Updated from 10:52 a.m. EDTLehman Brothers ( LEH) 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."