The World Economic Forum kicks off tomorrow in Davos, Switzerland, but it won't be nearly as exciting as in years past: The financial crisis has led many CEOs and politicians to abandon plans to attend the conference of heavy-hitters. Goldman Sachs chief Lloyd Blankfein won't be there, although he's reportedly sending "his deputy." Former Lehman CEO Dick Fuld won't be there, of course. Nor will John Thain, who, rather ironically, was scheduled to participate on a panel entitled "The Bank of the Future." And while Citigroup is still sending five executives, the bank's chief, Vikram Pandit, isn't one of them. (Citi isn't sending a "support staff" this year either, which means the execs who do make the trip may be forced to carry their own briefcases and fill up their own glasses of water.) Worst of all? There won't be too many celebs on hand to divert attention away from the depressing, gloomy discussions of economic doom.
Not only is John Thain out of a job, he's $1.2 million poorer, too. The former Merrill Lynch CEO has agreed to reimburse the company for the extensive renovations to his office suite, which included the purchase of a $87,000 area rug and $35,000 toilet. In his own defense, though, he'd like to point out that the renovations didn't only involve his own office: two conference rooms and a reception area were spiffied up, too. [Dealbook]
• Score a small victory for John Thain: It appears Bank of America signed off on the former Merrill Lynch chief's decision to hand out $4 billion in bonuses just before the end of the year, a move partly responsible for his ouster. [FT, CS]
• Steel yourself for an ugly week ahead as corporate earnings come in. [CNN]
• ING has announced plans to cut 7,000 jobs at the bank. [NYT]
• Several hedge funds made a fortune as bank stocks crashed last week. [NYP]
• Yes, the nation's banks have collected billions from the government. No, they haven't started lending again. [WSJ]
• A sign of life on Wall Street: Pfizer agreed to pay $68 billion to acquire Wyeth, making it the largest pharmaceutical deal in nearly a decade. [BN, WSJ]
• More bad news: Caterpillar is cutting 20,000 jobs; Home Depot is slashing 7,000; and Sprint Nextel is laying off 8,000 people. [WSJ, CNN, BN]
Here's another $15,000 or $20,000 down the drain for Bank of America. Shortly before John Thain resigned from BoA yesterday, he met with Ken Lewis, Bank of America's chief executive, for what was described as a 15-minute meeting. "Ken Lewis flew to New York today to talk to John," a bank spokesman explained. We also hear that Lewis arrived in NYC aboard one of the bank's private jets. A quick tip for CEOs looking to trim expenses during these recessionary times: Try using the phone every once in a while.
• More on John Thain's ignominious departure from BofA. [WSJ, BN, NYT]
• Mary Schapiro was approved by the Senate to head the SEC. [DB]
• Citi is remaking its board and is ousting Ken Derr and Franklin Thomas. [FT]
• Some investment bankers are keeping busy: Pfizer is in talks to acquire Wyeth in a deal that could be valued at more than $60 billion. [WSJ, BN]
• Wesley Edens' Fortress is returning cash to investors. [WSJ]
• Marc Dreier will need to post a $20 million bond to walk out of prison. [NYT]
• Job cuts in UBS's investment banking division come next month. [AP]
• Rumor has it additional layoffs at Goldman are coming, too. [Dealbreaker]
With all due respect, Bank of America didn't suddenly force out John Thain because he spent $1 million on office decorations a year ago. That was a year ago! And lots has happened since then! Remember last month when John Thain asked for a year-end bonus, an effort he almost immediately abandoned? That didn't look too good! Then he went to Vail over the holidays right around the same time Bank of America was closing on its acquisition of Merrill Lynch, firing thousands of employees, and preparing to announce record losses. Today's damaging news? Thain approved $3 to $4 billion—that's "b" for billion—in bonus payouts three days before the Merrill sale went through. But when the real story is kinda complicated, it's easier to place blame on $44,000 area rugs! [Gawker, Gothamist]
John Thain, the former CEO of Merrill Lynch who assumed control of Bank of America's trading, investment banking and brokerage operations following BoA's acquisition of Merrill, has resigned effective immediately. The reason? The Journal reports that board members considered it "poor judgment" on Thain's part when he headed off to Vail for a little vacation at the same time Bank of America was announcing massive losses, and his decision to accelerate bonus payouts at Merrill so they could be collected before the end of the year didn't earn him any points. The last straw: Thain was still insisting on jetting off to Davos this week, "even though Bank of America had signaled that such a trip was not a good idea." He has plenty of time to stroll in the Alps now!
