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Feb. 8 2010 - 9:37 am | 3,704 views | 11 recommendations | 51 comments

Another Wall Street Retread Rehired

NEW YORK (AP) — John Thain is getting a second chance.

CIT Group Inc. tapped the former Merrill Lynch CEO to become its chairman and chief executive.

Thain brokered Merrill’s sale to Bank of America as the credit crisis peaked in the fall of 2008, but was then pushed out the door after the deal closed as controversy swirled around bonus payments and mounting losses at the investment bank.

via News from The Associated Press.

Man, exactly what do you have to do to become unhirable in this country? Eat Christian babies on CNN?

John Thain is the dope who was buying himself an $87,000 area rug as his company was going bust. He became a symbol for brainless greed on Wall Street just in time to complete a tortured sale of Merrill to Bank of America in which billions in losses were somehow kept hidden from BofA shareholders.

Now he gets another big job, just like every other high-end Wall Street buffoon who wrecks a company in this era. My favorite of course is John Meriwether, the “genius” investor who dreamed up the imploded hedge fund Long Term Capital Management in the late nineties. Meriwether immediately was given another $250 million to play with after LTCM blew up and is now working on his third such venture, a company called JM advisors, which uses LTCM-like investment techniques. Who’s giving guys like this money?


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  1. collapse expand

    It’s amazing how failure is rewarded! Gone are the days of our Grandfather’s ethics.
    By the way, I thought Meriwether’s new venture threw in the towel? Also, whatever happened to LTCM’s computer model? I often wonder if it’s in use somewhere else.

  2. collapse expand

    Thain’s rehiring probably doesn’t surprise many people, especially those of us who work in Corporate America where it now seems up is down and stupid is smart. America has ceased being a meritocracy a long time ago and now these craven elites, otherwise known as corporate managers, have been granted a “get out of jail free” card (literally) by our government.

    In Cuomo’s complaint against Bank of America and that other loser, Ken Lewis, Thain is the guy who doled out $3.6 billion in bonuses to his management team despite bringing Merrill Lynch to bankruptcy. Thain even had the nerve to ask for $40 million for his own “brilliant” work (which was denied btw). But again, no one in our government seems to have a problem with this, despite the fact that Thain had to break Merrill’s own policy of paying bonuses at the end of the year, when he held a special board meeting to bless the payouts before the end of 2008.

    As an unapologetic Darwinist, I can only wonder what terrible twisted mutants will come out of all this, when failure is rewarded and success is marginalized. When the very people who caused the problem are in charge of fixing it, I know the natural order of things has been irrevocably altered. The reason why failure is so important to our system, to our very core, is that its fear drives others to success. Without the fear of failure, we will not have true innovation.

    My father used to have a simple saying, “Real leaders share the credit and take the blame.” Since no one and I mean no one has taken any blame here, I cannot help but think this will not end well.

  3. collapse expand

    Hey Matt,

    This reminds me a bit of something I heard Raj Patel say during a lecture on CSPAN-2 (the only place left that actually shows discourse nowadays). He was talking about how Alan Greenspan, shortly after the shit hit the fan, admitted that his crusade against regulation was ideologically wrong. Patel said that the media covered this on with less intensity than the balloon boy incident, “The financial market ideology was wrong . . . movie at 11″ was what he said, and I think it reflects our attitude toward this situation.

    We want Bernie Madoff to roast because we see what he was doing as immoral and illegal. The media latches onto it because it gives the human drama and an authorized bad-guy to demonize. However, surprisingly, the media finds this story tiring quickly.

    The probably figure that the public feels vindicated now that Madoff is in prison for-eva and that any further witch trials of sort won’t be cathartic. So snakes that drop 80k+ on rugs can slither right back into the picture and continue to pillage with impunity because Americans want a momentary villain instead of an ideological rejection.

    • collapse expand

      I think you are missing the point when you say “Americans want a momentary villain instead of an ideological rejection.”

      The reason none of this information comes to live in the MSM is not because Americans don’t want to see it, it is because the corporations in cahoots with these thieving bastards decide what we get to learn about.

      If a lot of Americans did not want to know about this chicanery, there wouldn’t be trueslant.com and Taibbi would be a computer programmer or something instead of a journalist.

      Put the blame on the Corporations where it belongs, don’t blame the citezenry. I think you’d be surprised how many people DO NOT watch Faux News and CNBC. I myself do not even subscribe to cable anymore.

      In response to another comment. See in context »
      • collapse expand

        I think its an urban, middle/upper-class misperception that the citizenry isn’t addicted to human drama and allergic to ideological discussion. I come from a rural area, and I know this might not be wholly representative, but those people aren’t perusing the internet looking for liberal blogs. This world is perpetuated by a relatively small percentage of the population.

        As kind of a fun exercise, I would challenge you to find a blog or site like this that caters to liberal, rural residents. I don’t think they exist because the organizing mode that rural people use are those obnoxious conservative chain emails.

        Sophistication is not really their game and most of them don’t use the internet outside of facebook, msn, and hotmail. I think our type (I’m not really middle/upper class urban, but I’ll roll with it) are kind of paper tigers. We sign a lot of petitions and comment furiously with indignity, being a very active presence on the internet.

        The reality show phenom is enough to evidence the fact that a lot of people have a desire to sidestep ideology and just allow the world to play out like an elaborate self-perpetuating soap opera (see Sarah Palin). The affect (commercially motivated) on the MSM is palpable.

        We sort of self-select out of this world (as you point out), and maybe by doing so, we ignore the behemoth that MSM and their viewers are. I think this leads to a blame game where we try to do line drawing between catering to an audience / telling them what to thing that I did in my original post.

        To reformulate, I think people want human drama and the MSM capitalize on that to push their agenda (i.e. corporate baptisms through convictions like Madoff’s)

        In response to another comment. See in context »
        • collapse expand

          I know there are big huge boatloads of teeming masses of American krill out there to have their opinions molded by the whales that ultimately use that to feed on them. They live in cities and towns, villages, and in the rural pastures of the land. It is the Morlocks and the Eloi.

          And, although I am a middle class worker with a college degree, most of my political awareness was self-actualized. I didn’t go to college for polysci. But I have this creeping awareness, almost like ESP, for what the neocons and neoliberals desire for themselves, of course at our expense. Unfortunately, for the last 10-20 years I have watched it play out much as I predicted.

          I should have actually become more involved earlier because I have seen the power of blogs, posters, petitions, and even received a direct signed copy from a prominent US Senator over one of the egregious government activities that blew my stack.

          Now what sets me apart? Why am I aware? Why don’t I fall for the tripe that slides out of Sarah Palins mouth like verbal diarrhea? Although I have been fooled before, I have never been brainwashed. And where does this brainwashing start? The corporate iron-fisted control over our entertainment, newspapers, television and you name it.

          The Internet is the only level playing field, and guesssssss what? Comcast and AT&T are working patiently behind closed doors to change all that too.

          Of course shit like this has been going on since William Randolph Hurst worked to promote or demote this or that movies star, vilify Pancho Villa, and ensure marijuana was demonized into a Schedule I narcotic so he could harvest a huge tract of virtually free forest land to make paper stock for his newspapers courtesy of the Wilson Administration and in cahoots with Dupont would have no competition for Nylon. So these Morlocks have been around a very, very long time. I’m sure they have been around since the beginning.

          So again I submit that people’s opinions are shaped by the information they have access to. If they are kept in the dark and fed bullshit all their lives, it’s hard to blame them for being more like mushrooms than sentient beings.

          The same thing happens when people do not have access to education, the result is ignorance and grinding poverty inflicted on people so that the powers that be can retain the status quo.

          In response to another comment. See in context »
  4. collapse expand

    At first I thought this said “Another Wall Street Retard Rehired.”

    So I dashed off to the Facebook to 1) write a grammatically dubious post calling for your resignation, 2)???, 3) profit!

    But it was all a misread. The embers of rage go unstoked.

  5. collapse expand

    Matt, I usually agree with insights, but you’re way off on this post – Thain’s #1 responsibility is to his shareholders. Thain, et al, should be judged on the botoom line.

    Keep your eye on the big picture and not the nuances of his interior decorating, Thain did fantastically well for the shareholders of Merrill, especially when one considers the Bear and Lehman alternatives.

    And I’m fully aware that Thain is an immoral prick who screwed the US taxpayer (via Paulson, et al) and Ken Lewis. However, I blame Pualson (and Lewis) more for buying this absolute piece of crap rather than Thain for selling it. Caveat Emptor.

