Craig Baltz's Blog

Craig's personal ramblings

Thain, and the likes of him, are demolishing America

Posted by craigbaltz on February 2, 2009

No guarantee on how long these links will work.

Today Show report about ousted Merill Lynch exec John Thain:

http://www.youtube.com/watch?v=YfpLfxZMO64&feature=related

Bethany McLean and Jon Stewart discuss financial markets (must watch):

Http://www.wowowow.com/post/bethany-mclean-discusses-ignorant-investors-daily-show-video-176347

Off topic as I’m bank and bailout bashing today and I know Bush bashing is easy, but I found this humorous.  I know pro-Bush people won’t see the humor, and it isn’t really funny – just sad.

President Bush kept us safe:

http://www.thedailyshow.com/video/index.jhtml?videoId=215927&title=president-bush-kept-us-safe

Before I start my rant I have to say that Jon Stewart is the only person who can make me laugh about this stuff.  It makes my blood boil to think about all that has happened, but he is one of the few people who can break it down in a realistic, sarcastic and hilarious manor.

I have been stewing on this for a week or more.  With all of the horrible things that are going on with our economy, our country, the banking industry, state budgets, unemployment, etc – a couple of stories popped up recently that typify what has got us to this point of near collapse.  It is my opinion that it is an environment of complete greed in our country, the mentality of taking everything you can whether you deserve it or not, is what is at the heart of our financial nightmare.  As Jon Stewart says it doesn’t seem like they have had a “come to Jesus” moment, meaning they don’t even see that they did anything wrong.

The current poster boy, and the well deserved lightening rod for the wrath of middle class America is John Thain.  The problem I see with singling Mr. Thain out is that I believe he is one of MANY.   There are many more like him.  They only show remorse when they get caught and they are pillaging banks and corporations everywhere for billions of dollars.  In my humble opinion, if what I have read and seen is true, Thain should be criminally charged.  If corporate executives are not held accountable, if there is no repercussion for their actions what reason do they have to act differently?  John Thain was the CEO of the now non-existent Merrill Lynch.  ML was bought out by Bank of America.  In their last quarter under Thain’s watch ML reported losses of $14 Billion.  It could be more.  It probably is more.  Thain took over ML in November 2007.  During the year of 2008 it has been reported that Thain earned in the ballpark of $83 million dollars.  He collected this compensation while the bank was being driven into the ground.  Employees were facing layoffs, the bank was pursuing the federal government for bailout money and B of A to buy them out.  In January of 2008 Mr. Thain, appalled at the condition of his ritzy office asked for and received authorization to remodel it (obviously from other rich spoiled brats).  Thain thought he needed to throw his garbage in a $1,400 trash can, pee in a $35,000 commode, and walk on an $87,000 carpet.  Total cost of the remodel was $1.22 million.    Thain is quoted as saying the office wasn’t really in a form he could he use it.  It didn’t “match” the other offices at ML and it would have been difficult to use it in the form that it was in.  Really…difficult to use…Did it have a desk, a chair and a phone?  I’ll bet it probably did which means it was usable, it just wasn’t luxurious enough for him and his snobbish buddies.  Thain also took a ski vacation to Vail while the company was being taken over by B of A and reports were surfacing of him massively understating the horrible condition of ML.  He also reportedly scheduled a ski trip to Switzerland while average people were being laid off and foreclosed on.  Perhaps the most gaudy and offensive of Mr. Thain’s actions was to request a $10 million bonus in December of 2008…for himself.  After the sale to B of A, with B of A into the taxpayers for $40 billion with more on the horizon, Thain actually thought his performance already overpaid in the ballpark of $80 million – warranted a $10 million bonus.  What world do these guys live in?  I work for the US Census Bureau and I have to buy my own pencil holder and maps.  I can’t get an hour of overtime without an Act of Congress to approve it.  This guy thinks it is actually OK to have a $1,400 trash can.  He paid his driver (who I guess had the highly demanded skill set of…knowing how to drive) $230,000.  An $85,000 salary, $128,000 in OT and an $18,000 bonus.  Wow.  One last arguably criminal offense was that Thain rushed out between $3-4 billion in bonuses to ML employees just before the buyout.  This was ultimately funded by the taxpayers.  I haven’t seen a breakdown of the bonuses, but I would be shocked if less than 99% of it went to executives.  Are these CEO’s with this enormous sense of entitlement even real people.  If he was standing in front of me would we be able to communicate?  Or are they so strange that they have developed their own little world where they have horded all the money, all the resources and driven our great nation to the brink of disaster.

