This editorial appeared in The Miami Herald.
"Troubling" is the kindest word we can think of to describe the greed and irresponsibility displayed by Merrill Lynch chief executive John Thain as his brokerage was going down the drain. Forced to sell the company to Bank of America, Mr. Thain lavished billions of dollars in secret, last-minute bonuses to his staff last month, just before the takeover and just before the government had to fork over a second bailout to cover Merrill's $15 billion fourth-quarter loss.
He also spent $1.22 million of company money to refurbish his office, all the while lobbying for a huge bonus that he failed to get. The deal to merge Merrill Lynch was consummated only because federal funds were used. Now taxpayers are stuck with a bill not only for the reckless way that this former titan of Wall Street mismanaged Merrill Lynch, but also for the wasteful spending that put the firm into a hole so deep that it threatens to swallow up Bank of America, too.
It has to stop. There was a time when the compensation of private executives was none of the public's business. But now that the public's money is put at risk to prop up failing enterprises, taxpayers have a right to demand an end to the extravagance of individuals whose sense of entitlement apparently knew no bounds. The public also is right to demand an accounting of the way in which bailout money is being spent.
Mr. Thain has apologized for the redecorating and promised to cover the costs. That doesn't change the fact that big bonuses were given in a firm that lost $27 billion in 2008 – handed out on an accelerated schedule before new managers took over.
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