  6. collapse expand

    “Failing up” is alive and well in this country. The folks in charge who royally screw things up are allowed to save face with stellar references from their former employers so they can land safely elsewhere, or with plum jobs in a different division. I saw this happen with two high-level managers at my former company who lost a piece of business worth tens of millions on their watch. Scores of employees lost their jobs (including me) because of it and where do these jokers land? One gets moved to the head office in NYC with an effective promotion, and the other becomes the president of another unit owned by the same parent company. Individually, they are not bad people. But they were clearly in over their heads. Either these guys have some pretty incriminating pictures, or they’ve been playing a ton of golf with the CEO. Meritocracy in corporate America? Nope. More like “Sycophants R Us”.

    • collapse expand

      Back in a previous life my father (who was the supervisor of a small enterprise) said that when an employee became a liability the best way to get them out was to write a ‘glowing’ recommendation so that they would be hired somewhere else, thus becoming the enemy’s curse. Sadly, much of corporate America has lost sight of that idea as most commonly now when someone isn’t up to the task they are given a negative recommendation, thus saddling the company with the dolt for years to come.
      Maybe the syncophants have more on the ball than we think they do :-) !

      In response to another comment. See in context »
  7. collapse expand

    This reminds me of a William Black comment: that to move up in corporate world you have to be known for incompetence and a willingness to shill or justify your actions under the guise of creating profits… He was referring to Geithner and Summers at the time, but Thain is a really piece of work… Everyday there is another consistence shard of evidence that the people who have derailed the train are getting on the caboose for another go at it…. Almost makes you think about how this financial crisis has been engineered-marketed (or in Thain’s case decorated).

  8. collapse expand

    This is the Major League Baseball system of hiring managers, where the same managers get moved from team to team regardless of competence.

  9. collapse expand

    This proves The Peter Principle, where everyone rises to the level of their incompetence. Although you have to wonder where it was from 2000-2008 when Dubya overshot it by light years.

  10. collapse expand

    “Who’s giving guys like this money?” We are.

    Shouldn’t you be apologizing for calling Thain a “Retread”? I’m mean, there are a lot of retreaded people out there who are probably appalled and offended.

  11. collapse expand

    Finally opened a T/S account – because I still think you have Thain all wrong.

    I’m ex-Merrill, so I’m hardly neutral on Thain, but to my mind the firm was unsalvageable. Thain took a decision to raise capital and hope the credit crisis abated, a shitty strategy to be sure, but I’m pretty convinced in hindsight he had no real alternative. Merrill was stuffed to the gills with asset-backed crap, and obviously that was not Thain’s doing.

    Thain seems like a typical pompous Wall Street grandee, and his thousand-buck trashcan and hiring of Grade A banker scum like Peter Kraus and rightwing sycophants like Margaret Tutweiler were all indicative of his ingrained Goldman persona. He also had a gag-inducing “I’m a straight-talking, salt-of-the-earth mid-westerner” schtick, but ultimately so what.

    None of this explains why Merrill blew up, and we’d never of known about the legless commode or whatever the fuck it was had CNBC not dutifully recited the memo from Ken Lewis’s PR hachetman. (That it was act 1 of Ken Lewis’s increasingly desparate effort to stay out of jail, well now we know.)

    Thain’s fault, fundamentally, was thinking he could fix Merrill. Timing and circumstances made this an impossible goal, and the question here is whether John-boy has made misjudgement here. I do however think it would be foolhardy to write him off as incapable of running a back – when the bank he is being put in charge of has now for a while had its balls in the vice-like grip of Goldman.

    [For some reason I can't post links, but google "Goldman + CIT + deal" and go figure how another Goldman alumnus turned up in charge of CIT]

    Thain arrived at Merrill planning to Goldmanize the place – ended up he had no chance. So he’s kind of returning home now, going somewhere Goldman are going to give him every chance to succeed.

    • collapse expand

      >For some reason I can’t post links

      Enclose the url with parentheses. There are ways to do it in a more pretty fashion, but I don’t know the code for True/Slant, and nobody’s passing out a manual.

      In response to another comment. See in context »
      • collapse expand

        Lawdy Gypsy… html tags aren’t specific to trueslant they’re read by the web browser. You’re on the internet for goodness sakes. Use it. Look at Absolute links. Or for crying out loud, select some text on a web page, right click and select ‘view selection source’ so see the relevant tags. This ends today’s lesson.

