BANK OF America (BoA) chief executive Ken Lewis was out to get former Merrill Lynch chief executive John Thain from the moment the two Wall Street bankers met.
They were all smiles, of course, when they orchestrated their recent merger and full of the usual promises of harmony and togetherness. But that facade lasted just three weeks as Thain was unceremoniously forced out of his new post as head of global wealth management at Bank of America on Thursday.
Some say it was a clash of egos between the two power brokers that led to Thain’s demise. Others say Thain lost it and started acting erratically until Lewis could take it no more. What is certain is that Thain sprang one too many surprises on his new boss, so many that he was starting to make him look foolish.
What is more, it was beginning to look like the merger Thain so helpfully suggested late last year, might have been the biggest mistake of Lewis’s career.
The first public sign that the relationship between the pair was becoming strained coincided with BoA’s fourth-quarter earnings announcement a week ago. It emerged that Merrill Lynch made losses of more than $15 billion (€11.5 billion) in the period, a sum far higher than anyone on Wall Street had anticipated. Had Lewis known things were so bad, insiders say, he may not have struck the Merrill deal at all.
The mood between the two worsened when it emerged that Thain had authorised some $4 billion of bonus payments for Merrill’s brokers just three days before the BoA’s merger was agreed.
How did Thain respond to this predicament? He went on holiday to Vail, Colorado, the exclusive celebrity ski resort, with his wife and friends. Wrong move. Lewis was furious and Thain, previously regarded as a rather dull, intensely intelligent Wall Street chieftain, began to emerge as a rather different character.
The former Goldman Sachs executive who led the New York Stock Exchange and then Merrill Lynch with such a seemingly steady hand was in fact a reckless profligate, with personal tastes to put Louis XIV to shame. Or so someone within BoA wanted us to believe.
Somehow, an invoice paid by Thain to a celebrity interior designer for a $1.2 million refurbishment of his Merrill Lynch office was leaked to the media.
Among the extravagances he ordered were a George IV chair for himself at a cost of $18,468, a “commode on legs” (whatever that may be) for $35,115, and a wastepaper basket made of parchment for $1,405.
But this sort of luxury is nothing new. Thain (53) is renowned in New York for living an extravagant lifestyle. He owns a country estate in Westchester County that is so large it has five addresses in three towns. The property taxes are $150,000 a year. The $10 million mansion, on at least 10 acres, includes several beehives, a clay tennis court and two swimming pools, a large outbuilding as big as some of the surrounding properties and several large paddocks.
A river runs through the massive back garden, while a lake stocked with fish borders the property in its northwest corner.
Thain and his wife bought the pile in 1995 for $3.7 million. With 14 bedrooms, three baths and a basement that has been converted into a heated garage, it now has a value in excess of $9.5 million.
Thain also owns a duplex worth $27.5 million in the exclusive 740 Park Avenue, a building once occupied by John D Rockefeller.
For all the extravagance, however, the real reason for Thain’s departure lies not in how many of his or his firm’s millions he chooses to spend on curtains or bonuses for the boys.
There is only room for one chief executive in the corner office, not two.
