John Thain told CNBC that he sees his new job as CEO of Merrill Lynch as "an opportunity to make things better" after the largest U.S. brokerage firm suffered huge subprime-related losses that led to the resignation of former CEO Stanley O'Neal.
In an exclusive interview, Thain was upbeat about Merrill's prospects despite the recent losses, saying "the vast majority of Merrill's businesses are doing great, so the problems are really concentrated in a relatively narrow area, which is part of fixed income."
O'Neal resigned in late October after Merrill posted an $8.4 billion write-down for the third quarter. The write-down resulted in a $2.3 billion loss, the largest quarterly loss in the company's 93-year history.
Thain, who has been CEO of NYSE Euronext for nearly four years, said he discussed the CEO job with Merrill's board for about two weeks before accepting the job. He will take over on Dec. 1. Duncan Niederauer, the NYSE's chief operating officer, is expected to succeed Thain.
Merrill's selection of Thain was a surprise because the firm had recently indicated to BlackRock CEO Larry Fink that the job was his if he wanted it. CNBC has learned that Fink said he would take the job but only if Merrill did a full accounting of its subprime exposure. At that point, Merrill, which owns 49% of BlackRock , moved in a different direction and decided to go with Thain instead.
When asked about Merrill's problems, Thain said he had "complete access to all their books and records."
"I've talked to them a lot about their exposure to the...subprime market," he added, "and they've been as open as they could be."
Thain also said Merrill "did a great job" in evaluating their subprime exposure but indicated further writedowns are possible.
Thain has a blue-chip Wall Street resume, with credentials sharpened by running NYSE and his time as a former co-president at Goldman Sachs.
Thain took over the NYSE in January 2004 after longtime CEO Richard Grasso was forced to resign over his $188 million pay package. Thain sought to present a new image for the exchange and pushed through some major structural changes, including the move to electronic trading.
Thain had also been rumored to be a possible CEO candidate for Citigroup , whose chief executive Chuck Prince also stepped down following big subprime-related losses. No replacement for Prince has been named.
Created Global Exchange
Thain, who is credited with remaking the NYSE into the world's first truly global exchange, is no stranger to the investment world. He started out on the bond desk at Goldman Sachs and left the firm as its chief operating officer.
Many say he's also exactly what Merrill Lynch needs after last month's ouster of Stan O'Neal. The former CEO was not well liked by Merrill's army of some 16,000 brokers, and lost their confidence after the company recorded its biggest loss since being founded 93 years ago.
Merrill Lynch ratcheted up a $2.24 billion loss during the third quarter because of investments in subprime mortgages and other risky types of debt. It joined dozens of other major financial institutions who are getting squeezed as investors steer away from riskier securities, causing credit markets to tighten significantly.
There is also speculation by a number of analysts that Merrill may take a $3 billion fourth-quarter writedown. That would be besides the $7.9 billion charge taken last quarter. Merrill originally said it would write down only $4.5 billion because of the credit crisis.
Faces Daunting Task
Thain faces a daunting task of cleaning up those investments, and reviving morale at a firm badly bruised during the past few months. There has been speculation that a new CEO would be forced to turn around Merrill's fixed income division, a department that he once ran for Goldman in the 1990s.
Meanwhile, Fink may be a possible replacement for Prince, who left the helm of Citigroup less than a week after O'Neal stepped down from Merrill. Thain was also said to be considered to run the nation's biggest bank.
Prince was forced out of his job after Citi's profit fell 57 percent in the third quarter after it booked $6 billion in asset markdowns and other credit-related losses. The night Prince resigned, the company estimated it would need to write down another $8 billion to $11 billion in the fourth quarter.
Thain leaves behind a transformed exchange now locked in competition with rival Nasdaq Stock Market. His first task after taking over in 2004 was the acquisition of electronic trading platform Archipelago Holdings. It was the first step in bringing NYSE into the 21st century, which ultimately led to the creation of a mostly electronic market last year.
He also shepherded the NYSE's April acquisition of European rival Euronext, which operated bourse's in Paris, Amsterdam, Brussels and Lisbon.
The Associated Press contributed to this report.