Wall Street has a short memory, but it never forgot the "commode."
In the late 2000s, when the world's financial systems were basically melting into a puddle of toxic debt, Merrill Lynch CEO John Thain became the face of executive tone-deafness. It wasn't just the billions in losses. It was the $35,115 he spent on a gold-plated commode on legs—basically a fancy cabinet—while his firm was teetering on the edge of a cliff.
Honestly, the story of John Thain is more than just a tale of a guy with expensive taste in furniture. It’s a case study in how a "Wall Street Savior" can become a pariah in less than 48 hours.
The Man Who Was Supposed to Save Mother Merrill
When John Thain arrived at Merrill Lynch in December 2007, he was treated like royalty. He had the pedigree. MIT grad. Harvard MBA. Goldman Sachs President. He’d just finished a successful stint cleaning up the New York Stock Exchange.
People called him "Mr. Clean."
He was brought in to replace Stanley O'Neal, who had driven the firm into a ditch with subprime mortgages. The board thought Thain was the adult in the room. He was calm, analytical, and seemingly perfect for the job.
He wasn't cheap, though. His signing bonus was valued at roughly $83 million, making him the highest-paid CEO in the country at the time. You've gotta remember, this was a time when Merrill was already bleeding cash. But at first, it looked like he was worth every penny.
🔗 Read more: Price of Tesla Stock Today: Why Everyone is Watching January 28
The 48-Hour Deal That Saved the Firm
Fast forward to September 2008. Lehman Brothers is collapsing. The "herd" (Merrill’s nickname) is next in line for the slaughter. Thain realized he didn't have weeks or months to find a partner. He had hours.
While other CEOs were paralyzed by pride, Thain got on the phone with Ken Lewis, the CEO of Bank of America. In a whirlwind 48-hour weekend, he sold Merrill Lynch for roughly $50 billion (about $29 per share).
At the time, he was hailed as a hero. He’d saved the firm from a Lehman-style bankruptcy. But the honeymoon didn't last three weeks.
Why the Bank of America Marriage Went Sour
The trouble started when Bank of America (BofA) looked under the hood of what they’d just bought. Merrill's fourth-quarter losses weren't just bad; they were catastrophic—totaling over $15 billion.
BofA felt like they’d been sold a lemon.
But what really lit the fuse was the "Bonus Bombshell." Just days before the merger closed, Thain accelerated about $3.6 billion in bonuses to Merrill employees. This happened right as BofA was going back to the government for more TARP bailout money to cover Merrill’s losses.
💡 You might also like: GA 30084 from Georgia Ports Authority: The Truth Behind the Zip Code
Essentially, taxpayers were subsidizing bonuses for a firm that was losing billions. It looked terrible.
The Office Renovation That Became a Legend
While the bonuses were a massive financial issue, the public was obsessed with Thain's office. News leaked that shortly after he started, Thain spent $1.22 million of corporate funds to redecorate his workspace.
The list of items was like a shopping spree for a 17th-century king:
- $87,784 for an area rug
- $68,000 for an antique credenza
- $28,091 for curtains
- $1,405 for a wastepaper basket
- $35,115 for that infamous commode
In the grand scheme of a multi-billion dollar merger, $1.2 million is a rounding error. But in the eyes of a public losing their homes and 401(k)s, it was an unforgivable insult. President Obama even weighed in, calling the spending "unconscionable."
The 15-Minute Ouster
By January 2009, Ken Lewis had enough. He flew to New York to meet Thain at the BofA headquarters. The meeting lasted exactly 15 minutes.
Thain was out.
📖 Related: Jerry Jones 19.2 Billion Net Worth: Why Everyone is Getting the Math Wrong
He went from being the most respected man on Wall Street to a late-night talk show punchline. He eventually apologized and reimbursed Merrill Lynch for the full $1.2 million redecoration cost, but the damage was done.
Where is John Thain Now?
You might think that would be the end of his career, but Wall Street is nothing if not resilient.
- CIT Group: In 2010, he was hired to lead CIT Group out of bankruptcy. He actually did a decent job there, stabilizing the lender before retiring in 2016.
- Uber Board: He joined the board of Uber in 2017 during their own period of corporate chaos, helping to steer the company toward its IPO.
- Philanthropy: He spends a lot of time now on boards like the New York Botanical Garden and New York-Presbyterian Hospital.
Lessons from the Thain Era
Looking back, the John Thain saga teaches us a few harsh truths about corporate leadership. First, optics matter as much as balance sheets. You can't spend $1,400 on a trash can when your company is taking government handouts. It just doesn't work.
Second, transparency is king. The friction between Thain and Ken Lewis mostly came from a lack of trust regarding the "surprise" losses.
If you're in a leadership position, here are the takeaways:
- Read the Room: Your personal lifestyle should never contrast sharply with the reality of your employees or stakeholders.
- Disclosure is Safety: If there’s a $15 billion hole in the bucket, tell your partners before they sign the check.
- Accountability isn't Optional: Thain's decision to pay back the $1.2 million was the right move, even if it was "too little, too late" to save his job.
Today, the Merrill Lynch brand still exists under the Bank of America umbrella, but the era of the independent "Thundering Herd" is long gone. Thain was the last man to hold the reins, and his exit marked the official end of an era for Wall Street investment banking.
To better understand the scale of the 2008 crisis, compare Merrill's $50 billion sale price to the market caps of today's tech giants. It puts into perspective how much the financial landscape has shifted since the days of the $35,000 commode.