What a difference 4 months make.

In September, Dick Fuld, CEO of Lehman Brothers, and John Thain, CEO of Merrill Lynch, were up to their loosened ties in takeout Chinese as they worked feverishly to secure their faltering institutions through a sale to Bank of America (BAC).

Thain beat the clock. Fuld got his cleaned.

The Clark Kent-looking Thain was hailed as a genius, a savior, easily living up to the nickname he earned during his time at the New York Stock Exchange: "Mr. Fixit."

Now, shortly after Merrill announced a staggering loss of $15.4 billion, Thain has been shown the door - and old transgressions are beginning to surface. Bloomberg reports he "held onto more than $40 billion of subprime-tainted bonds" when it was no longer prudent to do so, and oversaw a lousy deal with a Singapore sovereign wealth fund that "cost the firm $4.9 billion."

Certainly, poor performance can't go on being rewarded, but a lot of very smart people failed to see the growing and gathering subprime clouds. A lot. I'll leave it to the likes of Todd Harrison and Kevin Depew to opine about Thain's ultimate success or failure as a CEO in the context of his objective (make money for shareholders) and the environment in which he led (sucky).

What's most intriguing to me is Thain's complete, utter tone-deafness. On December 8 of last year, he solicited a $10 million bonus from Merrill's board of directors. He'd saved Merrill from certain death, sure, but he had to know the move wouldn't sit well - not with shareholders, and not with the public.

The request was rejected and the entire episode spun to make it appear he had had a change of heart. In deference to the fact that the sky was falling, he would seek no bonus after all.

But the real piece de tone-deaf resistance -- and the thing the media latched on to for deal life yesterday -- is the $1.2 million Thain spent furnishing his office - at a time when Merrill's balance sheet was all but assured. For an itemized list of outrages, including the now-famous $87,000 area rug (so much better than former Tyco International CEO Dennis Kozlowski's $4000 shower curtain!), click here.

But Thain's not alone in his obstructed view of "how this may look." Remember AIG's highfalutin corporate retreat just days after it received an $85 billion government bailout?

Or that time the CEOs of the Big Three automakers flew to Washington in private planes to beg Congress for money?

So, where does it come from, this cluelessness? Simple. It's the byproduct of years of bullishness, of windfall profits, of invincibility. The net result is a stubborn hubris that's kind of hard to disabuse yourself of when your latest signing bonus was $15 million.

And it could take some time to get flushed out of the system - theirs and ours.