Zazzle Shop

Screen printing

Wednesday, December 31, 2008

The $37 Million Park Ave. Apartment Your Bailout Bought

Where is the government's bank-bailout money going? In part to pay for Wall Street banker Peter Kraus's $37 million Park Avenue spread.

Kraus had excellent timing. He signed on as a top executive at Merrill Lynch in May, negotiating a $50 million pay package, with much of that guaranteed if the company was sold. He didn't officially start until September. A couple of days later, Merrill CEO John Thain sold the company to Bank of America for $50 billion, triggering a $25 million payout under Kraus's contract.

Bank of America got a $25 billion capital injection from the government. Kraus resigned and collected his cash, taking a job as CEO of AllianceBernstein, a money-management firm. And then he bought, for an estimated $37 million, an apartment at 720 Park Avenue from Democratic fundraisers Carl Spielvogel and Barbaralee Diamonstein-Spielvogel.

Let's be clear: Kraus got this apartment fair and square: He suckered Merrill Lynch into a pay guarantee, and had the gall to hold Merrill and Bank of America to his contract, even though he only worked a couple of days.

Bankers deserve bonuses — but only when they really earn them. Thain, who arguably saved Merrill Lynch from the disastrous fate of Lehman Brothers and Bear Stearns, declined to seek a bonus this year, but he would have been justified in getting one. Kraus got a bonus, but he didn't earn it. He did nothing illegal. He just did something unseemly.

The 5-bedroom spread technically belongs to Kraus's wife, who was listed as the purchaser. But given the circumstanced of its sale, I like to think it belongs to all of us. Behold the splendor of the People's Palace.

This is the floorplan [UPDATED] of the apartment that Jill Kraus (ahem) purchased for the family.

720 Park Avenue

This looks like the living room.

720 Park Avenue

And this must be one of the dining rooms.

720 Park Avenue

The entrance foyer.

720 Park Avenue