        In response to another comment. See in context »
        • collapse expand

          Why thank you andygeiger (said with southern accent just because); you gave me some answers I was unable to tease out of anyone else. I’ve been on a few other sites that use different protocol than True/Slant; my gig ain’t computers; and no, the other protocol had no effect here (except sometimes delaying/not showing my posts).

          In response to another comment. See in context »
  12. collapse expand

    In one of Thom Hartmann’s excellent books on politics (it might have been “Screwed”) he meditates on the reasons why American CEOs are rewarded so grotesquely. One of his explanations was, in this day and age, CEOs need to be psychopaths who are somewhat functional and understand the game of business. Since the percentage of Functional MBA Sociopaths in the population is extremely small, they can thus demand premium salaries.

    And it also perfectly reflects our current culture: the greedy, short-sighted, winner-take-all ethos that has been in ascendent in America for thirty years. It is time to leave this behind. Major overhauls are needed all directions. The Reagan Revolution, neocon Republicanism, the imperial dreams of PNAC and economic hegemony, all of these twisted fantasies have been exposed and discredited. The American public needs to face the fact and move on. Obama must be a much bolder leader. It is past time to start anew.

    “Someday a real rain will come and wash all this scum off the streets.”

  13. collapse expand

    I’ve worked in startups my whole career and the thing that really gets me is the opportunity cost. I work mentoring entrepreneurial business students in the developing world and the vast majority of their business plans ask for around $100K. Even in America you could fund a fuck ton of real small business ventures in places like rural Kentucky or Baltimore for low six figures. Where does that money go instead? A fancy shitter for some WASP dipshit who has managed to fail up so far that his crowning achievement and final act was to sell the already crippled company he was in charge of to another company, crippling that company in the process. Kudos America! Keep that frontier spirit alive.

  14. collapse expand

    John Thain has unimpeachable Power Elite credentials. He is even a member of the Trilateral Commission which, along with the Council on Foreign Relations, is an Eagle Scout badge for the well-connected.

  15. collapse expand

    this isnt shocking at all. who you know is more important than what you know or how you perform?

    lane kiffin, anyone?

  16. collapse expand

    Man, exactly what do you have to do to become unhirable in this country?

    I don’t know anything about John Thain’s personal situation other than what I read in the papers and on the internet, so this comment is in no way directed at him. And the answer to the above question in general is certainly going to vary by the company. But at a lot of Wall Street firms all you really need to do to become unhirable is to thell them you disapprove of any of the following:

    Laundering money for organized crime, laundering money for tax evasion purposes, bribery, bid-rigging in the municipal bond market.

    Or, you could tell them you “got this thing” against selling or buying “income smoothing products” that fraudently disguise a companies’ losses. They might also be interested to know that you have a “hang-up” over booking worker compensation premiums as general liability premiums as a way to help your company illegally avoid paying its’ fair share into special state worker compensation funds. Alternately, you can tell them that you just don’t “dig” helping companies improperly move bad loans off their books.

    The point is, that if you have some “issues” with any of the foregoing, you can get this becoming “unhirable” thing done.

  17. collapse expand

    As the late Howard Zinn said: “you can’t be neutral on a moving Thain.”

  18. collapse expand

    If the Three Stooges were on Wall St., their shorts would not end with them being chased by cops, bulls, angry home and business owners or Indians into the fade. Nope, they would end up the way the shorts usually started, with the boys somehow finding themselves in positions for which they are completely unqualified. Which means, I guess, that Wall St. today is like watching a Three Stooges short backwards.

  19. collapse expand

    America has never been a meritocracy, as any Empirical study would show (read American History) so why should one be surprised that one of the “made men” who failed…would find future employment? They take care of their own…as to the debate as to whether the American populace wants to know the unpleasant reality of their system or not. I think the many choose not to look to closely at the world, they know intrinsically that the “game is rigged” so they escape…those that try to inform themselves, well some become advocates of the system, play the game…so that they “may” advance, others try to rock the boat while most just succumb to cynicism.

    I’m guilty of the last category.

    I believe Michael Hudson got what is currently happening right, the current economic and political structures in the world are organized with the goal of moving us back into the Middle Ages of serfdom.

