Thain's Pain

The humbling of hot-shot banker John Thain is given generous coverage in both the Wall Street Journal and New York Times this morning. Just weeks after completing a deal that saw Merrill Lynch sold to Bank of America (and saved in the process) the so-called "Clark Kent of Wall Street" was unceremoniously dispatched by BoA CEO Kenneth Lewis. Thain's superhero image had been damaged by revelations that, even as his bank's fortunes foundered, he had continued to demand a large annual bonus, "said by individuals briefed on the matter to be $30 million to $40 million," writes the NYT. But it was Merrill's massive $15.31 billion fourth-quarter loss—a hole that threatens the future of BoA—that convinced Lewis that Thain had to go, writes the WSJ. Thain's fall came the same day that a fresh picture of the pressure banks are under emerged. The Guardian reports that a leading London hedge fund made $16 million in just four days last week by betting on the fall of Barclay's share price. The revelation has heightened criticism of Britain's financial regulatory body's decision to lift a ban on "short-selling".

Tough times provide acquisition opportunities, and Pfizer certainly is thinking big if the WSJ's exclusive story of a possible merger with Wyeth pans out. The purported $60 billion deal would give the new company a combined revenue of about $75 billion and a top shelf of "blockbuster drugs" including Lipitor and Prevnar. "A combination of these two U.S. pharmaceutical giants would redraw the boundaries of the global drug industry, which has suffered from flagging product development and high fixed costs," writes the WSJ.

Employees in Redmond, Wash., and Microsoft offices around the world are still reeling from the new that the software giant will layoff 5,000 employees, the Seattle Times reports. Facing not just "a once-in-a-lifetime set of economic conditions," CEO Steve Ballmer said Microsoft was struggling with an economy that "is resetting to a lower level of business and consumer spending."  Ultimately the net layoffs will be less than 3,000 because Microsoft will keep hiring in key areas, writes Business Week, but Ballmer's conclusion is clear: At the moment there is no recovery in sight. Google posted a 68 percent drop in profit for its last quarter—mainly because of its recent AOL investment—but the results "suggested that Google's search-advertising business and cost-cutting campaign are helping it weather the recession better than other Internet companies," notes the WSJ. In general, though, the tech sector continues to struggle as Samsung revealed its first quarterly loss since it began reporting results back in 2000, Forbes reports. The operating loss of $676.5 billion shocked analysts who had anticipated only half the pain. Nevertheless, with huge cash reserves the world's largest maker of LCD screens still finds itself in a healthier position to ride out the storm than rivals Sony and LG.

Keeping a focus on Asia,  Timothy Geithner, the treasury secretary to-be (probably)"told senators that President Obama believed China was 'manipulating' its currency, suggesting a more confrontational stance toward that country than under the Bush administration," the NYT writes. Geithner added that the U.S. would "use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices”—remarks that immediately sent the price of long-term U.S. Treasury bonds tumbling as traders anticipated China might ease up its purchase of US assets in retaliation to what the FT called "politically loaded [language] likely to raise tensions with Beijing." The diplomatic salvo comes at a time when China is seeking to jumpstart its own economy once more by spending "hundreds of billions of dollars on new highways, railroads and other infrastructure projects," the NYT reports.

Finally, we know the world's banks had a blinkered mentality but Santander might just win the prize for tunnel vision. Just weeks before the arrest of Bernie Madoff for a mammoth Ponzi scheme, the bank called "his market timing 'impeccable' in a report to investors that lawyers say raises questions about the bank’s risk controls," the FT reports.