John Thain’s Phone Date With Denial


If you ask us, Maria and John's phone date today started off on a bad note. First of all because she was in Davos (which is where he wanted to go this week except he got fired), and he was stuck back in New York at CNBC's studio. They could have at least hologrammed him onto the slopes so he would look cooler! But no. Anyway, Thain said what you might expect: The losses were a fault of legacy positions and market movement, though some of his little raw nerves showed when he said he was "surprised" by his ousting but couldn't "comment specifically on what irritated" Ken Lewis. But really the entire conversation is best encapsulated by this exchange near the end:

M-Hons: Why did you need to renovate the office? What was wrong with Stan O'Neal's office?
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.

We'd like to interject here and note that this is where Maria is supposed to ask the very important follow-up questions, like: How different was Stan's office from the rest of the offices? Was there an under-the-sea theme complete with round water bed and black lights? An insufferable incense smell and life-size naked-lady paintings? A doll collection? Did he take in stray cats that crapped anywhere?

Instead she goes straight to:

M-Hons: 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. Did it occur to you at some point over the process to say this is probably not the best judgment, I better put this off?
Thain: Well, Maria, remember, this was back in December of '07. So the financial industry hadn't melted down yet. 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 bring down costs. So with 20/20 hindsight, it was a mistake.

Okay, so we'd like to interject again and say this is just stupid, and wrong. December 2007 was not exactly halcyon days, if you recall. December 2007, when Brainiac Thain stepped in after his predecessor, Merrill Lynch CEO Stan O'Neal, took a then-unheard-of $8 billion in write-downs and was summarily dismissed, was also the month in which Vikram Pandit took over for Chuck Prince at Citigroup, when the latter was forced to resign after taking $6.5 billion in write-downs, and the month in which it was decided that Jimmy Cayne might want to bow out of Bear Stearns, which ceased to exist soon after. In short: December 2007 was the exact month in which it became pretty freaking clear, even to us, and we don't know shit, that America's banks had some pretty serious problems. So, basically, we kind of think Thain failed this one. He should have stayed home and laid low. We guess he will from now on.