Thain: Lehman Bailout Would Have Prevented TARP

The Bloomberg media empire, whatever its flaws, has performed some fine work exploring the 2008 bursting of America's financial boil. Its reporters have filed Freedom of Information Acts, the successful pursuit of which have brought to public light unsavory, discomfiting details about the financial markets and their interactions with federal agencies. Bloomberg's reporters have probed material gathered in testimony, gone to court, and basically done the dirty work that is the core of investigative journalism.

A case in point is today's simple story from Bloomberg reporter Hugh Son. In it, Son cites audio files released from the Financial Crisis Inquiry Commission focusing on comments submitted by John Thain.

Thain's thesis is that, had the Feds bailed out Lehman, the self-inflicted torpedoing of the American economy and subsequent (and largely misunderstood) TARP bailout would not have been necessary.

John who? How quickly we forget. Thain, currently CEO of CIT, was el primero at Merrill Lynch during the 2008 disaster. A former NYSE chairman, Thain stage managed the grafting of two wildly opposite enterprises -- Merrill and Bank of America -- into one splendid taxpayer subsidized catastrophe. He also had a hand in Merrill employees getting $4 billion in bonuses while the firm was plunging into the fiscal abyss. It has been strongly suspected, though unproven, that TARP funds paid for Merrill's way of saying goodbye.

For his part, Thain originally demanded a bonus for his role in the Merrill-BOA merger. He asked for $10 million in addition to his lavish compensation package. How lavish? In 1987, Thain earned around $83 million for his labors.

Thain, whose name rhymes with "vain," displayed an amazingly arrogant sense of entitlement throughout his career. The most egregious example of this behavior was his spending on his Merrill corporate suite. In early 2008, Thain had the firm pay over $1 million to redo two conference rooms, a reception area, and Thain's personal office. A $35,000 commode, part of the redecorating, was included in the deal. Only after those details became public information, and a source of outrage, did Thain reach into his pockets and pony up. (That leaves $82 million remaining from the 2007 compensation alone, in case you're keeping score at home.)

The former Merrill CEO still has powerful friends, as the linked relationship map from muckety.com suggests. He is a prominent Republican Party member and was among John McCain's economic advisors during the Arizona senator's unsuccessful run for the presidency. It's unknown whether Thain advocated for a continuation of the Bush tax breaks to the wealthiest 1% of Americans.