CIT hires ex-Merrill boss Thain

CIT Group Inc., whose bankruptcy all but wiped the Treasury Department's $2.3 billion investment in the company, has hired former Merrill Lynch & Co. head John Thain as its new chief executive.

According to a Securities and Exchange Commission filing, Thain will receive a base salary of $6 million a year -- $500,000 in cash and $5.5 million in restricted stock. He also will be eligible for incentive bonuses, with the target amount for 2010 set at $1.5 million.

CIT, a major lender to small businesses, got $2.3 billion in public aid through the Troubled Asset Relief Program in December 2008. Despite that infusion, its financial condition continued to deteriorate, and it sought refuge in U.S. Bankruptcy Court last November.

The reorganization plan approved the following month rendered the Treasury's preferred shares in CIT worthless, although the agency government came away with certain "contingent value rights'' in the revitalized company.

Bank of America Corp. agreed in September 2008 to acquire Merrill Lynch, which like many other Wall Street firms was struggling because of declining asset values and an abrupt lack of liquidity.

Although Thain joined Bank of America when the $50 billion deal was completed, he was ousted just a few weeks later, amid public outcry over the payment of $3.6 billion in bonuses to Merrill Lynch employees just before the closing.

Bank of America's failure to disclose those payouts to its shareholders prior to a vote on the merger led the SEC to bring civil charges against the company . The SEC filed a second civil action last month, alleging that Bank of America also failed to disclose "staggering financial losses'' at Merrill Lynch that could have caused investors to vote against the deal.

Bank of America agreed to a $33 million settlement with the SEC on the original charges, but the U.S. District Court judge hearing the case rejected the pact.

Bank of America and the SEC asked the judge at a hearing Monday to approve a new $150 million settlement that covers both cases.