|John Thain, who as a hired hand at Goldman Sachs, became immensely wealthy, agreed to sell Merrill Lynch to Bank of America on the weekend in September 2008, when rival investment bank Lehman Brothers collapsed. He was fired in January 2009 by BofA chief Ken Lewis. Thain had brought forward payment of the 2008 to December 2008, before BofA became the legal owner. |
Thain agreed to repay $1.2m spent on decorating his office, in late 2007, when he took over from Stan O'Neal, who had effectively destroyed the bank. O'Neal got a severance deal worth more than $160m.
Merrill Lynch, the collapsing US investment bank, which was formally acquired by Bank of America in early January, paid a select group of 700 staff, annual bonuses of at least $1m even though it incurred a $27bn annual loss in 2008 and a $15 billion loss in the fourth quarter.
New York Attorney General Andrew Cuomo, said in a letter to Barney Frank, Chairman of the House Committee on Financial Services, on Wednesday: "the allocation of the nearly $4 billion in Merrill Lynch bonuses is nothing short of staggering. Some analysts have wrongly claimed that individual bonuses were actually quite modest and thus legitimate because dividing the $3.6 billion over thousands upon thousands of employees results in relatively small amounts estimated at approximately $91,000 per employee. In fact, Merrill chose to do the opposite. While more than 39 thousand Merrill employees received bonuses from the pool, the vast majority of these funds were disproportionately distributed to a small number of individuals. Indeed, Merrill chose to make millionaires out of a select group of 700 employees. Furthermore, as the statistics below make clear, Merrill Lynch awarded an even smaller group of top executives what can only be described as gigantic bonuses."
- The top four bonus recipients received a combined $121 million;
- The next four bonus recipients received a combined $62 million;
- The next six bonus recipients received a combined $66 million;
- Fourteen individuals received bonuses of $1 0 million or more and combined they received more than $250 million;
- 20 individuals received bonuses of $8 million or more;
- 53 individuals received bonuses of $5 million or more;
- 149 individuals received bonuses of $3 million or more;
- Overall, the top 149 bonus recipients received a combined $858 million;
- 696 individuals received bonuses of $1 million or more.
President Obama said in comments to reporters on Jan 29th: "When I saw an article today that indicates that Wall Street bankers had given themselves $20 billion worth of bonuses, the same amount of bonuses as they gave themselves in 2004, at a time when most of these institutions are teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help then the entire system could come down on top of our heads, that is the height of irresponsibility."
"It is shameful," he said.