Thain Dethroned

Once the king of Wall Street, John Thain has been dethroned in more ways than one.

The former

Merrill Lynch

CEO responded to embarrassing accusations surrounding his hasty departure from

Bank of America

(BAC) - Get Report

Monday by blaming the bank's current troubles on BofA management, his predecessor at Merrill, and the press.

Bank of America's recent acquisition of Merrill Lynch has - thus far - been nothing short of disastrous, with Thain having a big hand in the misery making.

Thain, who formerly held the titles of CFO at

Goldman Sachs

(GS) - Get Report

and CEO of

NYSE Euronext


was dismissed from Bank of America last Thursday amid charges that Merrill Lynch hid fourth-quarter losses in December, accelerated employee bonuses at Merrill prior to the Jan. 1 closing of its deal with BofA, and spent lavishly to redecorate his office including the purchase of a $35,000 commode.

Tension between Thain and BofA CEO Ken Lewis reportedly had built since BofA learned in December that fourth-quarter losses at Merrill were going to be much worse than expected. Those losses almost led BofA to back out of the deal, until the federal government pledged help to absorb the hit.

In Monday's memo addressed to Merrill employees, Thain said Merrill consulted with BofA about the bonus pool's size, composition and timing. He said that the total bonuses paid had fallen 41% from their 2007 levels. Thain also addressed Merrill's $15.31 billion fourth-quarter loss, saying the losses were incurred on "legacy positions" and that BofA had "daily access to our P&L, our positions and our marks."

The one issue where Thain did not deflect blame elsewhere was the $1.2 million he reportedly spent on upgrading his office. Thain promised to reimburse the company for the extravagant expenditures, which he called "a mistake in the light of the world we live in today."

Excuse us John, but if you pull back those $28,000 Egyptian silk curtains you just bought, you will see that today's world is quite similar to the one you inherited when you replaced Stan O'Neal at Merrill in November 2007.

Merrill's fourth-quarter 2007 pretax loss from continuing operations was $14.9 billion. Merrill Lynch's net loss for the full year 2007 was $7.8 billion, or $9.69 per diluted share, and, just like now, employees were being laid off by the boatload.

The "light of the world" has not changed. And neither have you.

Take your excuses and flush them down your $35,000 toilet. Then go away.

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Dumb-o-meter score: 100 -- Thain's commode makes Dennis Kozlowski's $6,000 shower curtain look cheap.

Citigroup's Board Blow-up

We are happy to shed some light on how Citigroup's top brass are getting around the globe these days. And we can also provide an update on their tenure at the Big C. Here goes:


(C) - Get Report

board members are taking off, not its corporate jets.

The embattled bank on Tuesday denied a previous day's report in the New York Post that it intends to take possession of a brand-new $50 million jet it purchased two years ago. The Post report said Citi still planned to receive the jet even after it received billions of dollars in support from the government amid the ongoing credit crisis and recession.

"Citi has no intent to take delivery of any new aircraft," the New York-based bank said in a statement.

Despite Citi's denials, the issue still managed to wend its way to Washington D.C., where White House spokesman Robert Gibbs said President Obama "does not believe that is the best use of money at this point. That money should be used to lend to consumers."

We here at the

5 Dumbest Lab

can't help but laugh over the new atmosphere where Washington lawmakers, struggling to control their own spending, now weigh in on every dime of TARP money spent by humbled New York bankers. New York's former

Masters of the Universe

most assuredly are serving new masters.

That said, the real news relating to Citigroup last week came from the

Financial Times

which reported Kenneth Derr and Franklin Thomas will soon follow Robert Rubin's lead and retire from Citi's board. Derr and Thomas have been on the board of Citigroup and its predecessor companies for a combined 59 years.

As he did with Rubin's retirement announcement, Dick Parsons, the former CEO and chairman of

Time Warner


recently named Citigroup chairman, will undoubtedly praise the pair's long years of service when they finally fly off into the sunset.

They just won't be doing it on a private jet this time.

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Dumb-o-meter score: 90 -- Just a little more jet fuel on Citi's bonfire of inanities.

Colonial's Last Request

Colonial BancGroup


needs the last rites, not new ideas.

Colonial's stock fell almost 50% on Wednesday to less than 80 cents a share after the Montgomery, Alabama-based bank holding company reported a fourth-quarter loss of $825.1 million, or $4.11 a diluted share. In all of 2008, the bank posted losses of more $880 million compared with profits of $180 million in 2007, primarily due to bad real estate loans in Florida. Colonial shares have lost 95% of their value since this time last year.

