Thain Defends BofA Deal, Will Pay Back Office Costs

View Comments (
)
|
Email
|
Print

    NEWSLETTERS

    Former Merrill Lynch CEO John Thain said the acquisition of the brokerage giant by Bank of America was the right thing to do but blames Merrill Lynch's huge losses on the administration of his predecessor, Stanley O'Neal, according to a memo Thain sent to Merrill Lynch employees after his ouster last week.

    Thain also says he'll reimburse Bank of America for the $1.2 million renovation of his office last year, which sparked controversy last week after it was reported by CNBC.

    • Video: Watch Maria Bartiromo's report on Thain
    • Read Thain's Memo to Merrill Lynch Employees

    A copy the memo was obtained by CNBC in advance of a scheduled interview of Thain on the "Closing Bell" program Monday afternoon.

    In the memo, Thain said the decision to sell Merrill Lynch to Bank of America was "the right one for our company and our clients." He acknowledged the deal has been a difficult one to execute, but said he maintains his belief in "the strategic rationale of the transaction."

    Thain also said the media had inaccurately reported his company's year-end bonus payments. He said the 2008 bonus pool was 41 percent lower than 2007, and the pool was substantially smaller than the merger agreement permitted.

    He did not specify how those comments differed from media reports.

    On the subject of last year's "large and unfortunate" fourth-quarter losses, Thain blamed "legacy positions" and " market movements."

    He said he had been "completely transparent" with Bank of America (NYSE: BAC), and pointed out that the acting chief financial officer of his businesses had been Bank of America's chief accounting officer.

    "They learned about these losses when we did," he wrote. "The acting CFO of my businesses was Bank of America’s former Chief Accounting Officer. They had daily access to our (profit and losses), our positions and our marks. Our year end balance sheet target (which we more than met) was given to us by Bank of America’s CFO."

    He characterized the $1.2 million renovation of his Merrill Lynch office, conference rooms and a reception area as "a mistake in the light of the world we live in today," although the costs were incurred more than a year ago "in a very different environment." He promised to repay the costs.

    For more stories from CNBC, go to cnbc.com.