The Wall Street Journal published an excellent piece today on the fall of Lehman Brothers, which is worth a read if you're into that sort of thing, you have access to the Journal site, and you have the patience to digest a 4,800-word article. This afternoon WSJ.com followed up with a few casting suggestions for the movie that will inevitably be made about the biggest bankruptcy in history, and while we can't say we're convinced about George Clooney playing John Thain, Ben Kingsley in the role of Dick Fuld strikes us as an unusual and yet oddly compelling choice. It's certainly better than what the Celebrity Match Up game came up with: The site's facial recognition software picked Andy Garcia as Fuld's ideal stand-in. [WSJ/Deal Journal]
Merrill Lynch CEO John Thain didn't collect a bonus—his request for $10 million quickly turned into a PR disaster—but the same can't be said for some of the execs Thain recruited to the firm. Peter Kraus, who joined the bank in September, resigned last week after the sale of Merrill to Bank of America triggered a $25 million bonus payout, which the Journal helpfully points out, comes out to 0.1 percent of the total amount ($25 billion) BofA collected from American taxpayers as part of the bailout. An even more mind-numbing calculation: Kraus collected roughly $277,000 for every day he worked at the firm. [WSJ]
• Next in line for a bailout: Step right up, real estate developers! [WSJ]
• Currency traders have been least affected by the gloomy bonus season. [BN]
• JPMorgan is purchasing two business units from UBS. [MW]
• The banks that have received taxpayer bailouts paid their top executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007. [DB]
• John Thain's tarnished legacy at Merrill Lynch. [Bloomberg]
• 40 partners have bailed from crumbling law firm Thacher Proffitt. [NYT]
• Tim Geithner's daunting new job: Secretary of Saving the World. [Slate]
I recently reread Den of Thieves, the tale of how federal prosecutors brought down Wall Street giants Ivan Boesky and Michael Milken, the emblems of the '80s takeover boom. It turns out that Boesky never actually said, "Greed is good," the line Michael Douglas uttered as Gordon Gekko in Wall Street.
It's really too bad that Merrill Lynch CEO John Thain decided to back down on his request for a $10 million bonus. If he'd stood his ground, just think of how much mileage cable news hosts would have gotten out of the story in the coming days. To your left, Campbell Brown's thoughts on the subject from last night: "Is it me or is this guy nuts?"
That was quick. This morning, Merrill Lynch chief John Thain was lobbying for a $10 million bonus. By the early afternoon, Attorney General Andrew Cuomo had sent off a letter denouncing the idea. Now CNBC is reporting that Thain has relented and has accepted his bonus-less fate. He's not the only one. CNBC also reports that Morgan Stanley CEO John Mack won't be getting one either.
♦ Merrill Lynch CEO John Thain is tangling with the bank's board over a $10 million annual bonus he says he deserves for "saving" the firm and selling it to Bank of America. [Reuters]
♦ Ken Griffin's Citadel is closing up shop in Tokyo. [Bloomberg]
♦ UBS may be planning to shed another 4,500 jobs. [DB]
♦ Sam Zell's Tribune Co. has retained Lazard to assist the company with a possible bankruptcy filing. [WSJ]
♦ The outlook is increasingly grim for Wesley Edens' Fortress Investment Group: Shares have gone down more than 90 percent this year. [NYP]
♦ Plenty of problems also face Leon Black and his Apollo Management. [NYT]
♦ But it's been a good year for hedge fund manager Jim Chanos, despite the whole Ashley Dupre thing. [NYM]
♦ Stocks are expected to gain big today with the news of an auto bailout. [CNN]
♦ Yesterday's sell-off is expected to continue today. [WSJ]
♦ Even Goldman Sachs is cutting. The firm plans to cut 10 percent of its 32,000 employees. [WSJ]
♦ The glory days of hedge funds are over, as you're probably aware. [NYT]
♦ Credit Suisse reported a $1.08 billion loss during the third quarter. [DB]
♦ The inquiry into the financial crisis on Capitol Hill continues. Today's guest piñata will be Alan Greenspan. [NYT]
♦ John Thain says he expects "thousands" of job cuts will follow Merrill Lynch's merger with Bank of America. [Bloomberg]
♦ Another day, another bailout: The Netherlands will inject $13.4 billion into ING. [WSJ]
♦ GM is having difficulty acquiring Chrysler because it can't come up with the financing. [WSJ]