Bad news for BofA
Remember how Bank of America's Ken Lewis axed John Thain after the FT broke news of Merrill's outsize bonuses? This morning's FT has another nice scoop:
Bank of America played a role in Merrill Lynch's controversial decision to pay $4bn in bonuses in December just as mounting losses were threatening to derail BofA's takeover of the Wall Street firm, according to people close to the situation.
BofA has said that the payment of $4bn in compensation in a fourth quarter in which Merrill racked up $15bn in losses was sanctioned by John Thain, Merrill's chief executive.
Ken Lewis, BofA's embattled chief executive, ousted Mr Thain on Thursday after news of the bonus payments appeared in the Financial Times. BofA told the FT last week that Mr Thain had made the decision to pay bonuses in December instead of January and it had been "informed" of the move. The bank said Merrill was an independent company until the deal closed on January 1.
However, a person familiar with Mr Thain's actions said the ousted chief had at least two conversations with BofA's chief administrative officer, J. Steele Alphin, one of the bank's most senior executives, before a December 8 board meeting at which Merrill's bonus payments were approved.