BofA, Citi CEOs: Collateral Damage

NEW YORK (TheStreet) -- Morgan Stanley (MS) CEO John Mack's retirement will probably get Bank of America's (BAC) and Citigroup's (C) boards thinking even harder about replacements for CEOs Ken Lewis and Vikram Pandit, but their options are not enviable.

Though Mack's retirement probably shouldn't be seen as an ouster, he did not distinguish himself during the crisis, so it may be seen as a semi-ouster, with dignity intact. Lewis doesn't deserve the same fate, having failed to disclose ballooning losses at Merrill Lynch to shareholders in a timely manner leading to prickly grillings before Congress and regulators afterward. Pandit didn't create the problems at Citi, but he has never seemed in control.

BofA's board has the tougher task. Lewis proteges like Consumer and Small Business Banking president Brian Moynihan and CFO Joe Price are too embroiled in the scandal surrounding the Merrill deal. Global Markets chief Tom Montag is an investment banker, and so too far removed from the bank's folksy Charlotte retail orientation. New Global Wealth chief Sallie Krawcheck does not seem up to the task of running a giant like Bank of America, even though she was probably brought in as a possible contender for the top spot.

Bringing in yet another outsider after Krawcheck seems like a stretch. Unless, perhaps, it were a former insider like Al de Molina, Price's predecessor in the CFO spot and now CEO of GMAC Financial. It is unclear whether de Molina would want the job, however. He is already in the midst of a challenging turnaround task at GMAC, and all the aforementioned contenders, having been passed over for the top spot, would probably not be too welcoming.

One outsider who might have some credibility is JPMorgan Chase (JPM) retail boss and Jamie Dimon protege Charles Scharf. But even he might find himself undermined by malcontents, and he might refuse an offer for that reason.

BofA has a serious problem in finding a leader. Internally, the bank is probably not viewed as a failure, so it is unlikely an outsider would be welcomed, especially since proven leaders are so scarce in the financial services world at the moment. But the insiders all have investigatory clouds hanging over them, whether or not they are officially the objects of any inquiries.