John Thain, the recently fired CEO of Merrill Lynch, has been getting his ass handed to him here, there and everywhere around the blogosphere this past week, in the wake of revelations that, during a quarter in which the investment bank ended up registering a $15 billion loss, he accelerated the ahead-of-schedule granting of millions of dollars worth of bonuses to Merrill employees. And for that extra dash of class-warfare-induced homicidal rage, there is also the tidbit, first revealed by MSNBC's Charles Gasparino, that Thain spent $1.2 million remodeling his office in Sistine Chapel-like extravagance last January.
Recall, first, that Thain was brought in to rescue an already floundering Merrill Lynch, in December 2007, after the ousting of then-CEO Stanley Neal. So, shortly after taking over the reins of a company in severe financial turmoil, Thain found the time, and felt the inclination, to spend, among other things, $35,000 for "a commode on legs" and $1,400 for a "parchment waste can."
Now Thain says he's sorry and promises he'll pay back the cost of renovation. Which, in a way, is almost even more infuriating. His company just lost $15 billion, and yet he has $1.2 million in cash sitting around handy to reimburse his employer for his addled descent into luxury-overkill?
It is too easy, however, to fixate on what could possibly have been going through John Thain's head when he authorized his little fixer-upper frenzy. The larger point is how well this incident demonstrates the completely different frame of reference that all the lords of Wall Street operate under from the rest of the country. Thain is as blueblood a Wall Streeter as they come. He was Hank Paulson's No. 2 guy at Goldman Sachs, and then ran the New York Stock Exchange before moving on to Merrill Lynch. He was generally acclaimed, by financial columnists, as a pretty capable guy who did the smart thing by orchestrating Merrill Lynch's sale of Bank of America before hitting the wall and blowing up spectacularly, à la Bear Stearns or Lehman Brothers.
But Thain couldn't possibly have thought his office knickknacks worth purchasing if he didn't consort with a class of people who shared such values, and considered that level of extravagance to be standard operating behavior. Or perhaps more significantly, who lived in a society where outrageous levels of executive compensation are still considered by a healthy portion of the populace to be the justifiable rewards of business success. It's easy to look at Thain and wonder what the hell he was thinking, but the really scary and disturbing thought is he probably considered his new accouterments to be the normal trappings of office. Talk about your entitlement society!