bank of America stock. So there was complete transparency and complete agreement– with Bank of America as to what levels the– that bonus pool would be and how it would be paid out. The– compensation committee of Merrill Lynch’s board did approve those. And ultimately, the– it was ratified by– by the entire board. And so there was– there– there was complete transparency here.
MARIA BARTIROMO: And you– did you– say that to Ken Lewis when you had the discussion in your office last week? I mean, did you ask him, you know, all of this was known, the board approved? What was the reasoning for asking you to step down?
JOHN THAIN: Well, the– the– the conversation was very brief. And– we– we mutually agreed– that– that this wasn’t working out.
MARIA BARTIROMO: John, I know that– we– we focused a lot and it’s been– it’s been a tough– weekend and a tough– certainly– couple of months– as far as the integration. I saw some of your quotes– recently about that. Let me switch gears and just ask you– broadly where we are right now. Do you think the worst is to come for the– for the industry? Or have we seen the worst?
JOHN THAIN: Well, as– as you know, throughout the course of 2008, everyone who predicted that we were in the seventh inning or eighth inning or ninth inning was wrong. And– I would say that the economic environment continues to be very difficult. The U.S. economy is still contracting. Housing prices are still falling. So there still is significant downward pressure– asset prices. And the combination of falling asset prices and a– and a weakening economic environment are all bad for the financial services industry. That being said, there has been at least a little bit of improvement– in the credit markets– in the first part of January. And, you know, I– I think we are definitely not out of this difficult period. As a matter of fact, I think 2009– the entire year are going to be difficult. But– it’s– it’s hard to imagine that things could be worse than they were in 2008. And I certainly hope they’re not.
MARIA BARTIROMO: What are your plans now, John?
JOHN THAIN: Well, because as you started this interview I said this was a surprise to me on Thursday, I– I haven’t really thought much about that yet.
MARIA BARTIROMO: John, thanks very much for joining us today. We so appreciate your time.
JOHN THAIN: Thank you, Maria.
Bess,
Where can we listen???
has thain had botox?
If anyone sees the craigslist ad for the round, spinning bed and various other sexcessories, lemme know, I know some people who might be in the market for such things
Amazing, just amazing! This interview is reminscent of Jeff Skilling and Kenneth Lay. One can only hope that Thain is incarcerated for his role in the demise of Merrill Lynch and bamboozling of Bank of America which is now teetering on insolvency as a result of their rediculous purchase of Merrill Lynch.
Next to be fired should be Ken Lewis another idiot!
“So did it ever cross your mind that redecorating the office amid losses and layoffs was a bad idea?…..well obviously not…..” Hahahaha.
Also, why does it look like he is missing a tooth?
I heard it was hard-wood with cones scattered everywhere. Mr. Big played repeatedly, and you were forced to wear roller-skates upon being greeted by Stanley.
Thain wanted mats and headgear.
@5
I think he is missing a tooth. Maybe Ken zLewis knocked it oput last Thursday.
“unaware in september of q4 losses” really? Is he saying he had no fucking clue where things might go? Come on!
Truth is that the govt. wrote them a huge put option and they somehow managed to pull off the seemingly impossible act of giving even less of a fuck than before.
@4
Why would Thain be incarcerated when O’neal was @ the helm the whole time the house of cards was being built?
Is this the best we can expect for Davos and CNBC for three days? As you can see Maria didn’t have to go there for interviews so what is the real reason………..cause FOX is….cause Bloomberg is…….or cause. —- ——-.(finish this picture)
Thain said that in Dec of 2007 when he decided to renovate his office, he had no idea the financial crisis was so bad as to make such luxury expenses unwise. He’s been disingenuous, though so far he’s saying he’ll repay those costs. We’ll see.
And Ken Lewis should end up like Dick Fuld. He doesn’t deserve anything less.
