Are the Profits in the $35,000 Commode?

Ken Lewis is angry, and John Thain is on the way out at Bank of America.  Not much makes sense in banking these days, but this is a decision that should sit well with the frustrated shareholders at BAC.  Will those shareholders be satisfied with Thain’s job?  Henry Blodgett suggests that the board needs to ask for Ken Lewis’ job next.  After all, Lewis signed off on the deal. Ultimately, when $15 billion in additional losses appeared on Merrill’s books, it falls to Lewis to explain.  He has the responsbility of conducting due diligence, right?

This news comes out the same day that we find out that Thain spent $1.2 million re-decorating his office in 2008.  It includes $800,000 in fees for a designer, as well as some ridiculous charges like $35,000 for a portable commode (not sure what that is – maybe a bucket for those $15 billion?), as well as new furniture.   Here is an excerpt from The Daily Beast:

The other big ticket items Thain purchased include: $87,000 for an area rug in Thain’s conference room and another area rug for $44,000; a “mahogany pedestal table” for $25,000; a “19th Century Credenza” in Thain’s office for $68,000; a sofa for $15,000; four pairs curtains for $28,000; a pair of guest chairs for $87,000; a “George IV Desk” for $18,000; 6 wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining room for $13,000; fabric for a “Roman Shade” for $11,000; a “custom coffee table” for $16,000; something called a “commode on legs” for $35,000; a “Regency Chairs” for $24,000; “40 yards of farbric for wall panels,” for $5,000 and a “parchment waste can” for $1,400.

People say that lending needs to be kept in the hands of private firms, because government could not do it as efficiently.  More and more, this seems like a truism and less of an emprirical fact.  Sure, private firms can probably assess risk better, but they don’t seem to be doing it in the aggregate.  Often, they are far less efficient in their use of capital, as the $1.2 million in decorations exemplifies. 

BAC shareholders should be sooooo frustrated.  Unfortunately, the bad news is spreading onto the American taxpayer?  How many schools could have been fixed up for $1.2 million?