Lehman Brothers, struggling to allay mounting worries about the company's balance sheet, today axed its COO and CFO. The move comes days after the bank reported a $2.8 billion quarterly loss. Joseph Gregory and Erin Callan will both remain at Lehman, but will be replaced at the top by two veterans, global head of equities Herbert McDade III and administrative officer Ian Lowitt, the New York Times reports.
The bank’s hedging, especially on commercial mortgage-related positions, has been a resounding failure, leading to a major writedown in the latest quarter—and the first deficit since its 1994 IPO. The bank did report plans to raise $6 billion in fresh capital this week, but today’s move was an acknowledgment of deep trouble—months after the CEO's sunny declaration that “the worst is over.”