4 has it exactly correct. I never knew robots could st-st-studder. I didn’t see the coverage live, but reading the transcript, clearly shows a shaken Thain and man devestated. If you think this was painful Thain, just wait until Congress gets to grill you! And they will. Thain is an idiot, he never should have left the New York Stock Exchange.
http://www.cnbc.com/id/15840232/?video=1013593036
About the 1.2MM renovations,
Thain: “Well, first of all, it– it is true. This was a year ago or actually a little bit more than a year ago in a very differ– different– ec– economic environment and a very different outlook for Merrill and the financial services industry.”
Because in a normal economic environment, It is perfectly okay to spend in excess of 1MM for office renovations.
WHAT,
THE,
FUCK…
What did he do use gold leaf to cover the walls??? How is it possible to spend that much money to renovate his office, last I checked his office was not an entire floor of the building was it???
And $85,00 shitter, give me a break!
Maria, what about the corn in the ducage?
Maria should have asked him which of the 4 definitions of commode it was. If #4, she should have asked him to wear it for her.
14 & 15,
Not meaning to stick up for Thain, but 1MM isn’t a terrible amount of money to renovate an office and two conference rooms (as well as reception). Maybe you don’t remember interviewing with your firms, but they didn’t greet you on your shit-hole floor, where it looks like an electronic slave-ship. They met you on the top floor, with a fantastic view and nice decor. Now, imagine Thain trying to turn that shit-hole around in order to make Merrill seem a bit more “professional” after O’Neal’s roller-derby days. You get the picture.
It sounds stupid, but it’s for the clients and lowly retards fresh from school (although, now that I think about it, Merrill has a recruiting office separate from reception). Whatevs. You get the point.
someone here had to have seen Stan’s office. emptied his garbage? replaced his kleenex?
What was it like?
People going after the personalities involved have a myopic understanding of the problems. Thain is not the problem. Fuld is not the problem. Lewis is not the problem. The next unfortunate asshole to be at the helm of a company that goes under isn’t the problem. They, at worst, are symptoms.
The culture and incentives that gives rise to inappropriately contracted for and considered contracts is the problem. Bonuses are front-ended. Consequences are back-ended. There is also a tremendous, and worsening, principal-agent delimma that is affecting public companies (not just in the financial services arena, even though we are, temporarily, disproportionately focus there).
I am not one of these guys but I imagine the vast majority of people who “got” us here are decent enough people. 95 out of 100 people put in their situation would do the exact same thing. And 4 of the 5 left over just wouldn’t be bright enough to recognize the incentives. It might make some of us feel better to take former CEOs down a notch, but it ain’t going to do shit to solve anything and it won’t help us obviate future issues.
Can we get a graph of Thain’s utility function?
Can any of you whippersnappers recall the heady days of corporate excess under the late Warner CEO, Steve Ross? He was a legend in imperial grandiosity and expense account padding.Thain’s remodelling job is nothing compared to what Ross did eons ago.
Sounds like Joe Torre versus the Yankees…
Thain had a nice orange glow. I think we’ll see him on Dancing With the Stars.
@18 the two ways Wall Street takes customer’s money:confusing them with complicated valuation formulas and dazzling them with opulence.
“His office was a little, um, uh, flamboyant, you might say…”
thain deserves a fucking 10 billion dollar bonus.
he sold a bankrupt company for 50 billion. think about that.
I can’t even how much it must suck to be a stockbroker at ML right now. LOL
what do you do if you’re a stockbroker at ML right now?
your AUM is down ~40%, you’re working for a shitty retail bank and about to have your payout squeezed to nothing.
ken lewis brags that he doesn’t like to pay attorneys more than 100k.
how does he think stockbrokers whould make? lol
@20 BS. The average Joe 6 pack at the corner bar would have known that it wasn’t a good idea to pay a 70 percent premium for something that could be obtained for pennies on the dollar by waiting 48 hours
Ken Lewiser!
Ken Lewiser!
Ken Lewiser!
29, examples help when you’re making a point. Saying something like “getting the same thing cheaper is good” is not as bright as you and the other know-nothing douches think it is.
