The John and Andy Show

New York Attorney General Andrew Cuomo met up with his old pal John Thain of Merrill Lynch's auction rate security (ARS) lore and they did the same old tap dance on taxpayers, but this time the beat was a little less bludgeoning. Remember in the old footloose fancy days not so long ago Thain was CEO of Merrill Lynch while the company was under investigation for pollution of the New York financial system by auction rate junk bonds and the New York State Attorney General was nice enough to have lunch, play around and largely leave alone Merrill and look like the little mans big man while at it, cute little trick for a headline hoar with aspirations for more, but leaving 80% of $200 billion big bucks on the table didn't do the tax payers nearly much good.

Lest Mr. Cuomo be confused with Robin Hood, let’s be clear, the crime here is fraud, not being rich. So wealthy defrauded investors are intrinsically deserving of a lower level of justice than identically defrauded retail investors? Well, that’s inside out of the way things are usually done, but we’d bet the banks would rather pay 18 percent to the puny pups than 82 percent to the big wolves. Is it true that wealthy investors are inherently no good and deserve to be defrauded?

Instead of playing favorites when he doesn't have to Coumo should have just done his job for all the defrauded investors in his state and gone for the pot, that was the way he started, but finished covering everyone ass who would have had to pay out the 80% and came out smelling like a rose himself.

Let’s see if we can figure how this all got worked out. Sensing political pressure or political opportunity, Cuomo launched an investigation at the big banks and dug up some damaging dirt. Let’s hear what the grapevine has to say:

Securities firms have little defense against regulators because of incriminating documents and the risk to their reputations, said William Shepherd, a Houston attorney whose firm, Shepherd, Smith Edwards & Kantas, has met with more than 500 investors holding the securities.

“The regulators had these firms dead to rights,” said Shepherd, who worked as a bond market salesman in Texas for 20 years. “All the firms will be shamed or forced to do something, even Goldman which seems to be saying that all of their clients are rich and sophisticated.”

With the heat on, the big banks sat down with Mr. Cuomo to discuss his political ambitions and whether or not they would push back Spitzer style or behave more “amicably” like Thain. That’s where a deal was made in everybody’s best interests and what began as an aggressive investigation effective and punitive has morphed into a protect-the-big-banks sham.

So Cuomo didn't throw the game he just shaved a few points off it, about $160 billion by the old math and since the game plan worked so well then, they just could not resist a rematch.So, John Thain revved up his famous unmitigated gall by asking for the $10 billion bonus, as Bank of America refused a line of credit for Republic Windows & Doors Company in Chicago forcing it to suddenly shut it doors causing hundreds to loose their jobs and stage a sit in, possibly the first flash point of the credit crisis. Merry Christmas yall!

Merrill Lynch Chief Executive John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company’s compensation committee is resisting his request, The Wall Street Journal reported, citing people familiar with the situation.

The compensation committee has not reached a decision, but is leaning toward denying Mr. Thain and other senior executives bonuses for this year, The Journal said.

Those "people familiar with the situation" would be called leakers by you and me and without them this story would not be known and Thain would be putting his fat bonus under the Christmas tree by now. But Thain just won't quit.

Mr. Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, The Journal said, citing people familiar with his thinking.

Committee members are also weighing the fact that other Wall Street firms, including Goldman Sachs, which did better than Merrill this year, are not giving out bonuses to top executives, according to the report.

Yea, they were also weighing the fact that the plumbers were late and the leaks got out out.

Members of Merrill’s compensation committee agree with Mr. Thain that the takeover is in shareholders’ best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the newspaper said, citing people familiar with their thinking.

The reality is that it was the leaks which just could not be ignored, that broke the story.

Had the story of Thain and his bonus not been leaked to the press, he probably would have gotten away with it and no one would have known. What was he thinking? He is already worth millions and could probably lend these banks money.

All the while, someone else was watching and weighing his options. The New York attorney general knew what everyone in the world did except maybe John Thain. Sticks and stones will break my bones, but words will never hurt my pal John, so with headlines beckoning Cuomo piped up:

Mr. Cuomo has found his latest target at Merrill. While The Wall Street Journal reported that Mr. Thain is arguing that his quick sale of the firm to Bank of America helped avoid a larger catastrophe, the attorney general is having none of that assertion.

“In terms of performance, Merrill has reported losses for every quarter this year and has lost more than $11 billion for the year as a whole,” he wrote in the letter. “Indeed, Merrill’s decision to be taken over by Bank of America seems to have been the only thing that saved Merrill from collapse.

“Clearly, the performance of Merrill’s top executives throughout Merrill’s abysmal year in no way justifies significant bonuses for its top executives, including the CEO.”

Mr. Cuomo also pointed out that the need to retain Mr. Thain is moot: He is staying on at Bank of America to run the combined firms’ global banking, securities and wealth management businesses.

So far, The Journal said, Mr. Thain is having little traction with the board as well.

And without even the veneer of sincerity Thain asked that he not receive a 2008 bonus.

Merrill Lynch & Co Inc said on Monday that Chief Executive John Thain, who agreed to sell the brokerage to Bank of America Corp earlier this year, has requested that he not receive a bonus for 2008.

Thain told a board meeting Monday the decision was appropriate "given current economic and market conditions."

We did mention his unparalleled, unmitigated gall didn't we?