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Former Merrill Lynch Chief Executive John Thain, who was fired after a scandal over the payment of billions of bonuses to Merrill traders, argued on Tuesday that big payouts played no role in triggering the financial crisis.
Congress and various federal regulators have accused Bank of America [ BAC 14.48 
-0.52 (-3.47%) ] of failing to adequately disclose various details about the Merrill merger to investors, including the payment of $3.6 billion of bonuses to Merrill staff in the fall of 2008.
"The focus on bonuses as the cause of risk-taking is just wrong," Thain told the Reuters Global Finance Summit in New York. "Bonuses did not cause excessive risk-taking and bonuses did not cause the financial crisis."
Thain instead blamed the crisis on poor risk management, excessive leverage and too much liquidity available for too long.
Thain, ousted after Merrill Lynch was sold to Bank of America, said he favored proposals that tie bonuses to long-term performance, are based on equity, and include clawbacks. But he doubted such changes will prevent another collapse.
He pointed to Lehman Brothers and Bear Stearns as examples of companies whose senior management received a large portion of their compensation in stock.
"That didn't help them," Thain said, referring to the two former competitors.
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