The broader point, how process and structure matters more than personalities, is so far beyond you that I won’t repeat it.
Please now go back to wondering why you think your girlfriend is cheating on you while you also try to figure out a way to get with the not-hottest junior from work.
Wait – I thought this is what we wanted in leaders – A boss who 1) even when business is bad takes care of his employees and 2) when the firm is hurting ends up getting a great price for ML, outnegotiating BoA and saving shareholders billions of dollars. Great job Thain! He deserves a good bonus
Amen #34. Thain is a LIAR but certainly no worse than Ken Lewis. At least Thain looked out for his employees and shareholders. Just ask a few of BofA’s recent layoffs how Lewis treated them. Lewis’s decision to purchase the “TALENT” at ML has taken a profitable company and driven it into the gutter. The BofA layoffs have lost their jobs, their bonuses and unfortunately most of their life savings as it was tied to BofA’s stock. Remember Ken – these were the people that allowed your company to be in a position to purchase that toxic waste site. May kharma treat you well.
@33 Examples are Jamie Dimon and Bob Diamond. Go back to your ivory tower and complete your Hoshin Plan.
Look, Thain fails to redeem himself on several levels:
1. At what point do “legacy” positions become yours? Answer: you get one quarter to deal with it then you own them. He thought he marked everything down enough at end of 2007 and again after 1Q08. You can’t be in job for a year, take the writeoffs he did and then still blame it all on the predecessor a year later – adult behavior please!! If they went up in value would he credit his predecessor? HA.
2. Bonuses: he defends because if you don’t pay your best and brightest, you lose your franchise. They really have $4.1bn of “best and brightest” left at ML? Please. Pay $100mm to your top 60 people and give the rest back to the govt. Maria let him off the hook here. Gasparino would have at least followed up. She needs to go to journalism school or go back to the coat check room.
3. the office: his answer is one of the funniest things I’ve seen. What the hell was he talking about???
Amen #34. Thain is a LIAR but certainly no worse than Ken Lewis. At least Thain looked out for his employees and shareholders. Just ask a few of BofA’s recent layoffs how Lewis treated them. Lewis’s decision to purchase the “TALENT” at ML has taken a profitable company and driven it into the gutter. The BofA layoffs have lost their jobs, their bonuses and unfortunately most of their life savings as it was tied to BofA’s stock. Remember Ken – these were the people that allowed your company to be in a position to purchase that toxic waste site. May kharma treat you well.
Look, Thain fails to redeem himself on several levels:
1. At what point do “legacy” positions become yours? Answer: you get one quarter to deal with it then you own them. He thought he marked everything down enough at end of 2007 and again after 1Q08. You can’t be in job for a year, take the writeoffs he did and then still blame it all on the predecessor a year later – adult behavior please!! If they went up in value would he credit his predecessor? HA.
2. Bonuses: he defends because if you don’t pay your best and brightest, you lose your franchise. They really have $4.1bn of “best and brightest” left at ML? Please. Pay $100mm to your top 60 people and give the rest back to the govt. Maria let him off the hook here. Gasparino would have at least followed up. She needs to go to journalism school or go back to the coat check room.
3. the office: his answer is one of the funniest things I’ve seen. What the hell was he talking about???
Look, Thain fails to redeem himself on several levels:
1. At what point do “legacy” positions become yours? Answer: you get one quarter to deal with it then you own them. He thought he marked everything down enough at end of 2007 and again after 1Q08. You can’t be in job for a year, take the writeoffs he did and then still blame it all on the predecessor a year later – adult behavior please!! If they went up in value would he credit his predecessor? HA.
2. Bonuses: he defends because if you don’t pay your best and brightest, you lose your franchise. They really have $4.1bn of “best and brightest” left at ML? Please. Pay $100mm to your top 60 people and give the rest back to the govt. Maria let him off the hook here. Gasparino would have at least followed up. She needs to go to journalism school or go back to the coat check room.
