John Thain, former CEO of Merrill Lynch, has been vilified for his decision to pay $4 billion on employee bonuses in December as the firm was tanking. A big question has been what role Ken Lewis, CEO of Bank of America, played. The bank has put out the word that the decision was Thain's and there was no "legal basis" for Lewis to challenge it. Merrill was an independent company until Jan. 1.

But the Financial Times reports that Bank of America employees were more than passive players in all this. Bank of America's chief administrative officer apparently persuaded Merrill to go with a modified incentive mix. An HR officer also knew of the bonus payments. All in all, everyone comes out of this looking bad.

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