Another fun fact about Merrill Lynch is that they paid an executive (Peter Krauss) $25 million and he worked there three months.  From September –December 2008.  He inserted a clause that if the company was sold he would get a $25 million payout.  I don’t even know how to comment on that.  Do these guys have golden poo?  What are they doing that is worth that much money?  They aren’t creating that much profit even when times are good – they fake it all.  Obviously the good times of the banking industry were MASSIVELY overstated and they weren’t earning any of the preposterous “compensation packages” they have collected for many years.

At the same time all of this ML/BOA/Thain stuff is coming to light reports come out that Citigroup, also into the U.S. taxpayer for $40 billion was purchasing a $50 million corporate jet.  The justification I heard was two fold.  The purchase was planned for quite some time (are they unable to cancel purchases or see that it wouldn’t be smart at this time?), and perhaps the coups de grace that it wasn’t taxpayer funds paying for it, that it was being paid for by the proceeds of the sale of their other corporate jets.  I have a newsflash for them.  This is why they are in the position they are in.  Is there some reason why a $1500 first class seat on a commercial airline is not good enough for them?  They have elevated themselves into another world of class – where even first class isn’t good enough.  Where the nicest, fanciest trash can I’ve ever seen in my life is not worthy of holding their trash.  And while they have pulled this off and horded enough money to throw our entire economy out of whack, common folk like us struggle to survive.  Struggle to keep our cars and our houses and our jobs.  This is not the America I love.  As Jon Stewart said in the video link above with Bethany McLean, our values are upside down.  Work is not rewarded anymore.  Backroom deals, shady investing, having powerful friends is what is rewarded.   Just my opinion and yes I am jaded and pissed off. 

 

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5 Responses to “Thain, and the likes of him, are demolishing America”

  1. Craig,

    I’m glad you have time to follow this. We need a list of all these bastards and their companies. I SWEAR that the only way to make them PAY is to BOYCOTT them. I know this is a very tiny drop the bucket but this is the only thing we can do.
    I will say this again and again–I was against the bailout from day one as I was against the Iraq war, government cannot solve all these problems. Mr. Obama is young and will soon realize this. I guess Mr. Dashale has forgotten how to DRIVE A CAR to work like the rest of us do. These guys are off the planet spoiled.

  2. Craig said

    Thain not only won’t drive, but pays his driver what…five or six times what a driver should be paid. Doesn’t require any skill or education. Could be replaced by just about any other person in America…exactly why did this guy deserve $240,000?? Another thing that seems to be forgotten is that all these guys used to claim that they deserved outrageous salaries because of what they produced…well now it turns out it was all a mirage and they never really produced anything. Not only are they not giving the money back they still think they deserve it even as their companies tank! Thain said his executives deserved the $3-4 billion in bonuses because they need to reward and retain their best people. That may be REMOTELY true in a normal environment but people in this environment are happy to have a job. WHERE ARE THEY GOING TO GO if you don’t give them bonuses?????

  3. Brian S. Lumberg said

    Craig,

    I think your anger is misplaced. When companies are mismanaged like this, they are supposed to fail. This is creative destruction. The artificial part of this, and what perpetuates the existence of corrupt and destructive behavior, is the feds handing them piles of money from our paychecks to keep them afloat. Congress does not have the authority to use the federal treasury to “bail out” private businesses!
    If you’re a shareholder in companies that operate this way, you have valid standing to be pissed off. If you are an employee, working for a dickhead CEO like this, you have standing to be pissed off. The only connection you have to this guy is the artificial connection created by this bailout bandwagon.

    Back in the 30s, Roosevelt demonized businesses in his attempts to nationalize industries, such as utilities (TVA). The same is happening now. “Look at those evil guys over there. We need to take over that shady business.” Keep the private businesses private (By private, I mean not federally controlled). If they are run poorly, do not support them and LET THEM FAIL!!

    That’s motivation to hire executives that run businesses correctly. Reward poor behavior and you will get more of it.

  4. Craig said

    No, my anger is not misplaced. While I had no “direct” connection to Thain until the bailout which I HATED from the start and totally agree with you is wrong on so many levels (including legally) – it is the hundreds of guys like him who have basically “horded all the money” and created this huge class gap in America. I used to be middle class, now I struggle to survive and it is because our upper class has not been responsible.

  5. Brian S. Lumberg said

    “it is the hundreds of guys like him who have basically “horded all the money” and created this huge class gap in America.” We have a fundamental disagreement on this point. Someone else having a great amount of wealth, has no effect on my level of wealth. Bill Gates doubling his net worth takes not one penny from my net worth. You or I can pursue income, independent of any other individual. The misconception is that there actually is a pie, and if someone else takes a big piece, there’s less pie left for me. This is not true.

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