Monday, February 8, 2010
Good news for the nation's employment statistics! John Thain is heading back to work today after a 13 month absence from the work force. CIT Group has hired the former Merrill CEO to run the show at the bankrupt lender. But is this good news for CIT? As usual, I don't think it will make much of a difference. CIT made its bed years ago when it veered away from the staid business of lending to small businesses and dove headfirst into subprime and student lending. Ironically, the brilliant move into toxic lending was pioneered by CIT's former CEO, Jeffrey Peek, another Merrill banker. I'm not sure why the board at CIT thinks that hiring yet another investment banker is the solution to all that ails the lender. One would think that after all the debacles of the past couple of years in the banking industry, it might sink in at company boards that celebrity CEO's aren't worth the money. Yet it hasn't. Perhaps CIT's board thinks that Mr. Thain will convince Bank of America to pay $50 billion for CIT? After all, that was Mr. Thain's only accomplishment in his brief tenure as the head of Merrill Lynch (other than redecorating the office.) It's not like he somehow magically made all of Merrill's losses on its CDOs disappear. The funny part is, selling Merrill wasn't even his idea. And yet somehow, he's worth $5.5 million in restricted shares.