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Facetime August 6, 2008, 7:13PM EST

John Thain on the Fire Sale of Toxic Assets at Merrill

(page 2 of 2)

Larry Fink of BlackRock: Thain calls the firm "a strategic asset" Jennifer S. Altman

So will you stop saying you don't need to raise more capital?

No. I still have to answer the question as of a specific point in time. Today, with the transactions we did last week, we are well capitalized. If the world continues to deteriorate and asset values continue to decline, then in the future we may have to make different choices.

Is the dividend in jeopardy?

We evaluate the dividend every quarter. We believe that we will, in a short period of time, be able to earn and cover the dividend, but that is something that we always evaluate.

In an interview with Brad Hintz of Sanford C. Bernstein in March, you said Merrill intended to hold on to as many of the CDOs as possible and sell them off gradually as prices recovered. In this deal, isn't Merrill basically giving away any upside recovery?

We are giving away any upside recovery. We are selling 100%, so we're not anticipating any upside recovery. The biggest change is the impact on our 60,000 employees, who generate $7.5 billion in revenues, earn just under $2 billion pretax, and have all their efforts overwhelmed by write-offs coming from these assets. So we decided it was better for our company and shareholders to rid ourselves of these assets and go forward with our core business, which is wealth management, investment banking, and trading—not a hedge fund investing in illiquid assets.

Have there been any reverberations from your decision to value the CDOs at just 22¢ on the dollar? Have other bank CEOs called you to complain?

No one has specifically called me to complain. And remember, this is a bulk sale price of $30 billion. And also the first trade like that, because there has been almost no liquidity in the CDO market. I expect there will be follow-on trades.

So the Lehmans (LEH) and Citis (C) of the world will be right behind you?

I can't speak for anyone else, but all of the investment banks and commercial banks are shrinking balance sheets and reducing assets, and this is one of the most toxic of assets.

Is it fair to say the price is 22¢ on the dollar today?

I can only say that the price was 22¢ on the dollar to sell $30 billion worth to a single buyer in a single trade.

If there is a need at some point for further capital, would you consider selling the BlackRock (BLK) stake?

We have always said, from the first of the year, that we would evaluate all of our options and decide what was in the best long-term interest of our shareholders. We do view our BlackRock stake as a strategic asset, but we would always look to all of our alternatives.

Maria Bartiromo is the anchor of CNBC's Closing Bell .

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