    “You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.”
    America and the world is returning to a feudal system based on debt peonage…The list of things that need to be done to prevent this such as a Breaton Woods II, reinstating Glass-Steagalll, trying to rebuild a dynamic domestic middle class in America (which would require removing some nonsense regarding Free Trade to rebuild our Manufacturing sector) to drastic de-escalation of the War Machine unleashed upon the globe…

    Well…none of this will happen.

    So just sit back and watch the Freak Show as Americans we have front row seats.

    • collapse expand

      There are already feudal models in place; they just need to be expanded: from gangs and the mafia to indentured servitude, payday lenders, pyramid schemes. Wall Street’s done its part protecting their turf and screwing those who contributed to their growing estates. Who’s next?

      In response to another comment. See in context »
  20. collapse expand

    Hmm, these guys don’t live in a vacuum, soooo….they have very active cronies from…old school daze, etc. That would be an interesting mapping of 6 degrees of separation that might bring it down a few notches…nearly to bedfellows, it would seem.
    Perhaps a note of something better? Senator Cantwell from WA is going after control of the derivatives market. Derivatives, for me, are just a sneak’s way of getting around buying on margin that was supposedly curtailed after the 29 Crash. Guess not…
    To add on Blase’s ideological rejection: Start with what? The old schools? Their conduits to the top spots?

  21. collapse expand

    Thor’s got it and even Claudia Deutsch has an article about this today. Here’s a surprise – not – from today’s NYT: (http://www.nytimes.com/2010/02/08/us/politics/08lobby.html?th&emc=th) “In a a Message to Democrats, Wall St. Sends Cash to GOP.” Sock it to me. Texas Senator Cornyn sums up the Wall St. whining with “I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you.”

    The only way for what we see as Wall Street crooks and liars to become unhirable is to transform “3 strikes you’re out” to “outta the financial game” and enact enforceable regulation on stink to high heaven greed.

  22. collapse expand

    Anyone ever read U. Sinclair’s “The Moneychangers” besides me?

  23. collapse expand

    But, don’t you see, Matt, that this makes perfect sense?

    The Masters of the Universe hold tight to the claim that their huge compensation packages are justified because GOOD HELP IS SO HARD TO FIND!

    It thus follows that Thane gets another top job.

    Same as it follows that Californians should send failed Hewlett-Packard chief exec Carly Fiorini to the U.S. Senate.

    Same as it follows we should leave the casino open.

    Wall Street has its standards, you know. How dare we question the “experts?”

  24. collapse expand

    Thain is evidently a made man in our criminal Kleptocracy. Wake up folks, the real terrorists are in the financial district of New York and inside the beltway in DC. It’s pretty much gameover, our middle class is dying at an alarming rate.

  25. collapse expand

    Shit, you know…this econometric cloned leader type stuff we face reminds me of whacking moles. Bingo, there is always another one in the hole! Matt or somebody has to go underground and make the conduit transparent… become a mole. That would really be unmasking America…

  26. collapse expand

    Thanks to Sarah, I can now see that your use of the “R” word is only satire.

  27. collapse expand

    Eeating Christian babies doesn’t disqualify you from employment if you’re a Christian.

  28. collapse expand

    Hi Matt,
    I am a fan of your work in Russia, and wonder how you would characterize the differences between the political economies of Russia, at least before Putin, and the US. There seem to be financial oligarchs pretty much running things in both countries.

    • collapse expand

      This topic interests me too. The one thing I’ve heard repeated a number of times that always makes me chuckle is that America’s corrupt politicians (at the national level) are really bad at it and bend over to the lobbyists and business interests for tiny sums of several thousand dollars or a new driveway, while you would expect a much higher comparable payment for services performed in Russia. I dunno if that’s true at all, but it would be humorous if so.

      In response to another comment. See in context »
  29. collapse expand

    John Galt, please, for the love of God, will you take these people to your mountain paradise?

    Unlike Ayn Rand, I think that society will prosper if dangerous people like you are kept away from the rest of us.

  30. collapse expand

    The U.S. is starting to look more and more like the third world kleptocracies that the USG used to support. Our governance structures are being hollowed out by the oligarchs.

  31. collapse expand

    Who’s giving guys like this money you ask? The answer is simple….Guys like this are.

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