If you've become comfortable with the current state of the housing market ... don't. Economists at Goldman Sachs (NYSE: GS) and Bank of America's Merrill Lynch (NYSE: BAC) say there's still plenty of risk in the housing market.

Alec Phillips, the head of Goldman's Washington office, said, "The risk of renewed home price declines remains significant." His "working assumption" is a drop of between 5% and 10% by the middle of next year.

There was no secret that Bank of America Corp. (NYSE: BAC) wanted to sell First Republic.

And so today the deal was announced: BofA got more than $1 billion from a consortium of private equity operators. They include General Atlantic LLC and Colony Capital.

Let's dive into the world of breaking news here, as the New York Attorney General's office has decided to mark the one-year anniversary of the financial meltdown by preparing charges against some Bank of America (NYSE: BAC) executives. Reportedly, the charges stem from the failure to disclose details about the company's acquisition of Merrill Lynch.

The Attorney General (Andrew Cuomo) is likely to file charges against the executives because of their failure to alert shareholders to mounting losses and accelerated bonus payments at Merrill. Earlier, a federal district judge rejected a $33-million settlement between BAC and the SEC over the same executive bonuses. This settlement was in relation to the fact that BAC did not inform shareholders of an agreement to pay Merrill Lynch execs billions of dollars worth of bonuses, the deal was struck before BAC acquired Merrill.

We have another fly in the ointment. Judge Jed Ratkoff of federal district court refused to approve a $33 million settlement in the SEC vs. Bank of America Corp case.

In the complaint, the SEC had alleged that Bank of America Corp (NYSE: BAC) told investors in the proxy documents for the Merrill Lynch merger that Merrill agreed NOT to award year-end performance bonuses before the merger closed.

An outspoken group of Bank of America (NYSE: BAC) shareholders has been calling for CEO Kenneth Lewis's head lately, with investors none too pleased by the bank's near-disastrous acquisition of Merrill Lynch. However, testimony is hitting Wall Street today that indicates Lewis was simply following government orders by keeping hefty losses at Merrill under wraps.

Lewis testified under oath before New York Attorney General Andrew Cuomo in February, asserting "it wasn't up to me" to disclose Merrill's fourth-quarter losses toward the end of 2008.

According to Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson pressured him to stay mum about Merrill Lynch's troublesome balance sheet. The regulators reportedly urged Lewis to proceed with the merger, warning that the deal's failure would "impose a big risk" to the nation's financial system.

There's been no shortage of heartstring-jerking reports from the current economic crisis -- seniors whose retirement accounts have been wiped clean; families relocating from homes to motels; MBAs forced to wear their resumes on sandwich boards.

However, in my humble opinion, today's news might be the most pathetic: Sesame Workshop, the nonprofit organization that produces the classic Sesame Street TV show, is slashing 20% of its 355-member workforce.

A report today in the New York Post suggests that shareholders are anxious to oust Kenneth Lewis, CEO of Bank of America Corporation (NYSE: BAC). The paper says that a group of angry investors, spearheaded by Jerry Finger, has compiled a list of demands to present at the bank's next annual meeting. Finger and his irate mob will request that the roles of CEO and chairman be split, and the outspoken investor said it's safe to assume that a brand-new chief executive is also high on his wish list.

Finger made headlines last month by filing a class-action lawsuit against B of A, alleging that its merger with Merrill Lynch failed to protect shareholders' interests. New York Attorney General Andrew Cuomo is now investigating that very same matter, and reports say that the AG may demand the return of $4 billion in bonuses to Merrill employees that were rushed through prior to the merger's completion.

In Gone with the Wind, Rhett Butler wryly notes that there is "just as much money to be made out of the wreckage of a civilization as from the upbuilding of one." Having observed the near-Roman excesses of New York's money men over the past couple of years, I might go even further and argue that the end of a civilization tends to be even more outrageously profligate than its beginning. After all, it's hard to imagine stern, conservative men like J.P. Morgan and Andrew Mellon giving in to the incredible excesses of the latest round of would-be magnates.

While tales like Stephen Schwarzman's million dollar birthday and Dick Fuld's five homes tend to capture the public's attention, these outrageous expenditures are only the tip of the iceberg. From $175 hamburgers at the Wall Street Burger Shoppe to John Thain's $1.22 million office redecoration, it has become increasingly clear that New York's financial workers have spent the last few years living in a completely alien world. What's more, they are either unable or unwilling to adapt to the changing realities of America's economy.

Just like the government's tardy recognition of the recession, nine months after the fact, Washington has become embarrassed over and over again by the scandalous behavior of Wall Street investment banks and corporate executives. This includes: overindulgent life styles at company, shareholder, and taxpayer expense; outrageous bonuses by money losing companies; corporate jets; lavish business retreats; gaming of stock options and more.

Our nation has been strip-mined by corporate executives that think short term, focus on themselves instead of their company, and people they represent, and have been negligent to consider the repercussions of their actions or inaction.

Strip-mining allows for the removal of minerals in the fastest and easiest way possible grabbing at surface material as you work your way down and cause havoc to the ecosystem. Environmental problems are of great concern now more than ever and the process is heavily regulated -- more so than the economic strip mining of the last few years.

Since Washington is so affected by lobbyists whose interests are not aligned with the overall public well-being (note: I did not say welfare), as the cynic would say "the best government money can buy", the public is not getting its monies worth.

