Business writers are happy John Thain's second act
is a step down. The CEO who engineered a fire sale of Merrill Lynch to Bank of America
and earned fame as the financial Nero who bought a $35,000 toilet while
Wall Street burned has returned to life as the executive of CIT--a smaller, less-prestigious, more troubled firm. CIT is a lender to small
businesses that went bankrupt in November, knocking out a $2.3 billion government investment. Thain is a wide-cheekboned Goldman alum who oversaw Merrill Lynch's hemorrhaging final days.
Do they hold the key to one another's resurrection?
- Smart Step Toward Redemption, writes Michael Corkery at the Wall Street Journal. "In some ways, CIT may prove a savvy next act. Before it strayed into
risky mortgage investments that contributed to its downfall, CIT's
bread-and-butter was small business lending.
If Thain can restore this business, he can not only help CIT, he can
also gain brownie points in Washington, where promises to increase
lending to small businesses is a campaign pledge of just about every
- They Deserve Each Other Douglas A. McIntyre of 24/7 Wall St. calls the match-up "a perfect pair." But, McIntyre"He still must deal with two important risks. The first is that he is
actually free of the government's investigation of the Merrill buyout.
The other is whether CIT has the capital and reputation to become a
viable lending entity again."
- Big Step Down, says Yves Smith
at Naked Capitalism. "Boy, is this a down-market move for former
Merrill CEO John Thain." Smith teases Thain, but hopes for the best:
"By all accounts, Thain was a capable executive before his career went
off the rails ... Let's hope Thain can turn his career and the company
- Baffling Pick for CIT Claudia Deutsch
at True/Slant is shocked that CIT's board would fall for Thain's
redemption act: "The fact remains, Thain was unable to save Merrill
implosion." Yet while she's "baffled" by CIT's pick, she says she's
"not despairing" because Thain is getting $500k for his trouble--"chump
change." She concludes by hoping that Thain really is interested in
fixing his reputation, because then "he has every incentive to manage
and profitably, with an eye toward societal good. Otherwise, all he's done is failed upward. The American way."
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