Tale of Two CEOs
As I mentioned in a previous post, Bank of America and some of its current and former executives, including its former CEO Ken Lewis, are facing tough times. The executives were named as defendants in a scathing complaint filed last week by New York Attorney General, Andrew Cuomo, relating to Bank of America’s 2008 acquisition of Merrill Lynch. And yesterday, Judge Rakoff suggested that he might not approve Bank of America’s latest $150 million deal with the SEC to settle allegations of fraud and misconduct in connection with the Merrill Lynch acquisition. Judge Rakoff expressed his views that the settlement was too small, lacked focus on the individual executives and did provide sufficient oversight of Bank of America’s proposed corporate governance changes.
In contrast to these trying times for Bank of America and its executives, one former Bank of America/Merrill Lynch executive is getting a second chance. John Thain, the former CEO of Merrill Lynch who orchestrated the Bank of America deal and then redecorated his office for a reported $1.2 million, was named as the new CEO of small business lender, CIT. Admittedly, CIT could use a talented turnaround artist at its helm; having just emerged from bankruptcy, CIT has a long way to go. And the markets seem to think Thain is the guy. Time will tell whether Thain can achieve for CIT what he did for NYSE and Merrill Lynch. In the interim, Thain’s new opportunity must add insult to injury on the heels of Bank of America’s and its executives’ latest legal challenges, which stem in part from bonuses that Thain approved for Merrill Lynch employees immediately before the Bank of America acquisition.