Wow! Those are some pretty impressive losses for a company that now sports a market value of barely $160 million. And the extent of those losses certainly won't help Colonial in its efforts to raise the additional $300 million in equity it needs to access the federal government's bailout package.

Colonial's management is not stopping to admire the accomplishment, however. They are too busy congratulating themselves for a project they launched in December called Colonial 1st which they say is designed "to encourage employees to submit ideas for the best interest of our company, the shareholders and our customers first."

In other words, the bank's major initiative in its time of crisis is to put out

suggestion boxes

similar to the ones found on the walls of fast food restaurants and dry cleaners.

"Today thousands of ideas have been generated and as a conclusion of the project late in the first quarter of 2009, the proven ideas will be implemented," said CFO Sarah Moore said on Tuesday's conference call.

Here's our suggestion for Colonial: If you want to survive much longer, forget collecting ideas from employees, and start collecting on loans from your deadbeat customers.

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Dumb-o-meter score: 85 -- Colonial's Florida real estate exposure is un-real.

Starbucks Decaf Discrimination


(SBUX) - Get Report

latest scheme to save itself: Discriminating against decaf drinkers.

The world's largest coffee chain, which last year started brewing fresh pots of coffee every 30 minutes, announced Tuesday that it plans to stop continuously brewing decaffeinated coffee after noon as part of a drive to reduce expenses. Starbucks customers will be able to request freshly brewed caffeine-free coffee after 12 p.m., provided they can wait the four minutes it takes to brew a fresh cup.

"For many of our stores, the demand for decaf is greatly reduced in the afternoon," the company said in the statement. "With our current standard of continually brewing decaf after 12 p.m. regardless of demand, we have seen a high amount of waste."

Chief Executive Officer Howard Schultz is pressing forward with a cost-cutting program to save $400 million by September from labor and product expenses. Aside from declaring war on decaf, Starbucks also intends to reduce waste by brewing smaller pots of coffee. The company, which announced a 67% drop in quarterly earnings this Wednesday, also plans to layoff 7,000 employees and close up to 300 stores in the U.S.

Starbucks is claiming its decaf decision is a "win-win" arrangement, saying customers who want decaf will be guaranteed a fresh cup, and store owners who want less waste will save a few bucks on beans.

We say they should step up their decaf service, not cut it. Starbucks is already making us jittery enough with all their wild maneuvers.

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Dumb-o-meter score: 80 - Howard, your double shot of stupid is ready.

Dow's Chemical Warfare

Note to

Dow Chemical

(DOW) - Get Report

: Next time you decide to buy a company, make sure you have the money to pay for it.

Dow Chemical ignored Tuesday's deadline to complete its planned $15.3 billion purchase of specialty chemical maker

Rohm & Haas


. The company said that "unacceptable uncertainties on the funding and economics" of the combined enterprise have made it impossible for them to move forward with the merger. Following the news, shares of Rohm & Haas tumbled 12% to $58. Dow Chemical's shares rose 4% to almost $15.

When the deal was first struck last July, Midland, Mich.-based Dow said the acquisition of Rohm & Haas for $78 a share would give it a buffer against volatile commodities prices in the chemical market. The deal has been on hold since December when a Kuwaiti company backed out of a joint venture that would have helped Dow fund the acquisition.

"Dow remains interested in discussions to find a solution to complete the acquisition ... but recent events have made closing untenable at this time," said Dow CEO Andrew Liveris Monday in a press release.

Rohm & Haas said that, in light of Dow's announcement, it plans to pursue all available alternatives to protect its shareholders' interests. A Delaware judge has been hearing arguments from both sides has set a March 9 trial date for Rohm's breach-of-contract suit.

Dow's attempt to drop out of the deal is quite understandable considering how deep the market for chemicals has cratered since last summer. And since every private equity firm is hiding behind the "material adverse change" clause to weasel out of purchases they can now ill-afford, Dow may as well do the same.

Nevertheless, Dow's decision last summer to pay a $30 premium for Rohm & Haas at the very time that crude oil was fetching more than $140 a barrel seemed brash, and now in retrospect it just seems irresponsible.

Dow dove into the deal with a Kuwaiti IOU instead of cold hard cash. And now they are doing to Rohm & Haas what the Kuwaitis are doing to them.

Dow's turnabout is not fair play. It's just dishonorable.

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Dumb-o-meter score: 75 -- Dow's chemical warfare backfired

Before joining, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.