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.

According to a Dow Jones report this morning, Citigroup (NYSE: C) has decided to cancel the Christmas party planned for its fixed-income staff in London. The soirée was supposed to be held this Thursday, December 11, but the financial firm apparently decided it was inappropriate to celebrate, considering the 52,000 job cuts it recently announced. The party's cancellation comes shortly after Citi scrapped a holiday celebration for its London equities division, which would have been held December 3.

Today's news from Citigroup is simply the most prominent report among a growing trend this year for U.S. corporations. In my own neighborhood, I can name more than a few companies who've axed their own Christmas plans in deference to the sorry state of the U.S. economy, as well as the continually growing unemployment rolls. It may be the holiday season, but it's harder than ever to find members of the working class who feel like celebrating.

If there's a silver lining to the anti-holiday mood, it's probably the growing trend toward prudent sacrifice among major corporations. Yesterday, we learned that executives at Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) will forgo bonuses -- and regular pay, in some instances -- along with many of their peers at other investment banks. Is it the least these guys could do? Maybe. But, as any addict can tell you, the first step toward recovery is admitting you have a problem. Now that top executives are starting to shoulder some of the blame, Wall Street could finally be ready for rehab.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

On Monday morning, Doug McIntyre posted that former Merrill Lynch CEO John Thain was demanding a $10 million bonus for his work there. But now CNBC is reporting that Thain won't be getting any bonus at all.

So far, details are not forthcoming but Charlie Gasparino, CNBC's On Air Edtior, reported that Thain, along with several other executives, will forgo bonuses this year. The Wall Street Journal is also reporting that according to people familiar with the matter, Thain, Merrill President Gregory Fleming and wealth management chief Robert McCann asked the board's compensation committee not to pay them for their work in 2008. So did two other Merrill executives.

Thain is being unfairly punished because the problems at Merrill happened under his predecessor Stan O'Neal. O'Neal walked away from the mountain of toxic waste he created with $161 million. He's the one who should be forking over a chunk of his compensation due to the problems he caused. To make Thain pay the price is unfair -- but politically expedient.

[Update: Morgan Stanley (NYSE: MS) CEO John Mack would not get a bonus for a second straight year. The bank also announced compensation changes that should link pay and performance better.]

Peter Cohan is president of Peter S. Cohan & Associates. Portfolio will publish his book about Boeing, 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.

Dell, Inc. (NASDAQ: DELL) won't see growth or gain market share in the next few quarters, according the brokerage house Merrill Lynch. So much so that the broker cut its rating on the PC maker to Neutral, citing the company's lack of catalyst to change anything about its bleak future as the business and consumer sectors continue to pull back their money.

But Dell wasn't the only one whacked. Merrill indicated that the market for PCs would be deteriorating through 2010, with a 2% free fall in 2009, contrasting against its earlier call of a 12% spike next year. In other words, it has no idea how the PC market is going to shake out. Might as well flip a coin.

Declining European and U.S. sales forecasts in the PC market are now showing up in the Asia Pacific and emerging markets as well. Although Merrill did say that expectations for growth in the newer netbook category would help offset softness in overall sales, I'm skeptical.

These newer netbooks are under-powered and are hard to type on (try one), even though the valiant attempt by PC makers to create a new category -- something that will sell -- is admirable. There will be a niche market for these devices (many of which cost as much as an on-sale full-size notebook), but that's it. If there's a bright future for these things plus any kind of profit margin that's respectable, I don't see it. That is, unless buyers like under-powered old hardware running old software with less features. But hey, it's small!

Around the world, governments are flooding the market with new currency in order to stem the tide of bank collapses and slippery stock market slopes. They are taking over financial institutions, absorbing debt, lowering interest rates, nationalizing some private companies, investing in others, and rebating taxes through stimulus packages to increase liquidity and spending.

So far all we can say is that the world is still open for business, but it is a different world. Even gold and oil are down significantly.

In concert with world markets, the stocks in my daring (maybe fool hardy) story I posted a few months ago Serious Money: Tempting fate with 10 financials -- buying into a pool of financial stocks at a time when the "hate 'em" factor was at a peak, or so I thought -- are down even more. I think I am turning into the web's leading glutton for punishment by posting such stories. However, while my stock ideas have taken a beating now and then, I hope my integrity has remained intact.

I took some major lumps during the collapse of Washington Mutual (NYSE: WM) as I candidly posted, Chasing Value: Not -- WaMu one week later - ouch!, and I lost some money also.

Nine of the ten financial stocks I wrote about are down or out at this point. When I last reported, the portfolio was losing 4.8%, and now it is losing 47% to date, not counting dividends. Only MBIA Inc. (NYSE: MBI) is up and there are question marks about this company too.