3. the office: his answer is one of the funniest things I’ve seen. What the hell was he talking about???
Thain contradicts himself when he claims the ML franchise was strong and that he needed to pay people because if they left the franchise would be crippled. The point of a strong banking franchise is that people come and go but you don’t lose business because of your franchise.
Your customers are your customers and they don’t stop doing business with you because someone new answers the phone. Who is Thain kidding? The more he talks the more he exposes the corrupt Wall Street culture to outsiders.
@ 39 & 40. journalism school 101. if you want another interview you better be nice in this one.
@41 Perfect observation. Let me add that he deserves to be investigated. His latest interviews remind me of Lay at Enron – - he just does not get it.
41 you are dead wrong.
ML is first and foremost a retail shop.
ken lewis was buying their retail salespeople.
that’s the guts of ML.
Maria is a better man than I. Knowing full well the “commode” is a chest and not a toilet, I would have yelled at him, asking why he spent $85k on a freaking toilet with legs. Just to see what would happen…
ken lewis hates investment banking and has zero interest in any business he can’t treat as an annuity.
i know this because he says it all the time.
retail stockbrokers are the ultimate annuity.
his plan is to squeeze down comp for brokers. nothing more, nothing less.
Is it just me, or does the ending of this interview remind anyone else of that movie “Space Cowboys” — the scene closes with Tommy Lee Jones dead, alone on the moon ?
@ 46
Stock broking (financial “advising” or whatever you want to call it), much like many other financial jobs is inherently a miserable business, and if you remove the opportunity to make a butt-load of money, many current/former practicioners will leave, and less will venture forward in the future.
Of course, I realize, that may, in fact, be the point, but I digress…
@44, I am not wrong. Don’t listen to these guys Mack, etc. al. talk about the firm’s assets walking out of the building. It’s all crap. In fact Wall Street compensation is a ponzi scheme. The guys at the top like to increase pay at the bottom so they can justify their huge bonuses. Thain almost got away with it one last time. Now he’s trying to make it sound like he was the victim.
49 do you have any idea how retail stockbrokers are compensated?
do you even work in finance? doubtful based on your comment.
Clown Capital,
How is it that your comment’s almost always straddle the line between severe and profound mental retardation?
The Setting :- Zombie IBankers that just refuse to die. The planet is in peril …
Hudson: Let’s just bug out and call it even, OK? What are we talking about this for?
Ripley: I say we take off and nuke Thain and Lewis from orbit. It’s the only way to be sure.
Hudson: Fuckin’ A…
Burke: Ho-ho-hold on, hold on one second. These IBankers have a substantial dollar value attached to them.
Ripley: They can *bill* me.
insert foot in mouth, idiot.
Anyone know what type of commode/chest or whatever it is? French provincial? Whatever ever it was, it helped land a dodo in deep doodoo. How do these people become “captains of the financial industry”? They’re barely qualified to um, clean toilets.
50 Actually, not 49 here, but how do retail brokers get compensated. In the old days – like 20 years ago – a $5000 trade would generate a few hundred dollars of commissions, and the broker would keep half of that, giving him a decent living over the course of the year. Different game now, correct? Not so much individual stocks, but instead managed funds. All about AUM? But how about those individual stocks and the commissions they generate. In 25 words or less please. Much appreciated.
@50 and where were all those retail stockbrokers going to go if Thain didn’t pay them?
The idea of the retail broker rainmakers walking across the street wasn’t in play when BAC took over Merrill was it? You think all those brokers were going to walk and their clients were going to pull their assets and follow them to God knows where? You must be a retail broker. Either that or you’re John Thain.
Thain’s response to why he needed to remodel O’neal’s office is a great moment that is not done justice by the transcript. It’s at 15:40 of the video (linked above).
Strange, but at the end I felt sorry for JT.
Stockbrokers today have to cater to larger accounts, at the expense of the smaller clients. There’s no money to be made on your $5000 trade.
Talk to Chuck if you’re a piker.
