Merrill Lynch is another company that was briefly brought up in class as an example of a financial institution that was bailed out during the financial crisis. When Merrill Lynch was teetering on the brink of bankruptcy, the company’s CEO was not concerned about the future of the bank, the economy or what he could do to save the company. Instead he was worrying about whether his bonus and salary were going to be cut. John Thain was the CEO of Merrill Lynch in 2007 when the company started to experience major economic downfall. Merrill Lynch was eventually saved when it was purchased by Bank of America. Thain, like so many other CEOs in the financial sector at the time, convinced investors that the firm was performing great while it was majorly failing. In addition to tricking the public, he also milked the company for as much money as he could get his hands on. He is infamous for spending $1.22 million on redecorating his office using shareholder money while Merrill Lynch was taking a turn for the worse. At the time, the color of the rugs in his office was more important to him than the color of Merrill Lynch’s balance sheets. He wanted to make sure that he cleaned out the wealth of the company before it merged with Bank of America. Before his grand exit, it is reported that he tried to take a $10 million bonus. Thain genuinely felt that he earned this bonus when in reality all he earned was a lawsuit. At a time of instability and chaos in our society, an influential CEO was more concerned with his own financial stability then the future of the American economy. Is this really the people we entrust our money and the future of the economy with?
Even after all of Thain’s greedy and deceitful actions while he was CEO at Merrill Lynch, he was still given another chance to head a firm. In contrast to Jeffrey Skilling, Thain was not charged with any criminal or civil crimes and escaped the entire mess without a visible scratch on him. He was not even given a ban from working in the financial industry, like the two Bear Stearns’ executives. Not even his reputation was majorly harmed since he was given the opportunity to run another firm. I do not know how investors of this company felt comfortable with letting this man run another firm after running the previous one into the ground. The name of the firm is the CIT group, a company that lends to small and midsized businesses. CIT was also bailed out by more than $2 billion of government TARP money, failed for bankruptcy, and is now on the radar of the Federal Reserve. I do not understand how Thain who caused so much damage is allowed to run another company that deceived the public and was bailed out. Since he was not even given a slap on the wrist for his actions, who is to say that he will ever learn his lesson?
Reports have claimed that he has learned his lesson since his days at Merrill Lynch. Apparently he now spends a large portion of his time at CIT trying to enhance shareholder value. I am very skeptical that a man that participated in so many unethical practices is all of a sudden a changed man. And to make matters worse, Thain has a dream of returning back to Wall Street to run one of the big financial institutions. Right now it seems as if John Thain is laying low to wait for the perfect time to return back to Wall Street. Only time will tell if Thain will continue on the straight and narrow ethical path or whether or not he will return to his deceitful ways. I think that it is only a matter of time that Thain will show his true colors to the American public when he deceives the public for the second time.
Question 1: How responsible is the media for cynical attitudes?
In today’s society, words can spread like wildfire, especially when it comes to “hot news”. Think about how many news channels, magazines, websites, social networks, and people you know of. That why it is so easy for news to get around. Continue reading →