Financial Winners & Losers: Lehman

Monday proved a dismal day for financial stocks as both executives and ratings got the ax.

Standard & Poor's cut the ratings of three investment banks with the opinion that the outlook for them was mostly negative. S&P lowered Merrill Lynch (MER Quote), Lehman Brothers (LEH Quote) and Morgan Stanley (MS Quote) each by one notch after a review of the sector showed more trouble ahead, but the ratings continue to stay in investment-grade territory.

Merrill fell by 3% to $42.55, while Morgan Stanley dropped 3.5% to $42.75. Lehman plunged 6.8% to $34.30.

"The outlooks on the large financial institutions sector in the U.S. are now predominantly negative," the credit rating agency said in a statement.

Another big loser for the day was Wachovia (WB Quote), which tumbled 3% after announcing the ousting of chief executive Ken Thompson. Somehow the nation's fourth largest bank managed to avoid hitting its 52-week low, but did trade down to $23.30. The bank has struggled with massive losses as it continues to review its portfolio. Thompson will not receive any pay for the 2008 fiscal year, but still walks away with s severance pay of $1.45 million and accelerated vesting of $7.25 million in restricted stock.

Fellow bank Washington Mutual (WM Quote) removed chief executive Kerry Killinger's title of chairman. WaMu has lost more than $1 billion due to the mortgage crisis and had to set aside an additional $3.5 billion for more bad loans. Shares of the beleaguered bank barely stayed above its 52-week low of $8.72, lately trading at $8.96.