Ex-Merrill chief Thain leaving Bank of America
Thain agreed to resign Thursday, just one week after BofA received $20 billion from the government to help the bank cope with Merrill's substantial losses.
NEW YORK (CNNMoney.com) -- Former Merrill Lynch CEO John Thain will leave Bank of America, the company said Thursday, just months after he shepherded a deal between the two firms during the height of the financial crisis.
Thain, who was set to oversee Bank of America's investment banking and wealth management operations following Bank of America's decision to buy Merrill in mid-September, met Thursday with Bank of America CEO Ken Lewis in New York. Both agreed that Thain should resign, a company spokesperson said.
Brian Moynihan, Bank of America's general counsel, will take over for Thain, the company said. Moynihan previously ran Bank of America's investment banking and wealth management businesses.
Lewis characterized Moynihan as a "strong manager" who can "effectively envision strategy and executive." He added that Moynihan's appointment did not indicate any change in the company's strategy or its plans for the newly acquired Merrill Lynch businesses.
"Those organizations, which formed the heart of Merrill Lynch, will continue to serve their clients as world class financial service providers," Lewis said in a statement. "We are quite happy with their performance since the merger."
Thain's exit marks the latest in a string of departures of top Merrill executives, a reflection of how difficult it has been for Bank of America to integrate the deal.
In December, Lewis threatened to scuttle the acquisition after his firm realized that fourth-quarter losses at Merrill Lynch would be much worse than they had originally anticipated.
But last week, the Treasury Department agreed to give Bank of America an additional $20 billion in funds from the controversial bank bailout program to help Bank of America digest the deal, which closed on January 1.
Merrill Lynch reported a loss of $15.31 billion, or $9.62 per share, during the fourth quarter, hurt by the turmoil in the capital markets following the collapse of Merrill rival Lehman Brothers.
"Mistakes obviously were made here," said David Dietze, chief investment strategist of Point View Financial Services in Summit, New Jersey, which owns shares of Bank of America. "Since Ken Lewis was the acquirer and John Thain was the acquiree, it was kind of inevitable that Mr. Thain, and not Mr. Lewis, would be the first scapegoat here."
Thain was initially lauded for helping to cobble a deal together with Bank of America on the heels of Lehman's bankruptcy.
Some believed the problems at Merrill Lynch were just as severe as they were at Lehman, and that the brokerage giant would have been the next to collapse had Lewis not stepped in with an all-stock takeover offer that ultimately valued Merrill Lynch at $19 billion.
Thain, who worked for Merrill for less than a year, asked Merrill board members last year for a $10 million annual bonus, but agreed to forfeit that payment in December after facing heavy public criticism, most notably from New York Attorney General Andrew Cuomo. Thain also received a $15 million sign-on bonus when he joined Merrill.
In addition, CNBC reported earlier Thursday that Thain spent $1.22 million decorating his office last year, including an $87,000 rug and $28,000 curtains.
A spokesperson for Bank of America would not confirm the CNBC report but told CNN that these expenditures "apparently happened a year ago, well before Bank of America was involved."
"While we would not endorse that activity, there were other more important issues that led to John Thain's resignation," the spokesperson added.