55 – retail still gets scaled payout based on revenues produced.
a dollar is a dollar, no matter how it’s produced.
brokerage firms have attempted to lock brokers to the firm by deferred comp schemes, stock grants, separating the broker from the customer, etc.
none of that shit works.
at the end of the day, a retail stockbroker has a very portable business and a brokers top revenue generating clients tend to be very loyal to the person the broker, not the firm.
firms will invest huge sums of money to recruit top producers through the use of upfront contracts. it’s not unusual for a broker to get 100% of his/her prior years commissions generated as a signing bonus. so if you did 2 million in business the prior year, you get a check for 2 million for switching firms.
56 – yes, i was a broker and retired at 37 years old. not bad, huh?
what do you do?
@59, @56 here what you’re describing is the pre-crash of ’08 ponzi-bonus-guarantee system. I know it well.
Watching Thain try to talk his way out of it after the fall is both sad and funny.
@51- No strattling hear. I goes balls deep into retardation on every post.
SPODE
@59, being paid $2MM to make $2MM is the sign of a parachute/airplane scheme. I see you were able to get out before the plane crashed.
I work at merrill, I totally support John Thain not because i work there, he was upfront and this is what a CEO is supposed to do stand up for his employees, investors and company. Other CEO just take the money and run. He is propably the only guy who said he would pay back for the office renovation. The Shit hole in CNBC (not maria) who reported about his 1.2M renovation of office space, i saw him on TV today trying defend himself but did a bad job.
Ken Lewis is A OK guy but he tried to sieze the a prized assent ML and also save the day for banking, what a lie these guys are telling now that they did not about the losses it is BS, what likely happened was that the market value what was on the books is Sept move south with the market in Dec. Now they scared the feds to pay up for it and protect they future loss with tax payer money. SO found a scapegoat in thain.
I work at merrill, I totally support John Thain not because i work there, he was upfront and this is what a CEO is supposed to do stand up for his employees, investors and company. Other CEO just take the money and run. He is propably the only guy who said he would pay back for the office renovation. The Shit hole in CNBC (not maria) who reported about his 1.2M renovation of office space, i saw him on TV today trying defend himself but did a bad job.
Ken Lewis is A OK guy but he tried to sieze the a prized assent ML and also save the day for banking, what a lie these guys are telling now that they did not about the losses it is BS, what likely happened was that the market value what was on the books is Sept move south with the market in Dec. Now they scared the feds to pay up for it and protect they future loss with tax payer money. SO found a scapegoat in thain.
62 – upfront money comes with a commitment of generally 3 to 5 years, which allows the signing broker dealer to reverse annuitize future revenue.
it’s the opposite of a golden parachute.
Thain said that in Dec of 2007 when he decided to renovate his office, he had no idea the financial crisis was so bad as to make such luxury expenses unwise. He’s been disingenuous, though so far he’s saying he’ll repay those costs. We’ll see.
And Ken Lewis should end up like Dick Fuld. He doesn’t deserve anything less.
merrills 18,000 stockbrokers manage about 2.5 trillion dollars. and blackrock manages another 1.5 trillion
at the end of the day, merrill will generate about 55 to 60 basis points of revenue a year from that that 2.5 trillion. forever. and ever.
in addition, they’ll collect like .30 basis points a year from blackrock
so what is that? like 20 billion a year i think.
that’s what ken lewis wanted. it’s all he wanted.
“unaware in september of q4 losses” really? Is he saying he had no fucking clue where things might go? Come on!
Truth is that the govt. wrote them a huge put option and they somehow managed to pull off the seemingly impossible act of giving even less of a fuck than before.
Your probabley sitting they’re asking your’e self, “how does he do it”. Talent bitches. Talent. —————————————->
SPODE
69 – are you high right now?
or is english your second language?
Know its my 1st. Why do’u ask.
SPODE
@14
$1.2m is a deal for what he had done.
Someone should ask Obama why he is paying someone $100,000 for his opinion plus charges for furniture and accessories (which I’m sure include a markup).
