NEW YORK (

TheStreet

) --

Morgan Stanley

(MS) - Get Report

CEO John Mack's retirement will probably get

Bank of America's

(BAC) - Get Report

and

Citigroup's

(C) - Get Report

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

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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.

Bank of America is so huge it will probably just keep chugging along, assuming the U.S. recovery is for real. But the leadership question looms large, and it is likely to weigh on the shares for some time to come.

Because the troubles Citigroup are worse than at BofA, finding a new CEO is somewhat easier in that an outsider would be given a chance. Probably not Scharf, though, since he lacks investment banking chops. If he did replace Pandit, he might have to do a wholesale purging of Pandit allies. The replacements most widely talked about include Vice Chairman Ned Kelly, who remains at the bank after being pushed out of the CFO spot, reportedly under pressure from the

Federal Deposit Insurance Corp. Other internal possibilities are former

US Bancorp

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boss Jerry Grundhofer, who sits on Citi's board and former

Freddie Mac

President Gene McQuade, who runs Citibank North America.

Richard Bove, an analyst at Rochdale Securities, believes the worst of the problems at Citi are behind it and Pandit has a decent shot at surviving in the top job.

"Though a lot of people want him out, including, apparently, the FDIC, he's still there, so if they haven't gotten rid of him yet, there's probably a good chance he'll stick around," Bove says.

Bove is even more bullish on Ken Lewis.

"Ken Lewis is in complete control of Bank of America's board, and people may call him a liar, but stockholders like him. If he leaves Bank of America it will be his decision and on his terms," Bove says.

--

Written by Dan Freed in New York

.