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Banking

Abigail Hofman: Thain, Mrs Tarp – where are they now?

So there is Monty perched astride the bull that once was Merrill Lynch. But what of his former boss, the robotic John Thain? Thain, whose most notorious legacy to Merrill was a $1.2 million refurbishment of former chief executive Stan O’Neal’s office, resurfaced in early February. He was appointed as chief executive of CIT, the lender to small and medium-sized US business, which is emerging from bankruptcy. There is no doubt that a few years ago Thain would not have taken the headhunter’s call if the initials CEO had been mentioned in the same sentence as the letters CIT. After all, Thain was a true master of the universe: a former co-president of Goldman Sachs and a respected chief executive of the New York Stock Exchange. It is a sobering lesson to us all but one misjudgement can bring the juggernaut of a successful career to a shuddering halt. To spend over $1 million of company funds on redecorating your office (and adjacent conference room) in a year when investment banks were bleeding to death shows a sense of entitlement that is indefensible. While Thain was signing the chits for his new furniture, he was grovelling to sovereign wealth funds to replenish the firm’s capital and chopping the bills for fresh flowers at Merrill’s headquarters. Obviously, Thain was aware that there was a need to economize. At least employees had the chance to enjoy the flowers. Few of them probably had the occasion to perch their pert buttocks on the $35,000 commode in Thain’s private quarters. Thain is fortunate to be given a second chance. Ironically, the previous CIT chief executive, Jeff Peek, was a former Merrill man too. Peek left the investment bank in 2001 when he was passed over for the job of president and COO which went to O’Neal.

Peek, however, is most infamous for something he did not do. In April 2009, an article appeared in a US magazine with the title: "Confessions of a Tarp wife". The anonymous female author, who is married to the chief executive of a bank in receipt of taxpayer funds, complains vociferously about the privations of her new lifestyle. She has to shop "in her closet", fly commercial and sneak in late to black-tie functions to avoid being photographed. In media circles, it is generally thought that the author of this piece was Mrs Peek. If that is true, she is a loyal wife. The author writes empathetically of her husband: "He’s exhausted, terrified of losing the company and beaten down by the constant criticism hurled at him." I don’t know why this article has attracted so much attention: perhaps it is intrigue at the glimpse inside the life of a once super-wealthy woman mingled with delicious shards of Schadenfreude. The reader is secretly pleased to know that the Tarp CEO and his wife: "like most Americans... are worried about money", that most of their net worth is in stock which has fallen by 95% and that "in an effort to conserve cash" they are eating out less frequently.


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