Well that didn't take long: Former Merrill Lynch CEO John Thain has received a subpoena from New York Attorney General Andrew Cuomo. The subpoena is part of an investigation into the billions of dollars in bonuses that Merrill paid last year just before it was taken over by Bank of America (NYSE: BAC). Cuomo called the decision to fast track the bonus payments "troubling."

In a statement, Cuomo's office said, "With that in mind, I am also pleased to announce that our ongoing inquiry into executive compensation practices at TARP funded institutions, including this matter, will be conducted cooperatively and in coordination with the TARP Special Inspector General Neil Barofsky." Bank of America Chief Administrative Officer J. Steele Alphin was also subpoenaed.

An era of greed that began with the election of Ronald Reagan has come to an abrupt end. That means that the seething emotions of greed and envy that come along with bonus time at investment banks will have fewer dollars attached to them. And talent will flow to government and academia rather than Wall Street. This could be good for the U.S.

Some of those masters of the universe in the investment banking industry have seen the value of their stock tumble (and many of them are going without bonuses this year). Here are some of the "casualties":

John Thain may look like superman, but he's only human. According to my brother William D. Cohan's article in Fortune, Thain contributed mightily to his efforts to get himself fired following the takeover of Merill Lynch by Bank Of America (NYSE: BAC). Now Thain is trying to salvage his reputation by offering to repay Bank of America for the $1.2 million he spent to decorate his office.

Thain's career suicide involved five key steps:

• Thain tossed out his Merrill deputies Greg Fleming and Robert McCann;
• He was late to disclose some $15.31 billion in trading losses that may have derailed the deal if they had been disclosed earlier;
• He took a year-end vacation at Vail and signed up for this week's Davos fest (against his boss, Ken Lewis's advice);
• He paid $4 billion in bonuses to Merrill workers before the deal closed -- although Bank of America knew about them so Thain should not get all the blame for these;
• He spent $1.2 million to redecorate his office.

Now Thain is going to try to partially reverse the damage from the last item in his career suicide process.

Former Merrill Lynch CEO John Thain has resigned from his post at Bank of America (NYSE: BAC), not long after the consummation of a merger that threatens that company's very survival.

"Ken Lewis flew to New York today to talk to John" and "they mutually agreed that his situation was not working and he resigned," Bank of America spokesman Robert Stickler told The New York Times.

Ken Lewis was upset with Mr. Thain partly because the merger was a disaster and partly because he realized that Thain did not have a strong grasp of the company's operations. Worse, Thain had made earlier than planned bonus payments to Merrill Lynch employees shortly before the deal was done.

And all of this came before the news of Thain's wasteful spending on interior decor was made public.

There is one silver lining though. Bank of America's spokesman was honest enough to say that "things were not working out" instead of hiding behind the usual "He resigned to spend more time with his family and charitable endeavors."

Score one for transparency.

The Daily Beast (where I also write a column) columnist and CNBC reporter Charlie Gasparino reports that Merrill Lynch CEO John Thain spent $1.22 million to redecorate his office last year while the company slashed jobs and fought for its survival.

Citing documents obtained by the site, Gasparino reports that the company spent $800,000 "to hire famed celebrity designer Michael Smith, who is currently redesigning the White House for the Obama family for just $100,000."

I was going to make a reference to former Tyco CEO Dennis Kozlowski and the $6,000 shower curtain, but one of Gasparino's sources beat me to it. Thain's version of an emperor's office includes:

• Area Rug: $87,784
• Pair of chairs: $28,091
• Pendant Light Fixture: $19,751

Now, $1.22 million is not a material amount of money given the scope of Merrill's problems, but it is indicative of how out of touch and arrogant John Thain was and presumably is. The fact he spent $230,000 in one year on a single driver will also do little to muster political support for additional bailout initiatives, and gives a huge amount of ammunition to the "Tell Wall Street to go to hell" crowd.

Not a good move, Mr. Thain, not a good move. If he has any class he'll offer to reimburse the company for those expenses, but I doubt that he will. Even if he does, it's too late.

That's right folks -- you're not the one who bought Merrill Lynch without doing any due diligence. But that doesn't mean you're not paying for it. Bank of America (NYSE: BAC) CEO Ken Lewis is the one who skipped that due diligence and now he's shocked to discover that Merrill Lynch is full of toxic waste. So he threatened to back away from the deal and guess who is stepping up? You are.

How much are you going to fork over so Ken Lewis can have his Merrill Lynch? You'll pay $20 billion for a capital injection and cover $100 billion in potential losses. To be more specific, a deal for the U.S. to invest $20 billion in Bank of America and to divide $118 billion in losses between Bank of America and the government is imminent. Bank of America would be responsible for the first $10 billion; the government would take on the next $10 billion in losses and then the government would absorb 90 percent of the next $98 billion. If this deal closes, the government will own $45 billion worth of Bank of America.

I find it interesting that $120 billion can go out of the taxpayer's pocket and into a bank's with the snap of a finger. By contrast, when the automobile industry wanted 10% of that amount we were involved in weeks of political wrangling, which ultimately resulted in a failed bill in Congress. And once again, it was us taxpayers who ended up forking over the money to bail out these big companies with their multimillion dollar management.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio published his eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing on December 26, 2008. He has no financial interest in the securities mentioned.