Lehman Brothers Gives Executives the Boot

Updated from 10:52 a.m. EDT

Lehman Brothers(LEH Quote) on Thursday said it is dumping CFO Erin Callan and COO Joseph Gregory after the firm earlier this week said it expects to report massive second-quarter losses.

A firm statement said Ian Lowitt, the firm's co-chief administrative officer, will succeed Callan as CFO and Herbert McDade III, who headed the firm's equities division, will succeed Gregory as president and chief operating officer. Callan will remain with the firm in a senior capacity within its investment banking division.

Lehman Chairman and CEO Richard Fuld, in the statement, did not explicitly give a reason for the changes. But he noted the "challenging times" the firm faced and expressed remorse for the fate of his long-time lieutenant Gregory.

"Joe has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a firm," Fuld said. "This has been one of the most difficult decisions either of us has ever had to make."

Brothers Grim

Lehman shares have plummeted more than 70% over the past year, a fall that has accelerated in recent weeks, as concerns have mounted about the firm's capital position. The firm on Monday warned it expects to post a $2.8 billion loss and raise $6 billion when it reports second-quarter results on Monday.

Lehman shares were recently flat in furious trading. Volume was at nearly twice its three-month average daily volume by 10:30 a.m.

The stock was bolstered by former AIG(AIG Quote) chief Maurice "Hank" Greenberg, who said he still planned to buy shares of the firm, in line with earlier statements, despite the expected loss.

Who do you think most deserves the blame for Lehman Brothers' expected $2.8 billion second-quarter loss?
	CFO Erin Callan COO Joseph Gregory CEO Richard Fuld Activist investor David Einhorn