Thain says hid nothing from BofA, to repay costs

NEW YORK (Reuters) – Former Merrill Lynch Chief Executive John Thain defended the acquisition of the brokerage by Bank of America Corp (BAC.N) and said the bank knew of Merrill's losses and bonuses before the merger closed.
In a memo to Merrill employees, Thain also said he plans to reimburse Bank of America for $1.2 million spent to renovate his office a year ago, calling the expense "a mistake in the light of the world we live in today."
The renovation expenses, including a reported $35,115 commode and a $1,405 trash can, have become became the latest symbols of corporate excess. News of the expenses surfaced on January 22, the same day Thain was ousted as Bank of America's head of global banking, securities and wealth management, and just three weeks after the $19.4 billion merger closed.
Still, Thain's insistence that Bank of America knew the extent of Merrill's condition put added pressure on Bank of America CEO Kenneth Lewis, who has been criticized over the bank's falling share price, and increasing speculation about his future as chairman and CEO.
Bank of America has been hit with several lawsuits over its failure in December to disclose Merrill losses and talks with the U.S. Treasury Department, which led to a $20 billion capital infusion from the government.
The Charlotte, North Carolina-based bank said on January 16 that Merrill lost $15.31 billion in the fourth quarter. Shares were down 82 percent from September 15, when the merger was announced, through Friday.
Bank of America's board of directors is scheduled to meet on Wednesday.
In the memo, which was posted on several news Web sites, Thain said Merrill's fourth-quarter losses stemmed almost entirely from positions taken on by his predecessor, Stanley O'Neal, who was ousted in October 2007.
"We were completely transparent with Bank of America," Thain said. "They learned about these losses when we did."
Thain also challenged reports that Bank of America was critical of $4 billion in bonuses that Merrill awarded a few days before the merger closed, and earlier than in past years.
He said Merrill's discretionary bonuses were down 41 percent from a year earlier, and that the size, composition and timing of payments "were all determined together with Bank of America."
Bank of America spokesman Scott Silvestri declined to discuss the board meeting, or Thain's memo, apart from bonuses.
"John Thain and the Merrill Lynch compensation committee made the decision on the amount and timing of year-end compensation," he said. "We had no legal right to challenge it."
Bank of America shares rose 52 cents to $6.76 on the New York Stock Exchange.
(Reporting by Jonathan Stempel; editing by John Wallace and Jeffrey Benkoe)