In the end, he will pay about the same to the same person.
@70- English is my…
wait for it
wait for it
First [language] bitches!
YES!
Damn that felt good.
and I postulate that 71 is quite possibly a poster impostor. Say that five times while multitasking: watching porn, smoking the good Earth and typing with one hand.
SPODE
@65 “reverse annuitize future revenue”. Save that talk for your poor schnook customers. Or better yet, mail it to Thain. He may need some fancy talk when he gets dragged in front of the Senate.
74 – i don’t have any customers. i don’t work anymore, unless you consider being a homemaker a job. oh, and i spend a lot of time in the gym. that’s sort of working.
and it’s still the opposite of a golden parachute.
75 – a guaranteed bonus is the opposite of a golden parachute?
Google: No results found for “reverse annuitize future revenue”.
I knew you made that up. I just wanted you to know that I know.
hey 76 it’s 75 again.
http://www.google.com/search?q=reverse+annuity&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
jerkoff versus the search engine.
the “bonus” is guaranteed by certain terms. one of the guarantees is that you must remain in the employment of the broker dealer for an agreed upon length of time.
does it piss you off that a loser like me has cashed a 7 figure check? i bet it does.
have a nice evening.
Results 11 – 20 of about 186,000 for reverse annuity.
oooopsie.
76 got owned by a retired stockbroker.
Ouch.
You don’t last long on Wall Street if you get pissed off when losers cash 7-figure checks.
I stand by my original statement: No results found for “reverse annuitize future revenue”. I’m not your customer. You can stop trying to bamboozling me.
so 79, what exactly do you do for a living?
i’m going to guess laid off or soon to be laid off back office type.
no, wait, customer service rep for bank of america.
not that there’s anything wrong with either of those jobs.
what do i win?
we know for certain that 79 doesn’t work in brokerage.
clients are never referred to as customers.
The retail broker is a hack. Stuffed all his clients in B shares [mutual funds] for a 5% juice, showed his numbers to the competition and said “look how much business I do” and collected a check 100% trailing 12 month gross. Four years after jumping ship the market takes a shit and AUM are in the shitter and not enough to play the 5% mutual find game again. He can’t jump ship for another upfront check.
77 wrote: “does it piss you off that a loser like me has cashed a 7 figure check? i bet it does.”
Actually, I feel sorry for the clients you used as a means to the end. Considering how many of your sentences revolve around your use of the word “I”, I can tell how much you care about them.
Go back to yahoo finance hack.
@81- and we also know for certain this isn’t a brokerage website.
If this isn’t a brokerage website then why are you posting comments in a John Thain / Merrill Lynch story?
Writing a super long post defending yourself against getting pwned is not only super lame but also reinforces why you got pwned in the first place.
Nice job weirdo.
as for the $1.2mn office, I can forgive the $400k on the thing itself, but we need pictures to envisage the extra 800k of value and glory added by the designer as an intangible Till then let’s just think of Thain’s immortal words about his NEED for it after the Harlem person had been through.
. Like Marie Anoinetter saying at her 1793 trial, ” It really would have been, uh, very difficult, uh for, uh me to use it in the form it was in. I mean, that new Diamond Necklace, that’s what those cost, you know, like duh. Mrs. Louis XV was a Polack, you know, and like recycling her crummy diamond necklace was not an option. France needed pizzazz to revive the budget. You know? At the time it looked like an a-1 recovery plan all the way.”
@84- so you think a story about Thain makes this a brokerage website? In addition to being a hack you’re also stupid because you assume.
And about “getting pwned is not only super lame but also reinforces why you got pwned in the first place.”
pwned = 16 year old kid from My Space.
Nice try Champ but this isn’t 79. Go to bed stud, you have an early workout in the morning. One more thing hack, for your next response will you please use the word “super” three times in one sentence.
Good night.
Thain’s thinking–”I’m not paying for the commode–that thing didn’t even flush!”
