John Thain Quits BoA

John Thain has resigned from his position as head of global banking, securities and wealth management division, per mutual agreement with Bank of America Chief Executive Kenneth Lewis after BoA discovered the scope of losses at the Merrill Lynch brokerage it bought three weeks ago.

The resignation was with immediate effect. Brian Moynihan, 49, a former investment banking chief will succeed John Thain, while Tom Montag, chief of Global Markets will take over setting the bank's strategy. In this position he will now report directly to Ken Lewis.


BoA shares closed down 14.5 percent.

Just a day before his resignation Thain purchased 84,600 share of BoA worth approx. $483k. This was disclosed in an SEC filing.

Last week, the government agreed to loan $20 billion from the TARP funds, and to share in losses on $118 billion of debt.

John Thain and Lewis had worked together on the merger after less than 48 hours of negotiations in mid-September, but Lewis threatened to back out of the deal when it appeared that Merrill Lynch's financial position was worst than anticipated.

Lewis said U.S. regulators pressed him to complete the deal.

Merrill's losses in the 4th quarter of $15.31 billion in addition to BoA's losses of $1.79 billion forced BoA to slash its dividens to a penny a share.

It is possible the AG of NY will investigate a large bonuses that were paid by Merrill in December just prior to the merger in January.

"This is a huge crisis of credibility," said David Dietze, chief investment officer at Point View Financial Services in Summit, New Jersey. "Someone has to fall on a sword." (source: reuters)

Further, CNBC reported John Thain hired well-known Los Angeles interior designer Michael Smith to redecorate his Merrill office a year ago and ran up a $1.22 million bill, including for a $35,115 "commode on legs" and a $1,405 parchment waste can. For a list of items bought by John Thain click here: