- The Washington Times - Friday, January 23, 2009

NEW YORK | Wall Street bonuses, a sore point as the government gives billions of dollars in bailout money to the financial industry, have apparently cost former Merrill Lynch & Co.CEO John Thain his new job at Bank of America Corp.

Mr. Thain resigned from Bank of America on Thursday following news that Merrill Lynch had rushed out its year-end bonuses, paying them just before Bank of America completed its acquisition of Merrill Lynch and sought $20 billion in additional government bailout money.

The company gave no reason for Mr. Thain’s departure, but its timing, coming hours after news reports about the bonuses, made it likely there was a connection to the payouts.

The bonuses to Merrill Lynch executives were also paid out as the company prepared to report a $15.3 billion fourth-quarter loss - a loss that led Bank of America to request and receive government funds on top of the $25 billion it had already been given.

Bank of America spokesman Scott Silvestri issued a terse statement: “(BofA Chairman and CEO) Ken Lewis flew to New York today to talk to John Thain. And it was mutually agreed that his situation was not working out and he would resign.”

The bonuses raise the question of how proper it was for executives in a struggling company to be given big payments even as its soon-to-be-parent was accepting billions of dollars in government money.

“He’s just completely tone-deaf to the culture of BofA” if he was paying out bonuses days before reporting a multibillion dollar quarterly loss and as Mr. Lewis was securing more government support, Tony Plath, a finance professor at the University of North Carolina at Charlotte, said about Mr. Thain. “My surprise is the board gave him an opportunity to resign and didn’t just fire him.”

Mr. Thain also drew criticism for redecorating his New York office last year, a project that a person familiar with the matter said ended up costing about $1.2 million. Mr. Thain paid decorator Michael Smith $837,000, and his purchases included $87,000 for area rugs, $25,000 for a pedestal table and $68,000 for a 19th century credenza, CNBC reported.

Mr. Silvestri said Bank of America was informed of Mr. Thain’s decision to grant the bonuses. It was not immediately known what fallout from the bonuses there might be for Mr. Lewis.

“Merrill was an independent company until January 1 of 2009,” Mr. Silvestri said. “John Thain decided to pay year-end incentives in December, as opposed to their normal date in January. Bank of America was informed of his decision.”

Bonuses were not paid to Mr. Thain and four other top executives - President and Chief Operating Officer Greg Fleming, Chief Financial Officer Nelson Chai, President of Global Wealth Management Robert McCann, and General Counsel Rosemary Berkery - who requested they not receive additional compensation.

Charlotte, N.C.-based Bank of America has increasingly come under criticism in recent weeks for its acquisition of Merrill Lynch, a deal fostered by the government to save Merrill Lynch on the same day that Lehman Brothers Holdings Inc. collapsed amid the ballooning credit crisis.

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