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.