Report: Merrill Lynch CEO Spent Over $1M to Redecorate Office
Before bailout $'s, exec said to have hired decorator; bought luxury furniture.
January 22, 2009— -- Less than one month into his new gig at the Bank of America, Merrill Lynch CEO John Thain resigned today after it was revealed that he doled out executive bonuses a month ahead of schedule and just days before his struggling Merrill Lynch firm was acquired by the BofA.
Although no reason was given for his resignation, a spokesman for Bank of America, which acquired Merrill Lynch at the beginning of this year in a government-negotiated deal to save it from collapse, issued a statement saying: "(BofA Chairman and CEO) Ken Lewis flew to New York today to talk to John Thain. And it was mutually agreed that his situation was not working out and he would resign."
The amount in bonuses paid out was between $3 and $4 billion, according to the Financial Times. Exorbitant Wall St. bonuses have garnered increased attention since the economic collapse and subsequent billions in bailout funds have gone to help companies stay afloat.
Bank of America, which received $25 billion in bailout funds before being handed an addition $20 billion last week, said Thursday that it knew Thain gave the incentives ahead of time.
"Merrill was an independent company until Jan. 1 of 2009," said spokesman Scott Silvestri. "John Thain decided to pay year-end incentives in December, as opposed to their normal date in January. Bank of America was informed of his decision."
Report Says Thain Spent Over $1 Million To Redecorate Office
To make matters worse, Thain is now facing more criticism for reportedly spending $1.2 million to lavishly decorate his Merrill Lynch office early last year while the firm was fighting to survive.
Thain splurged on interior designs from the Obama's chosen White House decorator Michael Smith ($800,000), two area rugs ($131,000), two guest chairs ($87,000), a 19th Century credenza ($68,000), four pairs of curtains ($28,000), and a mahogany pedestal table ($25,000), according to Charlie Gasparino, the CNBC contributor and Daily Beast columnist who broke the story.
Other items mentioned: six dining room chairs ($37,000), a George IV Desk ($18,000), a custom coffee table ($16,000), a sofa ($15,000), a chandelier ($13,000), a mirror ($5,000), six wall sconces ($2,700).
Also reported to be on the list was a trash can for $1,400.
Thain's lavish spending shows that even as the gilded age of Wall St. comes to an end, he "occupied this rarified strata on Wall Street" and "just didn't get it," said banking industry analyst Nancy Bush. "It's time for all this to be gone because the reality needs to set in on Wall St. that the business has changed for the foreseeable future, if not forever," Bush added.
Thain's Decorator Chosen by Obamas for the White House
Thain apparently didn't get much of a deal – the First Family is paying Smith just $100,000 to decorate their new presidential home, according to the report.
Merrill Lynch and Smith did not immediately respond to calls from ABCNews.com seeking comment. Thain could not be reached.
Thain, a Harvard MBA, was named Chairman and CEO of Merrill in November 2007. The following January, the firm announced record-breaking losses of over $8 billion. By April the troubled investment bank had said it would lay off as much as 10 percent of its workforce.
Senators Say Exhorbitant Spending Needs to Stop
Senator Bill Nelson (D-FL) said Friday that Thain's office remodeling was just the last straw of "inconceivable and irresponsible and inexcusable behavior" shown by Wall St. corporations.
Nelson is one U.S. Senate member who said this type of spending prompted legislation, introduced Friday, that establishes clear guidelines on how corporations can use federal bailout funds and increases accountability and transparency in spending.
"For the folks all across America who are experiencing these daily financial difficulties and losing their jobs and their business and their companies, and then to see that their money is being wasted excessively by greedy Wall St. executives – this has to stop," said Nelson.
The Troubled Asset Relief Program Transparency Reporting Act would prohibit companies from using bailout dollars to pay for private jets or travel expenses, holiday parties, entertainment, office renovations, lobbying, political contributions, conferences and events.
The Associated Press contributed to this report.