I would have had much more respect for Thain if when asked by Maria “Mrs. Barmitvah Boy” Steinberg-Bartaromo about the office if he had replied, “Well Maria, do think in hind sight as a journalist and married woman and employee of a publicly traded media company, that it wasn’t such a good idea to roll around with Todd Thompson on the Citicorp private jet and for Mr. Thompson to kick off CITI employees so that he could have alone time with you raising the specter of your membership in the Mile High club with a married man who also used firm funds to support a favorite charity of yours?
I mean, hindsite is 20-20 and I am sure nothing happened behind the closed cabin doors and although reports that you exited the plane with tussled hair and missing a sock were totally untrue, do you think maybe given the environment we are in maybe that wasn’t such a good idea?!?!?!?!!?
Then I would have respected John Thain as a MAN not a squeeky voiced stuffed shirt whose mania for publicity and self-promotion was his ultimate undoing.
Just the opinion of an unbiased observor with a bag of popcorn enjoying watching the real life show of things that I could never make up.
A concerned citizen
GIVE ME A BREAK, MARIA!!
YOU WOULD PIMP THAT OFFICE TOO IF THEY GAVE THAT TO YOU!!
MARIA B. WOULDN’T CARE IF THE ECONOMY WAS IN THE CRAPPER AND PEOPLE MORE VALUABLE THAN HER WERE LOSING HER JOBS!!
SHE WOULD PROBABLY BUY A LIFE SIZED STATUE OF HERSELF LIKE THE ONE OUTSIDE ROCKEFELLER CENTER HOLDING THE WORLD!!..maybe she thinks she’s that person too. lol.
MARIA HAS ALWAYS BEEN ABOUT MAKING CNBC ‘HER CHANNEL’ AND JEFF ZUCKER BOUGHT IT!!
I don’t think he did anything wrong. People just want to throw someone under the bus whenever somethings goes wrong. The bonus explanation is sound, and the office renovations were no big deal when the economy didn’t suck like it does now.
Gotta love how polarized posters are about Thain. I guess on Dealbreaker there’s no in between–you either suck at your job like Thain (or all but about 4 HF managers who are printing cash this year after returning 2% for the last 10) or are a rock star like (insert DB poster name here). Nobody wants to talk about how Thain did some thingss well, like finding a buyer for Merrill, but also made some gigantic mistakes, like choosing to write down assets in 1Q instead of liqudating them because we were in “the ninth inning of the credit crisis”.
Blow me if I made any grammatical errors.
Maria rocks!
Here’s a guy who says a $1.2mm office renovation was okay in Dec. 07 because things were not so bad and he thought ML would do very well in the future. But in Dec. 08 he claims the old legacy positions that dragged earnings down weren’t his. Huh? You were optimistic with them a year ago, but now they aren’t yours? If the firm had made money this year, I doubt he would have said they were legacy positions, don’t pay me. Man’s full of it. Also, I thought the merger with BAC was really Fleming’s work, not Thain’s. Why does Thain get credit?
Wait – I thought this is what we wanted in leaders – A boss who 1) even when business is bad takes care of his employees and 2) when the firm is hurting ends up getting a great price for ML, outnegotiating BoA and saving shareholders billions of dollars. Great job Thain! He deserves a good bonus
#88……This entry #88 makes me pleased that I am not losing it after all. I agree with all the goings on and described by “concerned citizen”. Every damn word I would say, is what many of us have felt for a long time. Yet, with all this…Maria signed a book deal for $500,000…..reasigned her (multi=year)?….contract? I think it’s a short extention and if she pulls more crap like today with her handler Sunshine…..it may not last that long. This is the place to exercise your first amendment….do it. I am also a little sick of CNBC not returning inquiries as you may read in the NYP. Most times a no comment or not guilty or did nothing wrong is an admission.
Thanks Concerned Citizen……keep adding you thoughts and I will keep reading the site, which by the way, is one day gonna self destruct if the “finger in their ass” crew doesn’t go away.