John Thain says “Doh!”

September 20, 2008

From Collin Barr’s column in Fortune:

Thain, after a game fight, conceded to the market’s view Monday, when Merrill – facing the prospect of a run on its shares after Lehman imploded – agreed to sell itself to Bank of America (BACFortune 500) for $44 billion in stock.

Thain, of course, had seen his peer Dick Fuld run Lehman Brothers into the ground by refusing to accept the low-ball offers of potential partners, a stand that ended up putting thousands of Lehman workers out of work. Thain chose instead to take a deal that likely saved most of Merrill’s 60,000-plus workers.

And yet now – with the feds organizing a bailout and banning short-selling, the practice of betting against a company in the stock market – Thain’s decisiveness seems misplaced. Rather than acknowledging economic reality and selling his firm, he could have waited for a handout and Merrill could have lived to see another day, it now appears.

Thain’s rivals seem to be reaping the rewards of expanded federal largesse. Morgan Stanley, after plunging as low as $16 a share in panicked trading Wednesday afternoon, has recovered to the low $30s, possibly forestalling the need for the firm to find a merger partner such as Wachovia (WB,Fortune 500). CEO John Mack, who responded to his firm’s plunge with a memo to employees blaming short-sellers, surely likes the way this week has turned out.


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