Anyhow, in the months after this initial flurry of excitement, reality did start to set in. But the problem is, the press had spent so much energy building Thain up that even in the face of his highly questionable performance, they made it hard for themselves to abruptly about-face.

And so Merrill Lynch’s performance got worse and worse under Thain, but he didn’t receive much blame for it until February 2009. The press’s enthusiasm for Thain did dim somewhat during his Merrill tenure, but any fair reading shows he got way too much slack for way too long.

Thain himself continued to be positive about Merrill’s outlook, for no obvious reason, beyond the fact that he headed the company—and, unfortunately for Bank of America shareholders and U.S. taxpayers, he was greeted with little skepticism. Sure Merrill wrote off $11.5 billion and reported a fourth quarter loss of almost $10 billion, but Thain still insisted, as Dow Jones reported, “the firm is in good shape after the writedowns.”

To give credit where it’s due, we note that a few pieces did a better-than-average job of diminishing Thain’s carefully crafted PR. But at the time, this kind of reasonable skepticism was clearly the exception. It didn’t generate real momentum.

Speaking of PR: Thain seems to have been on the interview circuit for a good part of the past year, and the misinformation campaign clearly had an impact in softening up the press. Having talked with the WSJ for an interview published January 18, 2008, Thain spoke with the FT February 1, where he merited the introduction of “Wall Street’s Mr. Fix-It.” The Sunday Times applied the same well-worn moniker in “‘Mr. Fix-It’ John Thain eases pain at Merrill Lynch,” an early March interview, as did Forbes in an early April profile that noted, among other things:

Apart from the subprime calamity, Merrill’s investment banking and institutional equity divisions had a good year…

We’re sure the accommodations were lovely on the Titanic. To speak of results at Merrill “apart from” subprime was ludicrous even at the time.

Audit Reader, this is why the hero narrative doesn’t work. The financial problems are systemic. No single person can come in and turn things around any more than any one executive, no matter how powerful, can turn millions of struggling subprime borrowers into prime ones. It just doesn’t work that way. And that goes double for someone like Thain, who either didn’t see or didn’t admit the depths of the crisis.

The fact is, Thain got away with saying a lot of things. In April, he was still pedaling the increasingly well-worn line that things at Merrill might be bad, but they would turn around.

At least one observer detected that even Thain now seemed to have less confidence in his words. But whether or not his own confidence was flagging, his reputation was still sufficiently intact that the WSJ led off a Heard on the Street segment with:

John Thain has done such a good job stabilizing Merrill Lynch & Co. that investors already are betting he can return the Wall Street firm to profitability and growth in the near future.

It is clear in hindsight that this evaluation was, um, misinformed. What’s more, it was pretty questionable at the time. But the WSJ insisted on spinning bad news positively. Job cuts? They “Show Thain Is Boss.” Sure, but maybe he cut the wrong jobs. Who knows?

It was not until summer 2008 that we got appropriately skeptical reporting of any volume, and this only after hideous results sent the stock into a freefall. BusinessWeek offered some badly needed reality in a July 15 piece that asked “How Bad Is It?”:

Poor Merrill Lynch (MER). Was it only three months ago that investors were buying shares of the nation’s third-largest broker ahead of its first-quarter earnings announcement? Not this time around. Since the beginning of May, Merrill’s stock has dropped 45%—and touched a nine-year low of 26.50 on July 11, as investors continued to pound the stock in the days leading up to the company’s July 17 earnings release.

What has changed? Back then, optimistic investors hoped the worst was over. Now, they know it’s not.

Indeed, the second quarter results did force a re-evaluation of what had been largely unquestioned optimism about Thain—although the degree of re-evaluation varied from piece to piece and, this is the key point, by no means represented a seismic shift. Listen, with what we knew at that point about subprime and the toxic crud it was made into, a properly skeptical financial press would have dropped the deference thing by now.

Elinore Longobardi is a Fellow and staff writer of The Audit, the business-press section of Columbia Journalism Review.