Ending a four-month search, commercial lender CIT Group, Inc. (CIT) on Sunday named John Thain as the its new chairman and chief executive officer, effective immediately. Thain succeeds Jeffrey Peek, who announced in October his intention to resign from the positions at 2009 year-end. Replacing Peek, who resigned from the positions effective January 15, 2010, the company had appointed one of its directors Peter Tobin as the interim chief executive officer in mid-January.
Thain, the former chief executive officer of Merrill Lynch & Co., has returned to the helm of a public company a year after he was fired from Bank of America Corp. (BAC), just weeks after the Charlotte, North Carolina-based bank's purchase of Merrill Lynch closed in 2009. In his new role, Thain would be responsible for transitioning CIT to a more streamlined commercial lender focused on serving the small business and middle market sectors and optimizing the its business model.
New York-based CIT historically has specialized in financing for retailers and other forms of secured lending, but ventured in recent years into subprime and commercial lending that went sour. CIT had received a $2.3 billion capital infusion from the federal government in December under the Troubled Asset Relief Program or TARP, after it was granted a bank holding company status.
Thain, who helped to seal the takeover of Merrill Lynch by Bank of America amid the financial crisis, was ousted amid criticism of the firm's plans to pay bonuses in 2008, a year in which its losses totaled $27.6 billion. His image soon became tarnished as media reports emerged that he had spent lavish sums on office renovations at Merrill Lynch. Thain later said the renovation was a mistake and reimbursed the company for the furniture.
Prior to joining Merrill Lynch, Thain ran NYSE Euronext (NYX), the company that owns the New York Stock Exchange, for four years, and also worked for about 24 years at Goldman Sachs Group, where he was most recently president and chief operating officer.
In a statement, lead director, Vice Admiral John Ryan said, "John is a well respected financial services executive and proven leader who is uniquely qualified to lead CIT at this critical stage. CIT and its customers will benefit enormously from his breadth of experience, industry acumen and deep knowledge of the financial services sector. We have the utmost confidence in John and are pleased to welcome him to CIT."
CIT, a major lender to small businesses, is rebuilding top management, the board and its business model after the 101-year-old lender collapsed under losses from subprime loans. The company exited bankruptcy protection on December 10, 2009 after having satisfied all of the conditions required to consummate the pre-packaged plan of reorganization approved by the U.S. Bankruptcy court.
Last month, CIT named three new directors to its board, completing a corporate-governance revamp that has handed control of the company to bondholders. The company announced that Gerald Rosenfeld, Anthony Terracciano and Laura Unger have been appointed to the board. CIT is also reportedly looking for a chief financial officer and has spoken to Nelson Chai, the former chief financial officer of Merrill Lynch.
Meanwhile, CIT announced last week that its President and Chief Operating Officer Alexander Mason, who oversees the operations of the company and all business, segments, will leave the organization, effective February 26. Further, Anthony Terracciano, who became a member of CIT's board of directors on January 21, 2010, notified on February 1 that he was resigning as a director due to temporary health issues, effective immediately.
On October 13, Peek had announced his intention to resign from the company just about two weeks before CIT filed for Chapter 11 bankruptcy protection on November 11. The company then formed a search committee to oversee the recruitment process and ensure a smooth leadership transition. Peek was named CIT's chief executive officer in July 2004 and as chairman of the board of directors in January 2005. He joined CIT in 2003 as president and chief operating officer and was elected director in September 2003.
Tobin, who served as interim chief executive officer, would now continue to serve as a director of CIT. He has been a director of CIT since July 1, 2002, and earlier from May 1984 to June 1, 2001. Earlier, Tobin also served as chief financial officer of Chase Manhattan Corp. from March 1996 to December 1997, and served as chief financial officer of Chemical Banking Corp. from January 1992 to March 1996. Prior to that, he held various executive positions at Manufacturers Hanover Corp.
CIT closed Friday's regular trading session at $30.75, up $0.30 or 0.99% on a volume of 3.20 million shares, lower than the three-month average volume of 3.68 million shares. In the past 52-week period, the stock has been trading in a range of $24.83 to $35.00.
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